Dell Computer Supply Chain - Operations Management

Solution Preview

Explanations and answers with related sources are included in the attachment as well as plain text below.

1. Explain how the organization deals with contract issues, including legal issues, resolving contract disputes, and international contracts.
First of all, the Personal Computer supply chain had significant transformations in the recent decades. The sourcing and manufacturing shifted to countries such as Taiwan and China. Dell is also among many PC makers, or Original Equipment Manufacturers (OEMs), which partner with contract manufacturers in China to take advantage of their labor cost and high product quality. Dell's contract manufacturers (such as Foxconn) produce partially assembled products in China and ship to Dell's factories worldwide for the final assembly.

Let's have a look at how Dell deals with legal and contract issues. Dell's standard "terms of sale" document that comes packed inside the box with every computer contains an arbitration clause. An arbitration clause is a provision that states that you agree never to sue Dell, but instead to use an arbitrator to resolve any disputes that you might have with it.

Let's give an example about a dispute. In 2003, Dell Computer mistakenly posted incorrect prices on the web order pages for two of its products. The company corrected the pricing error three days later, but not before hundreds of consumers had placed online orders at the posted prices. Dell declined to process orders placed at the incorrect prices. This refusal resulted in an attempt to initiate class action proceedings against Dell in the Superior Court of Quebec by a non-profit consumer organization acting upon a complaint by a consumer living in the province of Quebec. The company resisted the proposed class action by invoking the arbitration agreement contained in the terms and conditions page hyperlinked to the Dell website order pages. Finally, the court considered and rejected each of the remaining grounds for challenging the validity of the arbitration agreement. First, the court found that the arbitration clause was not 'external' to the consumer contracts and second, it found that class action proceedings are not a matter of public order.

Dell Computers also pay close attention to security for payment issues, as payments by credit card on the Internet can hardly be called the safest method of payment. Besides, it puts emphasis on international issues, in particular on international ownership ...