For the exclusive use of E. Atolagbe, 2019. case Ravi Anupindi June 18, 2018 Andrew Hoffman W91C21 Dell: Upcycling Ocean Plastics Through Supply Chain Innovation Piyush Bhargava, vice president of global operations at Dell, glanced out his office window. It was a sunny and hot late-August day in Round Rock, Texas in 2017. The sunshine reminded him of the beaches in Indonesia and he could not help but wish he were back there where his goals seemed much more straightforward. It was not long ago that he and his team had been in South Asia surveying the availability of ocean plastics waste, meeting with processors, and enjoying more than their fair share of bakso.i Indeed, the trip to Asia had been a huge success. The team, supported by two University of Michigan Tauber Institute for Global Operations1 interns, had not only proven that incorporating ocean plastics into Dell’s packaging for products was feasible, but that doing so could deliver both meaningful cost savings over conventional sources of plastic and a substantial diversion of waste from the oceans. Bhargava had been happy to see the results but he also knew now that the real work was only just beginning: developing and certifying the supply chain that the team recommended and finding ways to utilize meaningful volumes of ocean plastics, through both Dell products and packaging and creative partnerships with other companies. Even by the most conservative estimates, millions of tons of plastic enter the ocean every year. The scope of the environmental crisis was staggering and it would take a concerted effort well beyond Dell’s scale to fully address the problem. Bhargava glanced back at his computer. His Chief Supply Chain Officer, Kevin Brown, wanted a strategic plan for how to proceed with the Ocean Plastics Initiative by the following week. But even with the recent successes, there were still many unknowns. Dell prided itself on being a leader in both packaging innovation and supply chain management, but this latest initiative would test its mettle in both. The list of internal stakeholders from whom Bhargava needed buy-in to make the ocean plastics supply chain operational and certified was staggering. Even more challenging, Michael Dell had a vision of the ocean plastics supply chain being open to any company interested in following suit, and to that end Dell was positioning itself to lead a consortium of like-minded companies to drive major demand for ocean plastics. i A traditional Indonesian meatball soup dish. Published by WDI Publishing, a division of the William Davidson Institute (WDI) at the University of Michigan. © 2018 Daniel Partin, Luke Sawitsky, and Allison Ward. This case was written by University of Michigan graduate students Daniel Partin, Luke Sawitsky, and Allison Ward under the supervision of Andrew Hoffman, Holcim (US) Professor of Sustainable Enterprise, and Ravi Anupindi, Colonel William G. and Ann C. Svetlich Professor of Operations Research and Management, at the University of Michigan’s Ross School of Business. The case was prepared as the basis for class discussion rather than to illustrate either effective or ineffective handling of a situation. The case should not be considered criticism or endorsement and should not be used as a source of primary data. This case is based on the 2017 Tauber Institute for Global Operations summer internship project that won first prize in the 2017 Tauber Spotlight! Team Project Showcase and Scholarship Competition. This document is authorized for use only by Ezekiel Atolagbe in OPMT 620 Winter 2019 taught by LARRY EARNHART, University Canada West from Dec 2018 to Jun 2019. For the exclusive use of E. Atolagbe, 2019. Dell: Upcycling Ocean Plastics Through Supply Chain Innovation Dell’s communications campaign around the Ocean Plastics Initiative had been a huge success and its unique approach to the problem was well received by the public. Carly Tatum, Dell director of communications, happily reported that the initiative already had two billion media impressions. Several publications were running articles about the pilot Dell had conducted in Haiti as a proof of concept for incorporating ocean plastics into its packaging, and Michael Dell himself was posting his support on Twitter and LinkedIn (see Exhibit 1 and 2). Bhargava knew all too well, however, that this publicity would also bring scrutiny and raise expectations, and that the company would really need to demonstrate that its efforts were making a difference for ocean health—what the corporate sustainability team referred to as delivering “additionality”.ii On top of all this was Dell’s pledge at the United Nations Oceans Conference in June 2017 to increase ocean plastics usage tenfold by 2025 as part of Dell’s commitment to the UN’s Sustainable Development Goals.2 The pressure to deliver was truly “on.” Bhargava reflected on this and opened the slide deck he would present at the end of the week. The question before him was not only what an operational ocean plastics supply chain should look like at scale, but how should Dell approach developing a consortium of companies to ensure meaningful demand for the material? He knew it would be a stressful endeavor, but he hoped that the impact he could deliver for both Dell and the oceans would make it all worth it. Exhibit 1 Michael Dell Tweets About Ocean Plastics Source: www.twitter.com/MichaelDell. Accessed 22 May 2018. Exhibit 2 Michael Dell Authored LinkedIn Article on Ocean Plastics Source: www.linkedin.com/pulse/ocean-plastics-problem-we-can-solve-together-michael-dell/. Accessed 22 May 2018. Dell Technologies: Company Background Dell Technologies (previously Dell Inc.) was a large, privately held company based in Round Rock, Texas, in the Austin metropolitan area, that provided consumers, industry, and government customers with a range of technology products and service solutions. In 1984, founder Michael Dell began selling specially configured computers out of his University of Texas dorm room. It was here that the company was born. The ii Typically applied to carbon offset markets, “additionality” is the concept that an intervention has a demonstrable effect when compared to an alternative baseline or status quo. 2 This document is authorized for use only by Ezekiel Atolagbe in OPMT 620 Winter 2019 taught by LARRY EARNHART, University Canada West from Dec 2018 to Jun 2019. For the exclusive use of E. Atolagbe, 2019. Dell: Upcycling Ocean Plastics Through Supply Chain Innovation direct sales model of “build to order” and “configure to order” was a significant disruption in the technology industry and helped Dell become a leader in supply chain development. In 2008, Dell announced that it was entering the retail business and restructuring its supply chain toward outsourcing large amounts of manufacturing. This shift was due to an evolving consumer market requiring multi-dimensional supply chains to meet the needs and demands of all customer segments. After being public since 1988,3 Dell went private in 2013 in a $24-billion deal that removed it from the NASDAQ stock exchange.4 In 2016, Dell Inc. acquired EMC (now Dell EMC) in the largest technology deal in history, forming Dell Technologies and expanding into the server and cloud computing markets.5 In 2017, with 140,000 employees, Dell was the third-largest PC vendor in the world by market share (see Appendix A), and a market leader in 21 other information technologies, hardware, or services spaces in which Dell operated (see Appendix B). A History of Innovation Dell had a history of both industry-leading and environmentally impactful innovations, especially in the packaging domain. Using its “3 Cs Strategy” of focusing on the cube (size and shape), content (material choice), and curb (recyclability), Dell led the incorporation of sustainable materials into packaging. In 2009, Dell replaced petroleum-derived foam with bamboo harvested near its manufacturing facilities; then in 2011, cushions that were “grown, not made” inspired mushroom packaging, which reduced the size of the packaging footprint and could be used for heavier shipments in North America. The success of these material substitutions allowed Dell to push the boundaries further, most recently with ocean plastics packaging. An evolution toward ocean plastics marked a shift from elements that “do no harm” toward a strategy that focused on actively improving the current environment.6 Sustainability at Dell Throughout its growth, Dell prided itself on keeping the entrepreneurial mindset that originally inspired Michael Dell. To maintain this mission and commitment to the environment, the company developed a sustainability and corporate responsibility plan called the 2020 Legacy of Good7 (see Exhibit 3). This document outlined a strategy of using technology to create a positive impact through environmental and social milestones for the business and offerings to create a positive effect on the environment, communities, and people by adding 10 times the amount of “good” when compared to the footprint that the technology created. The commitment started with Dell’s own operations, addressing the efficiency with which it delivered technology solutions worldwide. It expanded to the company’s supply chain, where Dell sought to ensure consistent, transparent environmental and social stewardship of its partner companies around the world. Finally, it provided customers with solutions that gave them the power to do more while consuming less.8 “Our aspirations and goals for 2020 reflect our approach of considering the environment at every stage of technology’s life-cycle—from design through end of life—and then measuring the impact to inform future efforts. Together they form the interconnected, inseparable components of our work to make a positive impact on the world we share.”—Dell 2020 Plan The 2020 Legacy of Good goals outlined several key metrics that would eventually reinforce Dell’s progression toward the Ocean Plastics Initiative.