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a traditional company
By eliminating the intermediary steps and creating a direct relationship with its customers, Dell is able to substantially reduce the cost of business processes and lower the cost of customers and suppliers.
In addition, Dell also uses the differentiation strategy to cope with the rivalry of competitors. Unlike its competitors, Dell’s built to order model allows customization based on specification of each client’s needs. As Michael Dell has stated, this direct relationship “creates valuable information” about the customer, thus Dell knows who the end users are, what they have bought from Dell and what their preferences are, a fact that allows Dell to offer add-on products and services, and stay, in general, closer to the customer (Kraemer, 2001). As Lawton et al (Lawton, 2001) suggest, this “provides Dell with a wealth of marketing and product development information”. By having such close relationship with its client, Dell is better able to understand what client’s concerns are and thus emerge as a market …show more content…
First, the level of inventories is very small, leading to low inventory costs and faster response to demand changes – for instance, when a new microprocessor comes out in the market, Dell can immediately order it from its suppliers, as there is no excess inventory to get rid of first. Also, it is common that customers pay for an order before Dell pays its suppliers for the product’s components, thus letting Dell operate on a negative cash conversion cycle (Kraemer, 2001). Due to its customized products offered, instead of guessing, Dell knows exactly what its customers want before producing …show more content…
Orders are entered by sales representatives or directly by the customer online into the Dell Order Management System (DOMS). In the DOMS, the order is first routed to the finance department, where the customer’s means of payment is checked. If approved, the order then goes to engineering, which reviews it to be sure that the desired configuration is technically feasible. Then it goes to the plant, where a worker receives a print- out of the order, with complete information on hardware and software configuration and any special requirements. The order is then checked against inventory to ensure that the required parts are available in the build area (Kraemer,
By eliminating the intermediary steps and creating a direct relationship with its customers, Dell is able to substantially reduce the cost of business processes and lower the cost of customers and suppliers.
In addition, Dell also uses the differentiation strategy to cope with the rivalry of competitors. Unlike its competitors, Dell’s built to order model allows customization based on specification of each client’s needs. As Michael Dell has stated, this direct relationship “creates valuable information” about the customer, thus Dell knows who the end users are, what they have bought from Dell and what their preferences are, a fact that allows Dell to offer add-on products and services, and stay, in general, closer to the customer (Kraemer, 2001). As Lawton et al (Lawton, 2001) suggest, this “provides Dell with a wealth of marketing and product development information”. By having such close relationship with its client, Dell is better able to understand what client’s concerns are and thus emerge as a market …show more content…
First, the level of inventories is very small, leading to low inventory costs and faster response to demand changes – for instance, when a new microprocessor comes out in the market, Dell can immediately order it from its suppliers, as there is no excess inventory to get rid of first. Also, it is common that customers pay for an order before Dell pays its suppliers for the product’s components, thus letting Dell operate on a negative cash conversion cycle (Kraemer, 2001). Due to its customized products offered, instead of guessing, Dell knows exactly what its customers want before producing …show more content…
Orders are entered by sales representatives or directly by the customer online into the Dell Order Management System (DOMS). In the DOMS, the order is first routed to the finance department, where the customer’s means of payment is checked. If approved, the order then goes to engineering, which reviews it to be sure that the desired configuration is technically feasible. Then it goes to the plant, where a worker receives a print- out of the order, with complete information on hardware and software configuration and any special requirements. The order is then checked against inventory to ensure that the required parts are available in the build area (Kraemer,