Supply Chain News Bites - Only from SCDigest

-August 28, 2007


Retail Supply Chain: Dell Will Have a Lot to Learn as it Embraces Retail Sales Model


Spot Check by One Observer Finds Wide Range of Inventory and Placement at Wal-Mart Stores; RFID to the Rescue


By SCDigest Editorial Staff


In June, Dell made big news by announcing it was eschewing its almost exclusive “make-to-order” supply chain model to begin selling and stocking desktop and laptop computers in Wal-Mart stores.

As we noted at the time, this move obviously requires a substantially different supply chain model, along with new skills sets in both supply chain planning an execution (See How Many Supply Chains Does Dell Need Now?).

We were therefore interested to read a piece on the investment web site in which one of its writers made random visits to Wal-Mart stores in the San Francisco area to see how well Dell products were being merchandised there.

The results were mixed, with inventory and merchandising varying substantially from store to store. A store associate at one Wal-Mart said they had received only a single Dell laptop, and having sold it a couple of weeks ago, were unsure when replenishment units would arrive.

The article says that “At all five Wal-Mart stores visited, Dell was a no-show among the out-of-box laptops on display in the PC section, where consumers could inspect machines from the likes of Acer and Toshiba.

The writer, Alexei Oreskovic, further added that “In a couple of stores, Dell had a special glass kiosk display promoting its laptops and the back-to-school theme. But instead of displaying one of Dell's laptops, the kiosk simply featured an "actual size" picture of Dell's laptop. The laptops were all in boxes locked in a cage underneath the display.”

He concluded: “So much for the hands-on shopping experience.” (See Dell Stumbles at Wal-Mart for the full article).

Other stores, meanwhile, had what seemed like an ample supply of Dell desktop PCs on the shelves.

Obviously, getting up to speed on the vagaries of the retail supply chain and in-store execution will take Dell some time, and probably cause quite a bit of frustration for a company used to operating its own supply chain in a very precise manner.

The anecdote also adds another check on the side of the ledger touting the benefits – one might almost say necessity – of improving in-store execution by making merchandising data visible to suppliers like Dell via RFID. As Procter & Gamble’s Dick Cantwell observed in a lengthy interview with Supply Chain Digest earlier this year, “I’ve seen every plan in the book to get better retail execution, and I’ve not seen anything that had ever lived up to its expectations. What RFID does, is it gives you, for the first time, real actionable visibility. It gives you the systems to really know where your products and displays are.”  (See Procter and Gamble "Unplugged" on RFID.)

In other words, Dell marketers would have known about the merchandising and inventory levels in the Wal-Mart stores long before Oreskovic.

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