Dell’s build-to-order strategy in the 2000s helped the company turn its inventory problems into a competitive advantage. By building only after receiving an order, Dell cut waste, improved speed, and reduced costs.
Article Brief & Key Nuggets
- Dell used a build-to-order strategy to escape losses from overstock and slow delivery.
- It slashed inventory from 70+ days to just 7, turning the supply chain into a profit engine.
- African manufacturers and distributors can apply the same thinking to beat overstocking, reduce waste, and serve customers faster.
- With small shifts—tight supplier networks, customer-first production, and real-time tech, local supply chains can do more with less.
Old Thinking Keeps Stock Piling Up
Many manufacturers still believe that holding more stock means serving the market better. They build to forecast and ship to the store. However, the problem with this strategy is that those forecasts can and will often go wrong, leaving them with inventory or tied-down capital.
Then the stock gathers dust. Or worse—it expires, rusts, or becomes obsolete.
Dell was also guilty of this. Until it nearly collapsed under the weight of its own warehouse. That was when the company flipped the model. In the early 2000s, the company stopped building PCs based on forecasts and started building them only when someone placed an order.
That one decision forced Dell to rethink everything—how it sourced parts, built products, shipped orders, and talked to suppliers. It didn’t just fix a broken inventory system. It made inventory into a weapon.
Now, imagine what would happen if African businesses copied that play.
Dell’s Build-to-Order Strategy: The Crisis and the Climb
In the 1990s, PC companies stocked thousands of finished computers. But then it became a problem as tech continued to evolve rapidly. A processor or hard drive could become outdated in weeks. And every day those machines sat in the warehouse, they lost value.
Then, Dell’s CEO, Kevin Rollins, called it “watching the machines rot.” The company tried selling through stores. That failed. Inventory piled up, orders slowed, and the losses grew.
By 1993, Dell had 70 days of inventory on hand. And every unsold PC lost Dell 1% of its value per week. So, the company had two choices—keep bleeding or change everything.
Dell’s Supply Chain Revamped Its Inventory Management Style
Dell’s supply chain made a bold call: No more building ahead. No more waiting for customers to buy what was already built. Instead, the company opted to wait for the order before building the PC.
Each one was made exactly how the buyer wanted it. No guesswork. No leftover stock. However, to make this work, Dell needed:
- Parts delivered just in time.
- Suppliers close to the factory.
- Software that tracked every step—live.
- Small, fast teams to build custom orders.
So that’s exactly what the company did:
- Dell moved suppliers close to assembly plants.
- It stopped building to forecast and built to order.
- It carried no finished stock—orders triggered production.
- It synced data between departments, suppliers, and shipping in real time.
- It cut out retailers. Orders came in online, and products went straight to the customer.
The strategy worked like a machine. Inventory dropped from 70 days to 7. Finished goods inventory? Almost zero. Dell’s inventory turned over 60 times a year—far above the industry average.
Yet, the company’s annual revenue jumped from $389 million in 1990 to $25 billion by 2000.
Read more: How Caterpillar’s Supply Chain Playbook Beat The 2014-2016 Downturn.
Lessons from Dell’s Build-to-Order & Supply Chain Reset
Dell’s build-to-order strategy wasn’t magic. It was discipline. Here’s how Dell made its supply chain fast, lean, and profitable—and how the same playbook fits some African industries, especially those in manufacturing
1. Make Demand Lead Production
Dell didn’t guess what people wanted. It waited until they clicked “Buy.” Then it built the machine. This way, the company held only the parts it needed in inventory, and the cost of holding finished goods was also low because they were out almost immediately.
There were no “slow movers.” Every product was already sold. The lesson here is to stop building for warehouse shelves. Start building for real orders.
Example: A solar panel assembler in Kenya could shift to selling customizable kits online. Each order would trigger a build, not a restock. With real demand driving assembly, there’s no overbuild, no warehouse clutter.
However, for this to work, the supply chain must be able to manufacture as quickly as possible to avoid delays.
2. Shrink the Space Between Supplier and Factory
Dell’s suppliers didn’t sit overseas with long lead times. They sat in inventory hubs just minutes from the Dell plant. Dell pulled parts as needed. And suppliers owned the inventory until Dell used it.
This gave Dell speed, but also lower risk, because it wasn’t stuck holding parts that might become useless. So, adopting the principle, you can co-locate your suppliers. Or work with regional partners who can stock what you need nearby.
Example: A Nigerian appliance maker can work with local plastics and electronics suppliers to hold raw materials in a shared warehouse near the factory. Instead of importing all components and tying up capital in customs delays, the company pulls parts weekly, based on order flow.
3. Don’t Sell Through Stores If You Can Sell Directly
Dell’s build-to-order strategy involved cutting out retailers and distributors because direct access to customers was necessary for speed. The middlemen would only bog down the process. And it worked. The company sold online and delivered directly. That meant no middlemen. No markups. And faster delivery.
Customers also got more choices. They could configure exactly what they wanted, right on the website. Direct-to-customer selling cuts costs and avoids unsold goods sitting in retail shops. But only opt for the option if you can handle it. Nike tried the same approach, but it did not work.
Example: A Ghanaian electronics firm can skip traditional retail by letting customers design and order phones online. Pay via mobile money. Assemble on demand. Ship via regional logistics. Direct selling also means better data on customer preferences.
4. Use Tech to Link Everything
Technology in the supply chain is no longer negotiable, especially in the age of AI. Dell knew what to build, when to build it, and what parts it needed because its systems were connected.
- Orders triggered supplier alerts.
- Factories saw demand in real time.
- Customers tracked orders from the factory to the doorstep.
As much as possible, use digital tools, even simple ones, to connect orders to production and suppliers. It speeds up the process and improves the flexibility/resilience of the process.
Example: A local fashion brand in South Africa can use WhatsApp or a simple mobile CRM to track custom clothing orders, trigger cuts at the factory, and alert couriers—all without overproducing styles that may never sell.
5. Focus on Fewer Products. But Offer Options
Dell’s supply chain did not try to stock every PC for every use. It let customers choose their specs from a set of standard parts. This cut the company was able to reduce complexity while still giving customers the illusion of choice.
Always standardize inputs, then customize the output.
Example: A Rwandan furniture maker can design tables using one of three wood types and two leg styles. That reduces material waste but still lets customers pick from options that feel personal.
Read more: Jumia’s Food Delivery Service Shutdown: What Really Happened?
African Supply Chains Can Steal Dell’s Build-to-Order Playbook
African manufacturers and supply chain leaders don’t need billion-dollar factories to copy Dell’s build-to-order model. The core ideas behind its build-to-order strategy are simple. And powerful.
Here’s what you can do today:
1. Cut what doesn’t move.
Review your warehouse. Stop ordering products just because you might need them.
2. Talk to suppliers about stocking near you.
If they can’t co-locate, try shared warehousing or shorter lead contracts.
3. Go direct where you can.
Use digital tools to sell, even if it’s basic mobile commerce.
4. Track what customers actually want.
Use sales data to guide production. Don’t build on guesses.
5. Train your team in lean thinking.
Get everyone asking: Does this step add value, or just cost?
Read more: How Seven-Up’s Distribution Model in Nigeria Revolutionized Delivery.
Stop Watching Your Stock Rot
Dell watched inventory eat its profits—until it built a system that worked backwards from the customer. African manufacturers are no different. Overstock is a silent killer. It locks up cash, slows growth, and punishes risk-takers.
Switch your supply chain and inventory to the build-to-order model. Work closer. Move faster. And let your customers lead your production, not the other way around.
“The longer you keep it, the faster it deteriorates. You can literally see the stuff rot.”
— Kevin Rollins, former CEO, Dell
That’s not just true for computers. It’s true for every business in Africa today.
Obinabo Tochukwu Tabansi is a supply chain digital writer & ghostwriter helping professionals and business owners across Africa explore various strategies that work and learn from the success and failures of various supply chains across the globe. He also ghostwrites social content for logistics & supply chain businesses
