A reorganization announcement by Dell Inc. at the end of December may have dropped off your reading list with the flurry of corporate reorganization and restructuring news these days.  The announcement outlined the fact that Dell will now organize around three global-based business units:

Large Enterprises– headed by Steve Schuckenbrock, currently president of Global Services, and CIO

Public– headed by Paul Bell, the current president of Dell Americas

Small and Medium Business– headed by Steve Felice, the current president of Dell Asia-Pacific and Japan, based in Singapore.

Dell also announced that Mike Cannon, president of Global Operations and supply chain will retire effective January 31. Cannon will be succeeded by Jeff Clarke, who will now become vice chairmen, Global Operations, in addition to his responsibilities for leading Dell’s Business Client Group. Clarke joined Dell in 1987, and has served as Senior Vice President, Business Product Group since January 2003. He was responsible for worldwide engineering, design, development, and marketing of business client products, including Dell OptiPlextm desktops, Latitude, and Precision lines of business.

Let’s do some speculating on what these announcements may mean for Dell’s global supply chain activities, which in the past set the benchmark for agility and responsiveness. 

During the summer, I penned a post commenting on Dell’s efforts toward more outsourcing of factories. I noted that Mike Cannon, being the former CEO of global-based contract manufacturer Solectron, was obviously well familiar with the outsourced manufacturing model.  I also cautioned that such a move could well solidify Dell’s movement away from its ala-carte product offering for businesses and consumers.  It was, in my view, product choice, service and responsiveness that differentiated Dell in the market.  Outsourcing moves in services, repair, and now production, have diluted that differentiation.  A quote from Michael Dell, founder and CEO of Dell notes that over the past two years the company has reengineered its supply chain as well as broadened its product portfolio.  He also states: “Customer requirements are increasingly being defined by how they (customers) use technology rather than where they use it.  That’s why we won’t let ourselves be limited by geographic boundaries in solving their needs.”   For me, this implies a continued need for world-class excellence in global supply chain efficiency as well as maintaining Dell’s former qualities for agility and responsiveness.

This latest re-organization adds a new twist to Dell’s global supply chain strategies. It would now appear that the focus upon centralized worldwide operations has been shelved toward de-centralized supply chain strategies, managed by these new global product business units. I doubt that Mr. Clarke will have a lot of quality time to devote to supply chain direction, given the fact that he now holds two important jobs. 

This decentralized model is somewhat similar to the organizational model that Hewlett Packard moved to about three years ago, where product groups own their own supply chain strategy.  HP was well positioned to make such a move since prior to the change because it had gone to great strides in clearly differentiating each of its required supply chain go-to-market models, and that remains the open question mark for Dell.  I wonder if a globalized distribution model of volume produced products can well differentiate Dell in this new and highly challenged market of mass customization and customer choice..

As always, supply chain capability will be the key, but this entirely different management focus may have to be the future test for Dell.

What’s your view? Does de-centralizing supply strategy within global product groups have merit for overcoming geographic boundaries?  Feel free to share your thoughts in the comments section below.

 Bob Ferrari