Dell Computer is a innovator in the e-commerce computer hardware market. It really is a recognised brand leading personal computer manufacturers both in U. S. sales and overall online sales. Its trademark method of providing products to customers, commercial and specific consumers, originates from the Dell Direct model, a Web-enabled infrastructure that allows customers to customise their PCs and order other products they want or desire. This online integration structure eradicates the necessity to produce everything, and instead uses the power of the web to share and exchange information with suppliers and sellers to build a truly superior supply chain that retains inventory turnover low and costs to the very least (Harrington, 2002).
The key method Dell uses in order to attain and preserve their competitive benefits is a distinctive, direct to customer business design (Dell, 2007). The model is known as Dell Direct, referring to the relationship between the company and its own customers to be "direct. " This model helps Dell focus on price for customization, service and support, performance, latest technology and superior shareholder value. Also, Dell can differentiate itself from its competitors with its personalized on- demand processing. Through customisation of the merchandise created by dell, the business has the capacity to offer more value your money can buy of its customers due to the removal of the intermediaries in the manufacturing, procurement and circulation operations of Dell.
Dell's most important resources include the most advanced technology, that allows the company to efficiently move along their superior supply string and achieve the value they shoot for. Dell's value string allows Dell and its own suppliers to exchange information and interact with each other. THE WEB, Dell's important IT element in its success, leads to lower costs to customers than other retailers, the customers notify Dell just what they want and Dell creates products for the buyer without experiencing wasteful resources in production (Breen, 2004).
Overall, it is evident that Dell's competitive benefit lies in its Direct model success. Through Dell's IT performance, which combines its resources, its romance with suppliers and its own consumer communication capabilities, Dell has achieved a big benefit over its competitors.
Analysis of Dell's Competitive Edge:
Dell provides the tag of being, one of the best personal computers company on the planet. Dell is able to support a competitive advantage over opponents in the computer industry because of an extremely efficient supply string/distribution system. Dell can achieve superior income in the industry because they are a knowledgeable end user of information, communication, e-commerce, e-business, internet, and web systems.
Dell implements a Just-In-Time inventory system which performs on only 6 times of inventory. Dell can achieve greater income and increased income because of their inventory system. Inventory and labor will be the highest liabilities of a company. Working only with 6 times of inventory, allows Dell to lessen its expenses on recruiting people to track and maintain inventory, warehousing, and securing to outdated technology. This enables Dell to free up cash flow to purchase other value adding activities.
The direct Model strategy compels the company to employ a JIT inventory system, as the customers are only permitted to order directly from Dell. Dell uses their website www. Dell. com to consider customer's orders. The organization focuses on direct sales, cutting out other circulation channels entirely. This allows for a deeper marriage with the customers whereby Dell may offer their customer's better service, personal savings, convenience, and efficiency.
Dell's use of the internet has revolutionized the business. Dells extremely consumer friendly website supplies the customers to put their orders with ease. The different "Premier Internet pages" on Dells website suitable for Dell's large accounts like firm, educational corporations and Government, gives easy navigation, energetic price enhancements and wide selection of available choices. Customer romance management software maintains close tabs on the types of personal computers that customers are buying.
Not only will Dell use the internet to make the customer placing your order process easier. They also use the internet to construct better relationships with their suppliers. In order for Dell to work from 6 days and nights of inventory, their suppliers have to be very involved in the company to ensure superior service is fulfilled. The use of art production planning programs assist in predicting the quantities of components needed to build the personal computers. The forecast is handed to the supplier, who reply with cost estimations and plan their production because of this.
Dell's e-commerce is an enormous part of these competitive benefits. Their e-commerce internet infrastructure is so advanced and educated that by it to determine trends and demands of their products, they have got gained superiority over their competition.
Dell has setup tactical alliances with others to own their products sold on Dell's direct selling distribution route. Back 2000, Hand, Inc. made an contract with Dell to provide an expanded line of handheld Hand products and accessories. This arrangement allowed Dell to drive momentum for the Hand operating system market (Dell: 2000, April 17). Along with Palm, Xerox also partnered with Dell to have benefit of Dell's e-commerce. Benefits to Xerox were increased revenue by offering the printers with the Dell personal computers. Advantages to Dell include selling high quality printers along with their computers, but more importantly, it allowed Dell to be involved in the client buying process for printers. Being involved in the decision making process is the main element to Dell's success because they see immediately what the clients want and determine their development program from that information (Dell: 2000, May 22).
Dell achieves its competitive edge over other organizations in the industry by having superior supply chain management. Dell utilizes technology to interpret information. When you are mixed up in customer buying process they are able to determine their customers' needs. This allows Dell to streamline production and also have close relationships with their suppliers which results in getting well-timed deliveries in order to mass customize customer's computer systems.
Analysis of Dell's BUSINESS DESIGN:
The four market segments in a industry are thought as Business to Business, Business to Consumer, Consumer to Business, and Consumer to Consumer. Dell targets Business to Business and Business to Consumer commerce to satisfy their business and specific customers. Dell differentiates between classes of customers because the needs of these business customers, who buy large quantities of computers, are different than the those who want to configure an individual unit. "Dell's business design is no top secret, of course, and it's really been emulated with considerably less success by many of its opponents (Henricks, 2003). "
Dell's preliminary success was due to its early implementation of the internet as the means of sales and marketing. "Dell's direct-to-the-customer strategy presents an extremely attractive cost benefits that's rough to ignore. Their direct interaction using their customers is still "a key drivers in sales for the quarter (2000). " Dell's early on work with utilising the web helped them get a join their competition while their competition was finding it difficult to conduct successful Business to Business procedures online since "exchanges are still in their infancy and many haven't even ended up live yet. Matching customer ease of ordering and direct interaction through the internet proven successful because Dell believes that it's the client that drives the business model.
Dell acknowledged the challenges in working with the customers and fragmented them into two distinctive communities with different needs, working with the business customers (like businesses) and working with specific customers. Dell did a exceptional job managing both of these different kinds of consumers so far. Within the last year or two, Dell made a decision to split their procedures into two different websites with different B2B sites. With distinct sites, Dell planned to "simplify the Internet procurement process for businesses and organizations of all sizes, generating personal savings that can range to huge amount of money annually for large customers (1999). " However, this notion failed, and "Dell were required to turn off its B2B site, four months after it launched. Dell said "the website failed to appeal to more than three suppliers".
Recommendations to construct sustainable competitive benefits in future:
After analyzing Dell's IT and their competitive advantage therefore of these advanced and successful IT, it was challenging to create suggestions to help them achieve more success in an industry that they already prosper in. However, despite having Dell's current success, we realize that within an ever-changing technology industry, there's always room for improvement.
1) Dell should consider selectively adding other suppliers to its supply chain management system. Due to the increase in Dell's global sales, Dell might need to consider to selectively adding additional suppliers to their supply string management system. The additional suppliers shouldn't bring about any significant cost to Dell and Dell might be able to negotiate better aspect costs from new suppliers. New suppliers would want to participate in this exchange because they might be seen doing business with a respected technology company
2) Use "Customer Surveys" to get market show. Although Dell does well in its marketplaces abroad, Dell has lost some domestic market share and has more potential abroad. It's important for Dell to market and get their products noticed in international markets. In order achieve this goal, in-depth customer satisfaction surveys should be utilized in markets where they trail their competition. .
3) Invest more in Research and Development. With all the expansion of quality competition, it is crucial for Dell to keep its competitive benefit by offering new technology products and services. Dell should consider extending into peripheral product marketplaces that would compliment their computer sales.
4) Dell can offer online data back-up capabilities. Another way to increase revenue is to offer existing customers (business and specific consumers) back-up capabilities on Dell's own servers. This process will have advantages of both consumers and Dell. For consumers, especially businesses, if something happens with their plants and computer systems, they can always retrieve their data from Dell who have their information supported offsite on their system. By keeping their data preserved at another location that is managed by Dell, Dell can generate income by charging because of this additional service. Dell also has a built-in customer list predicated on the sales that they lead to computer systems.
5) Enhance customer support services. Since successful customer care and communications are necessary to Dell's success, it's important that Dell helps to keep enough well-trained people on the phones and on the web for customer support. Predicated on the results of some surveys that say that Dell might be dropping customers because of genuine or perceived reduction in support, Dell should do a cost-benefit analysis to determine if they should spend money on more people who is able to answer technical questions & support customers using their problems and needs.
References:
Dell. com, Dealer Principles: Supply String Management System, 2007, seen 9th April 2011
Harrington, L, The Accelerated Value String: Supply chain management just got smarter, faster and more cost-effective, because of a groundbreaking alliance between Intel and i2 solutions, 2002
Breen, Bill, Living in Dell Time. Fast Company, 2004, seen on 10th April 2011,
