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History
Founded by Michael Dell in 1984 The single concept: Selling computer systems directly to customers Designed and built the first computer system of its own design in 1985 Was one of the first computer companies to send a technician to homes to service personal computers in 1985
History
Introduced the 316LT, the companys first notebook computer in 1989 Joined the top-five computer system makers worldwide in 1993 Earning appr. $1 million per day 7 months after the launch of dell.com in 1996 Introduced E-Support, an online tool to provide technical support to customers in 1999
History
For the first time, Dell achieves No. 1 ranking in global market share in 2001
How has Dell used its direct sales and buildto-order model to develop an exceptional supply chain?
Close relationship with customers and suppliers
These relationships with customers and suppliers allow us to know what we must be able to supply in real time and then very quickly and precisely meet that demand while maintaining low inventory. says Dave Schneider, continuous improvement engineering manager of Dell.
How has Dell exploited the advantage of the Internet to improve performance?
Dell established a unique e-commerce model by embracing the Internet in its supply chain.
Dell brings products to market faster than its competitors Customization and quick response
Dell uses direct sales via Internet, whereas Traditional PC manufacturers previously assemble PCs ready for purchase at retail stores.
Dell uses the Internet to sell its products offers a virtually unlimited variety of PC configurations.
Buyers can click through Dell and assemble a computer system piece by piece, based on their budgets and needs
To facilitate B2B sales, the Dell site offers each corporate customer an individualized interface called Premier page
purchasing managers log on and order using an interface customized for their company's needs
While Dells consumer sales are highly visible, its business sales are a much bigger revenue source
About 15 percent of our total revenue is consumer business and the rest is B2B says Bob Kaufman, Media Relations manager of Dell.
Dell constracts special Web pages for suppliers, allowing them to view orders for components they produce. This allows suppliers to plan based on customer demand
Because of direct sales, Dell can collect payments in averagely 5 days after they are sold. However, Dell continues to pay their suppliers according to the traditional billing schedules.
Low level of inventory and negative working capital helps Dell increase its performance.
What is the main disadvantage of Dell selling PCs over the Internet?
Economies of Scale
Dell company cant enjoy EoS (Economies of Scale) in shipping because it sends individual PCs to customers from its factories. Competitors
sell through distributors and middlemen ship their products with EoS using large truck shipments to warehouses and retailers
How does Dell compete with a retailer who already has a stock? (Continued)
Price Advantage
Differentiation advantage
How does Dell compete with a retailer who already has a stock? (Continued) Price Advantage of Dell
Cheaper Prices
How does Dell compete with a retailer who already has a stock? (Continued)
Differentiation Advantage of Dell
How does Dells supply chain deal with the bullwhip effect? (Continued)
Bullwhip Effect
The phenomenon in which order variability is amplified as it moves up the supply chain from end-consumers through distribution and manufacturing to raw material suppliers.
How does Dells supply chain deal with the bullwhip effect? (Continued)
Materials costs account for about 74% of Dells revenues Around $21 Billion is spent on material every year 0.1% Decrease in Material Costs
How does Dells supply chain deal with the bullwhip effect? (Continued)
Flexibility
Conclusion
Mission
High Customization (Mostly based mission on High Customization) Fast Response Lowest Cost (Highest Value) Fast response and cost considerations are not as high as customization considerations.
Benefits
References