Dell Online (Case Study)

Published: 18th May 2011
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Background (General Facts from Case Study)

Dell is a computer company recognized for the production of computer systems in parts put together. In 1983, Michael Dell saw an opportunity in using IBM-compatible computers for a new assembly line can be sold to local companies. The idea as explained by Michael Dell, in an interview with Joan Magretta [1] is that in the early days of computers "production, the companies are capable of any part of the system to produce. As mature industry, companies are focus on some parts and specializes in creating items that can be merged with other parts on a computer to prepare. As a result, Dell understood that for a competitive edge in the market, they needed to get concentrate on activities that drive sales rather than capital in producing items that other manufacturers already do.

In the year 1990, the market turned around computer desktops, notebooks and network servers. Dell competing with high-end machines from IBM, HP and Compaq product line with an affordable systems for consumers and highly reliable network systems for businesses provided. In the late 90's, approximately 40% of households owned a PC in the U.S.. On the contrary, from the business side, about 80% of companies had old server and desktop machines. Management had to approve purchase orders, in only 2.2% of the servers' sales resulted in comparison with the total purchases for desktops in 1996.

In order for Dell to $ 7.8 billion from the sale in the late 90's, had to skip the traditional channels of retail or the use of value-added resellers (VARs) to sell directly to consumers. The "direct model" or as Michael Dell remarks about how his new employees as the "model" is not all that powerful system. It's just a way for Dell to cut the standard supply chain cycle and directly from the manufacturer to deliver goods to the customer. They created partnerships with various suppliers such as Sony, Intel, and others to actually deliver goods at the time of the order to Dell's plant where the assembly took place. The delivery and transmission were contracted through a special service also assured supply of the monitors directly from the supplier at the same time. Michael Dell talks about how suppliers benefit from the fact that Dell buys more items from the suppliers hold no inventory and only requesting faster delivery of orders.

In 1996, Dell capitalized on the growing number of customers using the Internet and launched its online store at dell.com. The online business then was the most suitable sales channel supply chain implemented by Dell direct model are matched.

On her way to compete in the market, Dell had additional services, such as DellPlus which is Dell's commercial software packages to install offer dell true what hardware and software from other vendors, and after the sale and on-site support services. These actions, as described by Michael Dell, required establishment of more partnerships, Michael Dell describes as a process of trial and error. "Integration with partners was changing as technology evolves and many venders go volatile, while others blijven sold. Moreover, looking for an IT company's online store brought in very few players, allowing Dell to accept the overhead of developing the portal in-house to build.

Enterprise Architecture Issues

  • Supply Chain Management: The purchase and number of transactions that Dell has the requirement of a properly configured and concise business.
  • In-sourcing: To meet the market demand a number of components of the process requires the services of other companies that may be in partner with Dell standards.
  • Quality Assurance: The computer industry is a very dynamic, quality products stand out when faced with technology-oriented consumers.
  • Business Automation: Dell as advanced in online markets, sales people feared losing their jobs in favor of computer sales.
  • Dynamic Industry: The technology industry requires careful consumer trend of a low point of the gap between the demand and the point of supply is maintained.
  • Analysis

    Supply Chain Management

    Supply Chain Management (SCM) focuses on the integration of all corporate activities to build relationships at all levels (internal operations, supplier networks and distribution channel) to improve competitiveness to meet and satisfy the customer (Al-Mashari and Zairi 2000) [2]. To ensure an effective and complete business process supply chain, information between business partners build supports need to be shared. Sharing information via the internet gap for business-to-business (B2B) trade by enabling seamless integration with business processes among partner companies (Archer 2006) [3].

    Dell developed its internal business processes by creating production cells begin editing at the point of order. Even a single information system to the details of the products to be made under the production electronically available to all parties within the chain. To manage the delivery of computer parts, Dell maintained close relationships with their suppliers and logistics service providers to manage their inventory system, while Dell's focus on product assembly (Kumar and Craig 2007) [4]. Additionally, Dell uses technology to their enterprise database and methodologies available to the supplier to understand how Dell works. On the consumer side, orders made by phone or online at dell.com produced a tracking code that consumers can use to check the status of their order via any time by phone or on the Dell website.

    In sourcing

    Organizations worldwide benefit from the specialized services offered by various companies. In the Shipping and Transport arena, companies like UPS (United Parcel Service) and DHL stand out as masters in their sector. UPS and DHL have offices and transportation vehicles around the world. They offer business services through in-sourcing that allows them to be part of the internal processes of companies (Marcum 2007) [5]. For example, a company like Toshiba would after-sales support service to send the damaged computer and consumer side. Before UPS would say, "Look, instead of us picking up the machine of your customers, allowing it to our hub, they will fly from our hub to your repair facility and then fly it back to our hub and then from our hub to the house of your client, let's cut all the middle steps. We, UPS will pick it up, fix, and send it right to your customer "(Friedman 2006) [6].

    Dell understands that it need not compete unless it would be advantageous to get into the market. Michael Dell says that the field of competition to evaluate and choose the best. In that context, after-sales services were signed with companies specializing in that area and can be accessed directly via the integrated supply system to the requests of the consumers. Moreover, the shipping handled by multiple systems to supply shippers to consumers and resellers around the world. Dell has also saved the cost of overhead monitors' delivery by the requesting shippers to monitor the supplier to deliver directly to consumers at the same time.

    Quality Assurance

    In a competitive arena, companies try to have an advantage through means that are not necessarily related to price. Restrictions on outsourcing as a result of excessive decentralization within organizations can have a negative impact on the value chain process. Combs and various options open to diversification would help to increase speed to market and improve the quality of the products (Ernst 2000) [7].

    Dell has an operational facility in Penang, which Dell places a central position close to where most providers actually have their factories. Orders for goods come directly to Penang center by the integrated suppliers' logistics centers (SLCs) chain [8]. The Penang center sends e-mails to suppliers requesting the items will be compiled based on the customer's order. The whole model is efficient enough to not more than 36 hours from order to shipping. In terms of quality of service, Dell has won numerous awards for the highest quality. Despite that, it remains to find the means to increase efficiency of its products. Michael Dell suggested that reducing the human interaction with hard drives during the installation would not decrease. As a result, reducing the number of "hits" showed the loss of 20%.

    Business Automation

    The general attitude of individuals and employees within organizations through the automation of information systems make their internal processes, and can result in reducing the number of staff (Khatibi, V. Thyagarajan and Seetharaman 2003) [9]. There are several psychological and behavioral problems associated with reluctance to change, that appear to control the growth of E-commerce obstructed. On the other hand, retailers no longer think their websites are just an added benefit for their customers because the ROI (Return on Investment) percentages of online sites are more important than their brick and mortar counterparts (Casey 2004) [10] . For that reason requires the staff involved in the traditional sales process training for new technologies to embrace and learn how they can benefit.

    Dell online store of the consumer response was enormous, but the first representatives feared that the online website, the number of sale deals they closed reduction. To overcome this, Dell introduced the cost model shows how the online store representative would support more business and simultaneously would provide cost-effective results that would have a positive ROI on the business.

    Dynamic industry

    Customer Relations Management (CRM) is a key competency that was born from the amount of transactional sales deals through call centers. The process of understanding customer goes through the first phase of collecting data, analyzing trends and will ultimately build a knowledge base that will drive profitable relationship (Liew 2008) [11]. Organizations use CRM models is an attempt to firsthand knowledge of marketing effectiveness would improve, bring more personalization, and build brands include targets based on the nature of the business (Anderson, Jolly and Fairhurst 2007) [ 12] to get.

    Michael Dell model is based on keeping no inventory, allowing Dell to say that they focused on segmenting customers into scalable business that can be analyzed for their level of demand. Sales executives at Dell uses communication skills to obtain information from customers who would further support the demand forecast business initiatives. Additionally, Dell sent surveys to customers further insight into satisfaction with the service from Dell and accordingly its product and services. Moreover, Mr. Dell discussed the regional meetings in different countries invited potential customers to further enrich the relationship and provide space for comments and feedback about Dell services. On top of that, Dell sought information for its customers to help them make the right choices for their IT needs and get inside information on new and emerging technologies. Dell invested in developing a web portal in the form of "Premier Pages" for high-end customers and small to medium businesses Dellmarketplace.com [13]. Both sites are focused on providing information to customers and the creation of a single access point for customers' IT service requirements.

    Conclusions

    Dell is just one success story, he shows how the market growth by simply understanding what adds value to customers. No one, even Michael Dell himself when he started thinking that people would enjoy customizing their PC orders and waits patiently as his way back to their homes. Some studies talk about how people have objected to the initial delivery estimates from Dell to see if they were satisfied.

    The level of expansion of Dell strived to reach brought into problems as with any growing company. However, by adapting techniques such as in-sourcing and mutually beneficial partnerships, the reduction potential of its staff from 80,000 to only 15,000. Dell was also aware of factors that would impede the supply chain. They probably always be a list of several shippers not to be affected by unexpected delays and organizational issues. Moreover, they understood the importance of developing their own business systems in place all the variables to monitor and maintain their business.

    This is one of the best case studies in the IT industry. I believe that the level of commitment demonstrated in the Dell model he created is inspiring. On the editorial side, I believe more highlights on the internal network infrastructure from Dell would have helped in building an understanding of how the supply chain actually worked. Did they use CRM modules, ERP, SCM, or a combination of everything? How did you secure information to link with its suppliers, were all mature enough when it came to information systems?

    Recommendations

  • Organizations should focus on value added activities such as setting up online portals for their customers.
  • Companies must conduct frequent surveys to their level of service and work on improving their products to be measured.
  • Organizations need to decentralize and to expand through techniques such as global outsourcing and in-sourcing.
  • Building Enterprise Information Systems is the single most effective method for exchanging information and knowledge sharing.
  • Establishment of multiple touch points with customers, strengthening the relationship and increases the level of satisfaction.
  • Meeting global standards is the only way to get an advantage in a competitive arena.
  • Internal organizational assessment and training is vital to the high spirit of the workers to maintain and increase productivity.
  • Management support and funding is an important element in the success of any information system implementation.
  • References

  • Joan Magretta, "The Power of Virtual Integration: An Interview with Dell Computer Michael Dell." Harvard Business Review 76, no. 2 (March / April 1998): 72-84, 13, 2.
  • Majed Al-Mashari and Mohamed Zairi, "Supply chain re-engineering using enterprise resource planning (ERP) systems: an analysis of a SAP R / 3 implementation case." International Journal of Physical Distribution & Logistics Management 30, no. 3 / 4 (2000): 296-313
  • Norman P. Archer, 'supply chains and the firm "Journal of Enterprise Information 19, no. 3 (2006): 241-245, 242
  • Sameer Kumar and Sarah Craig, Dell Inc. 's closed loop supply chain for computer assembly plants. " Information Knowledge Systems Management 6, no. 3 (2007): 197 to 214.18.
  • Marcum, Jennifer. "In-source or outsource?" BioProcess International, June 2007
  • Thomas L. Friedman, The World Is Flat (New York: Farrar, Straus and Giroux, 2006), 168.
  • Dieter Ernst, "Inter-organizational knowledge outsourcing: What Permits Small Taiwanese firms to compete in the computer industry," Asia Pacific Journal of Management (Springer Netherlands) 17, no. 2 (August 2000): 223-255, 248
  • Friedman, The World is Flat, 516
  • Ali Khatibi, V. Thyagarajan, and A. Seetharaman, "E-commerce in Malaysia: perceived benefits and barriers." Vikalpa: The Magazine for Decision Makers 28, no. 3 (July-September 2003): 77-82, 6.
  • Bernadette Casey "Online Monday blacker than in the store Friday." DSN Retailing Today, December 13, 2004: 13 to 13.0.
  • Chor-Beng Anthony Liew, "Strategic integration of knowledge management and customer relationship management." Magazine for Knowledge Management 12, no. 4 (2008): 131-146.
  • Anderson, Joan L., Laura D. Jolly, and Ann E. Fairhurst. "Customer relationship management in retailing: a content analysis of retail trade magazines." Journal of Retailing and Consumer Services 14, no. 6 (November 2007): 394-399, June.
  • Alorie Gilbert, "Dell's online marketplace focused on small businesses." Electronic Buyers' News, October 2, 2000: 58, 0.


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