It could have been the unforeseen catastrophe that rocked Dell’s world. Instead, it proved to be the moment when Dell’s foremost competitive weapon — an unrelenting sense of urgency and speed — ultimately proved itself.
Two years ago, a 10-day labor lockout idled 10,000 union dockworkers, shut down 29 West Coast ports extending from Los Angeles to Seattle, and blocked hundreds of cargo ships from unloading the raw materials and finished goods that fuel U.S. commerce. The port closings paralyzed global supply chains, bloodied retailers and manufacturers, and ultimately cost U.S. consumers and businesses billions.
Analysts expected that Dell, with its just-in-time manufacturing model, would be especially hard hit when parts failed to reach its two U.S.-based factories. Without warehouses filled with motherboards and hard drives, they figured, the world’s largest PC maker would simply find itself with nothing to sell within a matter of days. And Dell knew all too well that its ultralean, high-speed business model left it vulnerable to just such an intolerable prospect. “When a labor problem or an earthquake or a SARS epidemic breaks out, we’ve got to react quicker than anyone else,” says Dick Hunter, the company’s supply-chain czar for the Americas. “There’s no other choice. We know these things are going to happen; we must move fast to fix them. We just can’t tolerate any kind of delay.”
Fortunately, the same ethos of speed and flexibility that seems to put Dell at the mercy of disruptions also helps it deal with them. Dell was in constant, round-the-clock communication with its parts makers in Taiwan, China, and Malaysia, and its U.S.-based shipping partners, who alerted it to the possibility of a lockout some six months before it occurred. Hunter dispatched a “tiger team” of 10 logistics specialists to Long Beach, California, and other ports; they worked hand in hand with Dell’s carrying and freight-forwarding networks to assemble a contingency plan.
