Supply Chain Star Dell Announces Shift Toward More Ocean Freight, Reports The Journal of Commerce

NEWARK, N.J., April 26 /PRNewswire/ -- Computer giant Dell, which set the supply chain standard for speed with its build-to-order business model, is advancing a new strategic approach and philosophy that will shift huge numbers of shipments from air to ocean, a fundamental change that, for a leader in logistics, could set a touchstone for distribution in the technology, The Journal of Commerce reports in this week's cover story.

(Photo:  http://www.newscom.com/cgi-bin/prnh/20100426/NY92942 )

Dell's diversification from strictly direct-to-consumer sales to include more retailers has led to increased outsourcing and a recent announcement to begin to move from costly air to slower ocean freight. If it is successful the practice will likely become more common, as the company strives to compete with rivals such as Hewlett-Packard, which replaced Dell as the world's No. 1 computer maker and relies heavily on ocean shipping.

However, the shift in Dell's core supply chain management business model comes with risks – damage, order cancellation, product value decline during shipment – as well as higher inventory carrying costs. Dell's inventory turns — a formula dividing the cost of goods sold by its average quarterly inventory — are its shining star and one that stands to fade with a longer supply chain.

In today's Cover Story, The Journal of Commerce analyzes the potential impact of Dell's supply chain shift on the company, its suppliers and the shipping world.

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Since 1827, The Journal of Commerce has been the most trusted source of intelligence for international logistics executives to help them plan global supply chains and better manage day-to-day transportation of goods and commodities in the United States and internationally.

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SOURCE The Journal of Commerce