Dell Online (Case Study)

Dell Online (Case Study) -

Background (general facts of Case Study)

Dell is a computer company recognized for manufacturing computer systems through parts assemble. In 1983, Michael Dell saw an opportunity in the use of IBM compatible computer for a new assembly line that 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 computer production ", companies had to be able to produce every part of the system. As the industry matured, companies have started to focus on individual parts and become specialized in the creation of objects that can be assembled with other parts to prepare a computer. As a result, Dell realized that to have a competitive edge in the market, they needed to focus on activities that drive the store instead of putting capital into the production of items that other manufacturers are now creating.

servers in 190, the market for revolved around computer desktops, notebooks, and network. Dell has competed with high-end machines IBM, HP, Compaq, and with a product line that supplied the value-priced systems for consumers and highly reliable network systems for businesses. in the late 0's, about 40% of households owned a pC in the United States. On the contrary, the business side, about 80% of companies still had old servers and desktop machines. Management had to approve purchase orders, which resulted in only 2.2% of the servers' sales in comparison to the total desktop PC purchases in 1996.

In order to Dell for $ 7.8 billion sales in the late 0s, he had to skip the traditional channels of use or value-added retailers (VARs) to sell directly to consumers. The "direct model" or as Michael Dell comments on how her new employees call "The model" is not that all the powerful system. It is simply a way for Dell to cut the supply chain cycle as standard and deliver goods directly from producer to customer. They created partnerships with several vendors such as Sony, Intel, and others to effectively provide goods at the time of the end of Dell's facility where the meeting took place. Delivery and shipping were outsourced through a dedicated service which also ensured the delivery of the monitors directly from the supplier at the same time. Mr. Dell talks about how suppliers are benefiting from the fact that Dell buys more than suppliers articles keeping no inventory and only the request for surrender faster on orders.

In 1996, Dell has taken advantage of the growing number of customers using the Internet and launched its online store at dell.com. The online business then has proven to be the most appropriate sales channel that has found the direct supply chain model made by Dell.

On its way to compete in the market, Dell had to provide additional services such as DellPlus that allowed Dell to install commercial software packages, DellWare which provided the hardware and software from other vendors, and after the sale and on-site support services. These actions, as described by Michael Dell, necessary to establish further collaboration, Mr. Dell describes as a process of "trial and error". The integration with partners was changing how technology is constantly changing and many sellers to go volatile, while others are sold. Also, looking for an IT company to build the online store has brought in a few players, which made Dell to accept the overhead of developing the portal in-house.

Enterprise Architecture Issues

• Supply Chain Management: The purchase and the number of transactions that Dell has taken required a business process properly configured and concise.
• In-sourcing: To meet of other companies that may be in partnership with Dell to market demand some parts of the process necessary services.
• Quality Assurance: The computer industry is very dynamic, which makes the quality products stand out in front with the consumer-oriented technology.
• Business Automation: How Dell advanced in the online market, its sales staff feared losing their jobs in favor of automated sales transactions.
• dynamic industry: The technology industry requires closely monitoring consumer tendency to keep a low gap between the application point and the supply point.

Analysis

Supply Chain Management

Supply chain Management (SCM) aims to integrate all business activities to improve relations at all levels (internal operations, supplier networks, and distribution channel) to meet the competitive advantage and meet the customer (al-Mashari and Zairi 00 ) [2]. In order to build an effective and comprehensive business process that supports SCM, of information between all trading partners must be shared. The sharing of information through the Internet to reduce the gap to (B2B) commerce business-to-business, allowing seamless integration with business processes between business partners (Archer, 06) [3].

Dell has developed an internal business process by creating production cells that begin the assembly at the point of order. It 'also set up an internal information system to make the details of the products in production available in electronic format to all parties within the chain. To manage the supply of computer parts, Dell has maintained close relationships with its suppliers and logistics providers to make their suppliers manage the inventory system while Dell focused on product assembly (Kumar and Craig, 07) [4]. In addition, Dell has used the technology to make their enterprise databases and methodologies available to the supplier to understand how Dell. From a consumer point of view, orders placed over the phone or online through dell.com produced a tracking code that consumers can use to track the status of your order at any time through the phone or on the Dell site.

in sourcing

The organizations around the world are benefiting from the specialized services offered by various companies. Shipping and transport arena, companies such as UPS (United Parcel Service) and DHL stand out as masters in their field. UPS and DHL have established offices and transport vehicles worldwide. They provide business services through in-sourcing that allows them to be part of the internal business process of companies (Marcum 07) [5]. For a company like Toshiba, for example, the after-sales support service delivery would require the damaged computer from and to the consumer. For this, UPS would have said: "Look, instead of taking the car from customers, bringing it to our hub, then fly from our hub to the repair center and then fly back to our hub and then from our hub at the home of customer, we try to cut out all the steps in between. We, UPS, will pick it up, fix it, and send it directly to your customer "(Friedman, 06) [6].

Dell understands that it does not need to compete if you do not get the advantage in the market. Michael Dell says you should evaluate the competition area and choose the best. In this context, after-sales services have been contracts with companies that have specialized in this field and can be contacted directly through the integrated power system to meet the demands of consumers. In addition, shipping is handled through multiple shippers to provide consumers or systems to retailers around the world. In addition, Dell has saved the environmental cost of the delivery of the monitor by requiring shippers to deliver from the monitor manufacturer directly to the consumer at the same time.

Quality Assurance

In a competitive environment, companies try to gain an advantage by means that are not necessarily tied to the price. Constraints against outsourcing due to excessive decentralization within organizations can have a negative impact on the value chain process. Combing various options and to be open to diversity would support to increase the speed-to-market and improve product quality (Ernst, 00) [7].

Dell has an operating facility in Penang, Malaysia, which puts Dell in a central location, close to the point where most of the vendors actually have their own factories. Orders for goods arrive directly to the center of Penang through the logistics centers (SLC) in the chain of integrated suppliers' [8]. The center of Penang sends emails to suppliers asking the parts that will be assembled according to the customer order. The entire model has been effective enough to require no more than 36 hours from order to delivery. In terms of quality of service, Dell has won numerous awards for the highest quality. Nevertheless, he continues to find ways to increase the efficiency of its products. Michael Dell has suggested that reducing the human interaction with hard disks in the assembly phase would decrease its failure rate. Consequently, the reduction in the number of "touches" the fall of the 20% failure rate.

Business Automation

The general attitude from individuals and employees within organizations is that automation through IT systems complicate their internal processes, and could result in reducing the number of staff (Khatibi, V.Thyagarajan and Seetharaman 03) [9]. There are several psychological and behavioral problems associated with reluctance to change, which seem to prevent the growth of e-commerce. On the other hand, no longer think retailers their websites are simply an added benefit for its customers as the ROI (Return on Investment) percentages from online sites have far exceeded their brick and mortar counterparts (Casey 04 ) [10]. For this reason, the personnel involved in the traditional sales process requires training to embrace new technologies and to learn how they can benefit from it.

For Dell online store the response from consumers was huge, however, at first the sales representatives were concerned that the online site would reduce the number of offers to sell have closed. To overcome this, Dell has introduced cost-cutting model showing how the online store would support representative close more offers and at the same time would produce cost effective results that would have a positive ROI on the business.

dynamic sector

managing customer relationships (CRM) is a very vital skill that comes from the amount of transactional sales offers via call center. The process of understanding customer goes through the initial phase of data collection and analyzing the trends and finally the building of a knowledge base that will drive profitable relationship (Liew, 08) [11]. Use the CRM models organizations is an attempt to get the first-hand knowledge that would improve marketing effectiveness, bring more personalization, and build brands among other objectives according to the nature of the business (Anderson, Jolly and Fairhurst 07) [12].

model

Michael Dell is based on keeping no inventory, in order to support that Dell have focused on segmenting customers scalable businesses that can be analyzed for their level of demand. Sales managers at Dell used communication skills to obtain information from customers that could further support the expected demand initiatives at the company. In addition, Dell has sent surveys to customers to better understand the level of satisfaction with the services provided by Dell and change its line of products and services accordingly. Also, Michael Dell discussed how regional meetings in different countries have invited potential customers to further enhance the relationship and give room for comments and feedback on Dell services. On top of all this, Dell tried to provide information to its customers to help them make the right choices for their IT needs and get inside information on new and future technologies. Dell has invested in the development of a web portal in the form of "Premier Pages" for high-end customers and another for small and medium enterprises to Dellmarketplace.com [13]. Both sites are meant to provide information to customers and establish a single point of access for IT service needs of customers.

Conclusions

Dell is simply a success story; shows how one can obtain a market advantage, simply understanding what brings value to customers. No one, even Michael Dell himself when he started, he thought that people would enjoy customizing their PC orders and wait patiently for the order makes a return to their homes. Some studies talk about how people questioned the initial delivery estimates provided by Dell to see if they were satisfied.

The level of expansion Dell tried to reach led to problems like with any business growing. However, adapting techniques such as in-sourcing and mutual collaborations benefits reduced its potential personnel from 80,000 to 15,000 only. Dell also was aware of factors that could hamper its supply chain. For example, they have maintained a multiple list of shippers not to be affected by unexpected delays and organizational problems. Moreover, they understood the importance of developing their business systems in-house to check all variables and maintain their business processes.

This is one of the best case studies in IT. I believe that the level of Dell's commitment showed in the model that created it is inspiring. From an editorial point of view, I believe that more highlights on the internal infrastructure of Dell network would help in building an understanding of how the chain of supply actually worked. They used the CRM modules, ERP, SCM, or a combination of all? How did Dell protect its link information with their suppliers, are all mature enough when it came to computer systems?

Recommendations

• Organizations should focus on value-added activities as established online portals for their clients.
• Companies should conduct frequent surveys to measure the level of service they provide and work on improving their products.
• Organizations should decentralize and allow for expansion through global techniques such as out-sourcing and in-sourcing.
• The construction of internal company information systems is the most effective methodology for information and knowledge sharing.
• Establish different points of contact with customers, strengthen relationships and increase satisfaction levels.
global quality standards
• Meeting is the only way to get an edge in a competitive arena.
• Internal organization assessment and training is vital to keep up the spirit of employees and increase their productivity.
• management support and funding is a key element for the success of any implementation information system.

References

1. Joan Magretta, "The Power of Virtual Integration :. Interview with Dell Computers Michael Dell" Harvard Business Review 76, no. 2 (March / April 1998): 72-84, 13, 2.
2. systems Majed Al-Mashari and Mohamed Zairi, "Supply-chain re-engineering using Enterprise Resource Planning (ERP): analysis of an SAP R / 3 implementation case. " International Journal of Physical Distribution & Logistics Management 30, no. 3/4 (00): 296-313
3. Norman P. Archer, "supply chain and enterprise" Journal of Enterprise Information 19, n. 3 (06): 241 to 245.242
4. Sameer Kumar and Sarah Craig. "Dell, closed-loop supply chain Inc. for computer assembly plant" Information Knowledge Systems Management 6, no. 3 (07): 197 to 214.18.
5. Marcum, Jennifer. "In-Source or Outsource?" Bioprocess International, June 07
6. Thomas L. Friedman, The World is Flat (New York: Farrar, Straus and Giroux, 06), 168.
7. Dieter Ernst, "Outsourcing knowledge between organizations: what allows small enterprises in Taiwan to compete in the computer industry "? Asia Pacific Journal of Management (Springer Netherlands) 17, n. 2 (August 00): 223-255, 248
8. Friedman, The World is Flat, 516
9. Ali Khatibi, V.Thyagarajan, and A. Seetharaman, "E-commerce in Malaysia: perceived benefits and barriers. "vikalpa: The journal for Decision Makers 28, n. 3 (July to September 03): 77-82, 6.
10. Bernadette Casey, blacker online. "Monday's in-store Friday" DSN Retail Today, December 13, 04: 13-13, 0.
11. Chor-Beng Anthony Liew, "strategic integration of knowledge management and customer relationship management." Journal of Knowledge Management 12, no. 4 (08): 131-146.
12. Anderson, Joan L., Laura D. Jolly, and Ann E. Fairhurst. "Customer relationship management in retailing: a content analysis of periodic retail trade." Official Retail and Consumer Services 14, no. 6 (November 07): 394-399, 6.
13. Alorie Gilbert, "Dell online target market small businesses." Electronic Buyers' News, 2 October 00: 58, 0.

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