Case Study: Dell Computer – Organization of a Global Production Network; Using E-Commerce to Support Its Virtual Company

3370 Words Jan 14th, 2012 14 Pages

Case Study: Dell Computer – Organization of a Global Production Network; using E-Commerce to support its Virtual Company

1.0 Executive Summary

Dell’s Direct Model of selling PCs directly to the consumers, bypassing the distributors and retailers (resellers) channel, has been pioneered and provides distinct advantages over the indirect sales model. Customers have the ability to contact Dell directly and order technologically advanced systems at competitive prices. This direct contact with consumers gives Dell the unique opportunity to know exactly what its consumers want and offer products that would satisfy their specific needs.

To fulfill the orders quickly and in supporting the “Build-To-Order” strategy, Dell has
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Securing long-term relationships with vendors allows Dell to more fully integrate major vendor into Dell’s supply chain management programs. This helps Dell reduce inventories of components, which translate into lower unit costs. Dell also seeks to lock-up supply at the lowest possible cost. Recently Dell signed a long-term supply agreement with Philips for the supply of CRT and flat panel monitors.

• Strong commitment to IT Practices − Pre-installing software for Eastman Chemical, maintaining a corporate asset database for innovational support − Integrating supply chain vendors with more precise demand forecast for business process support. − Premier Pages – customize, buy and track systems, resolve tech issues for operations support.

• Customer Efficiency – Dell has made a serious investment in understanding its customers' activity in real time and then uses this information to constructively build its business and its winning culture. Dell constantly monitored the customer’s shifting preferences, which helped in pricing, inventory management, and cost accounting. Also, Dell’s factory assembly process was highly organized (i.e. bar codes), efficient (i.e. systems were “burned in”) and extremely fast (i.e. 36 hour turnaround) and its customer service was exemplary for the industry.

(a) Start with customer value – Historically, customers were segmented by verticals (e.g., consumer, corporate,

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