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According to media reports and industry sources, UPS is no longer the default option for home deliveries of Dell computers, as the electronics firm is looking for new selling models to reverse its flagging fortunes.
Dell has used UPS for many years to deliver its products, but it did not renew its contract when it expired in April. By some estimates, moving the computer maker's products was worth some US$150 million in revenues for the integrator.
Neither Dell nor UPS commented on the matter. Industry sources confirmed that Dell recently used DHL for some deliveries in the US.
Dell has been working to overhaul its business model since early this year, when company founder Michael Dell returned to the company and assumed his old CEO role after the firm had suffered some setbacks last year. Problems with faulty batteries led to a costly recall of notebook computers last summer, and rival Hewlett-Packard overtook Dell as the world's largest computer manufacturer.
The founder's return signalled an even greater focus on logistics than previously, although Dell's direct model had already put a lot of emphasis on supply chain management.
"As we continue to grow worldwide, it is important that we increase our ability, via the direct model, to manufacture close to our customer and fully integrate our supply chain into one global organisation. This will allow us to drive for even greater excellence in quality, cycle time and delivered cost," Dell said on his return in January.
The company subsequently moved to integrate manufacturing, procurement and supply chain activities under the umbrella of a new global operations unit.
Dell runs nine manufacturing locations in five countries. New production facilities are planned in Poland, India and Brazil.
However, the company's overhaul did not stop there. Dell recently announced an agreement with Wal-Mart to sell computers in the giant retailer's outlets. It was planning to have two computer models available at some 3,000 Wal-Mart outlets in the US, Canada and Puerto Rico this month. This is supposed to be the first step in the creation of several partnerships with retailers to sell Dell products in stores around the world. For the company that pioneered the direct model, this marks a drastic change.
"The direct model has been a revolution, but it is not a religion," Dell said in a memorandum to staff.
It is unclear whether these developments had any impact on the role of UPS in Dell's supply chain strategy and the break-up of their long-standing co-operation. According to industry sources, the two sides failed to come to an agreement on pricing. UPS raised its express rates at the beginning of this year, increasing both ground and air express prices on average by 4.9 percent. |
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