Delivering Speed and Flexibility... Tuesday's Dispatch, Global Threats vs. Global Supply Chains (Apr 26), prompted Juan Carlos Rodriguez with NAI Mexico in Tijuana, Mexico, to ask some great questions.

"Are Dell's relationships with its suppliers short-term in nature? What kind of supplier turnover does Dell have? Does Dell make its suppliers compete on every order for its business? Does Dell have long-term relationships with some or all of its suppliers?"

Rodriguez concludes, "I understand that especially in the technology sector, speed and flexibility are key. But there has to be some short to medium-term planning and performance benchmarks. Otherwise, the financial risk and associated costs to support this would be ridiculously high."

We know that Dell completely redesigns its computers every year and constantly adds new features during the product lifecycle. We know that Dell orders components from suppliers every two hours and that Dell continually "shapes demand" by offering specials, sometimes just lasting an hour or two.

So it seems unlikely that Dell would contract for any component more than a year in advance, if that. (Does any Dispatch reader know?) Bluntly put, Dell suppliers will thrive or suffer, depending upon Dell's short-term success.

Bruce Donnelly with Global Direct Investment Solutions in Fox River Grove, IL, ( Chicago) reminds us that service providers are not immune to the pressure of global supply chains.

"A very profitable and helpful service provider can still be quite wasteful, just as a very inefficient low-cost manufacturer can be quite profitable until a more competitive alternative comes along and drives the waste out of the process by changing price and quality expectations. ...

"It's in the service provider's interest to be perceived as something distinct from the relentless pressure on other types of suppliers. ... [But] there is no monopoly of talented people, because smart people can be produced anywhere. So the service sector is going to face great and continual pressure to become more productive, as people are now starting to perceive (outsourcing, etc.)."

--Peter Pike