Dell tackles LCD shortages

Dell tackles LCD shortages

Dell has taken steps to ensure it can fulfil customer demand for LCD monitors and the promises it makes in its prominent marketing campaigns.

The company has sourced 17-inch LCD monitors from several third-party vendors since late 2003.

In the lead up to Christmas, Dell launched a large advertising campaign for 17-inch LCDs which proved successful until the vendor ran out of stock.

Like other LCD vendors, Dell has taken several strategic initiatives to try and direct consumers away from 15-inch panels, stocks of which are seriously depleted by long-term supply shortages, towards 17-inch LCDs.

In order to fulfil the promises it made in its advertising, Dell put a tender out towards the end of last year asking third-party LCD vendors to supply Dell with 15-inch and in particular 17-inch LCDs, multimedia devices product manager for Philips Australia, Lisa Coggan, said.

“It was a case of we need LCD supplies in two weeks or not at all and we need as many as you can spare," she said. "It sounded fairly desperate.”

Coggan said that although Philips could not have foreseen Dell’s request for stock, the company was aware that PC manufacturers were going to start looking at third-party monitors because of the shortage.

PC manufacturers frequently have to play second fiddle to home automation manufacturers when it comes to sourcing raw materials for LCDs as the home sector offers greater margins to the component manufacturers.

“We anticipated a shortage in the 17-inch and had been stung by the 15-inch shortage in July [2003] so we made sure we had sufficient stock over the Christmas period. There are still constraints on LCD panel supplies so we’ve been working closely with our distributor partners conducting demand forecasts.”

While other LCD vendors are struggling to meet demand and are burying themselves in back orders, Dell has been taking aggressive steps to ensure it can fulfil its customers’ demands through its partnerships with third-party vendors.

Coggan said: “What I’m hearing is that Dell are looking at how they manage their supply chain quite closely. The way they leverage their relationships with monitor manufacturers such as Philips is probably going to change. What happened at the end of last year seems to suggest that it might.”

According to a Dell insider, the company had no Dell-branded 17-inch LCD stock left and had been referring customers to OEM vendor and Dell LCD supplier, Samsung.

A Dell spokesperson said that orders for individual monitors had been fulfilled using Samsung product for the past few weeks.

However, a Dell customer told ARN that he was given a written referral to source the product from Philips.

“The impression in the market is that Dell is suffering [from the shortage] to a point but you have to realise that vendors will always try to test the market and there is always some kind of strategic initiative behind their moves, IDC associate analyst, Michael Sager, said.

“Any vendor that’s trying to get outsourced product is also trying to gain an understanding of what the market is like.”

Most recently, Dell has been aggressively advertising its PC systems with CRT monitors.

For a complete analysis on the LCD shortage, and more on Dell's strategies to deal with the issue, see this week's coming edition of ARN.

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