Supply Chain Reaction

Oh, Dell, poor, poor Dell. There are more unpleasant headlines out there this morning about the PC giant. The Wall Street Journal is running a story on the company’s latest attempt to revitalize its business that has now hit a sour note (“Dell's Consumer Focus Hits Snags,” sorry, subscription only).

Dell, which, depending on what research firm you believe, is either number one or number two in PC shipments, has faced a wave of challenges in recent quarters, including an accounting investigation that is forcing the company to restate earnings; a $48.46 million cash compensation payment to former president and CEO Kevin Rollins; and lackluster financial quarters. And let’s not forget increased competition from Apple and its Intel-based computers, which helped the company hit record-breaking sales of Macintosh computers in the most recent quarter. 

Keeping its head above water, Dell has been fighting against these challenges. It brought back company namesake Michael Dell to re-assume the duties of CEO in February and reenergized its commitment to the PC market, bringing its resources back to computers after exploring other consumer markets. Part of this effort, and also a way to stay the growing strength of Apple’s Macs, particularly among younger users, was the recent introduction of laptops cloaked in colors. “Hued Have Thought It? Dell Notebooks In Flamingo Pink!,” reads the Dell press release from June. 

It was a good strategy, especially in the prime back-to-school season when 18- to 20-year-olds have buying power. But it’s backfiring. According to the Journal’s report, Dell has encountered delays in laptop shipments because of paint problems, causing some back-to-school customers to cancel orders and head to their local electronics chains for immediate replacements. Dust contamination apparently caused Dell headaches when it went to volume on these flashy colored laptops. Indeed, Dell has stopped offering its pearl white model because of the dust situation.

In addition, Dell is blaming a shortage of LED back-lit liquid-crystal displays in the electronics supply chain for passed due shipments to customers. This is particularly comical because Michael Dell’s Direct Model concept is based in large part on a flowing supply chain.

The damage is done for the back-to-school season, but can Dell recover its product lines, not to mention reputation, before the holiday shopping season? Share your thoughts below.