Case Study: Dell Computer – Organization of a Global Production Network; Using E-Commerce to Support Its Virtual Company
[pic]
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 developed an excellent manufacturing and logistics capabilities supported by information systems that enable it to substitute information for inventory. Dell coordinates a global production network that spans the Americas, Europe and Asia, combining in-house final assembly with heavy reliance on outside suppliers and contract manufacturers.
The use of Internet and E-commerce has further giving Dell a means for extending the reach and scope of its direct sales business model at a relatively low marginal cost. It has done so in part by automating its functions such as product configuration, order entry, and technical support, enabling the company to grow revenues without a corresponding increase in customer service costs. Also, it has used the Internet to coordinate a network of suppliers and business partners who carry out many of the processes involved in building, distributing and supporting personal computers.
In short, Dell's supply chain consists of only three stages— the suppliers, the manufacturer (Dell), and end users.
Dell’s direct contact with customers and its use of e-commerce allows it to:
• offered competitive prices, high levels of support • properly identify market segments, • analyze the
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 developed an excellent manufacturing and logistics capabilities supported by information systems that enable it to substitute information for inventory. Dell coordinates a global production network that spans the Americas, Europe and Asia, combining in-house final assembly with heavy reliance on outside suppliers and contract manufacturers.
The use of Internet and E-commerce has further giving Dell a means for extending the reach and scope of its direct sales business model at a relatively low marginal cost. It has done so in part by automating its functions such as product configuration, order entry, and technical support, enabling the company to grow revenues without a corresponding increase in customer service costs. Also, it has used the Internet to coordinate a network of suppliers and business partners who carry out many of the processes involved in building, distributing and supporting personal computers.
In short, Dell's supply chain consists of only three stages— the suppliers, the manufacturer (Dell), and end users.
Dell’s direct contact with customers and its use of e-commerce allows it to:
• offered competitive prices, high levels of support • properly identify market segments, • analyze the