Michael Dell founded the company in 1984 while he was at the University of Texas at Austin. He began by selling improvements of IBM-compatible PCs and started to sell his own brand of PCs one year later (the Turbo). The concept was very simple: from the beginning Dell's business model was based on direct sales. Taking order by telephone or today thanks Internet, PC's fitted exactly customers' needs by selling computers directly to customers at very competitive prices. This direct business model eliminates retailers that add unnecessary time and cost, or can diminish Dell's understanding of customer expectations.
« At Dell, our approach to innovation focuses on customer requirements. Customers define what is important. Dell innovates internally and through collaboration with others in the industry. Many of Dell's innovations are shared through standards, rather than locking customers into proprietary solutions. Customers gain flexibility and real value. This approach is direct, customer-driven innovation." Kevin Kettler, Chief Technology Officer.
Dell also introduces the latest relevant technologies much more quickly than its competitors. For example, in 1987, Dell was the first computer systems company to offer next-day, on-site product service. Moreover, in 1996, Dell launched its website www.dell.com and customers started buying computers online.
[...] The role of IT and Internet in coordinating Dell's value chain: dell as an e-commerce company Dell uses its own PC-based technology to run its own business. Not only this is a very good marketing tool, it allows also Dell to create an integrated virtual chain with its suppliers and its main partners: the value web in the extent where suppliers and partners are linked electronically. In 1994, Dell saw Internet as a great opportunity to maintain its competitive advantage: first it has no distributors to impede this change (but a one-step link between the retailer Dell and the customer). [...]
[...] But thanks to Information to Run the Business (IRB) distribution is optimized locally and globally. Moreover e-commerce increases the demand for small deliveries to residential places in tighter time slots. Concerning warehousing, as said before when dealing with the technology complex, Dell avoids costly stocks using just-in-time production, i2 solutions and well integrated suppliers' relationships. MARKETING AND SALES: -Internet allows Dell to provide customers self- service tools; they have access to the same information technology available to Dell's employees. -Dell sells its products at the dell.com website. [...]
[...] The Business Process Improvement program is aimed to get every team member involved in creating a superior customer value. ORGANISATIONAL STRUCTURE : team based INDUSTRY STRUCTURE: Dell has a tight supplier base. About 50% of Dell's suppliers contribute to 95% of its total material costs. Dell has long term relationships with its suppliers: only two or three top suppliers have changed in the last three years. The Dell's suppliers have their own website, www.valuechain.dell.com, it helps them to participate in managing the supply chain (they can see material demand and reports on material quality for example). [...]
[...] Dell and the technology complex: the build-to-order business model Dell's build-to-order production (BOT) applies the principles of the lean production and just-in-time which were first developed in Japanese manufactures, like for instance Toyota. It seems to me interesting here to use the technology complex in order to have a holistic approach of all elements that compose the BOT business model. The BTO process involves the entire production cycle and supply chain. PURPOSE: making computers and electronics and accessories products (Desktop computers, Notebook computers, printers, networking products, storage ) as well as providing services (Managed, professional, deployment and support services). [...]
[...] We can here highlight the paradox between Dell's low cost business model and its high innovation rate. I found an explanation of this paradox in an interview of CIO Randy Mott arguing that the company has gradually decreased the number of IT staffers who maintain and support IT systems and those people work in developing new software and new products. So the Dell's business model shows that innovation can be costless just by reallocating more efficiently resources within the organization. [...]
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