Dell Online (Case Study)

Background (General facts from Case Study)

Dell Computer Corporation is to mount a production of computer systems through recognized parts. In 1983, Michael Dell saw an opportunity with the help of IBM-compatible computers for a new assembly line that can be sold to local businesses. The idea, as it is by Michael Dell, in an interview with Joan Magretta [1], that in the early days of production of computers, companies will be able to produce all parts of the system. Asthe industry matured, companies began to focus on individual parts and in the creation of products that can be combined with other components to prepare a computer to be specialized. As a result, understand that Dell have a competitive advantage in the market, they needed to focus on activities that drive revenue commitment, rather than capital in the production elements, the others are already producing the creation.

Turned in the 1990s the computer market for desktops, notebooks and servers in the network. Dellcompete with high-end machines from IBM, HP and Compaq with a product that provided value-prices for consumers and reliable systems for networked businesses. In the late 90s, around 40% of households had a PC in the U.S.. On the contrary, from the business side, about 80% of the companies nor the old server and desktop machines.'s Management had the purchasing orders, which only 2.2% of the sales server "resulted in comparison to the total purchases approveDesktop PCs in 1996.

To get Dell $ 7.8 billion from sales in the late 90s, was it the traditional way with the retail or value-added resellers (VARs) to skip from selling directly to consumers. The "direct model" or as Michael Dell comments, as his new employees call it "The Model" is not that all powerful system. It is simply a way for Dell to the standard supply-chain-cut cycle, and deliver goods directly from factory to customer. Theycreated partnerships with several vendors such as Sony, Intel and other goods delivered effectively at the time of order to work from Dell, where the meeting took place. Delivery and shipping are outsourced by an attentive service, the insured also provides the monitors directly from the supplier at the same time. Michael Dell talks about how providers can benefit from the fact that Dell buys more items from the suppliers to hold no inventory and only requesting faster deliveryfrom the contracts.

In 1996, Dell on the growing number of customers who activate over the Internet and launches its online store at The online company then turned out to be the most appropriate distribution channel that the supply-chain model tailored directly implemented by Dell.

Compete in their way to the market, Dell had to provide additional services such as Dell Plus, that Dell on commercial software packages, which provided Dell products capable of installing hardware and softwareother providers and after-sales and on-site support services. These measures, such as Michael Dell, more needed to form partnerships that Michael Dell describes as a process of trial and error "below. The integration with partners changed the technology develops and sells many sellers go casual, while others remain. It also will be on the lookout for an IT company in building the online store in just a few players, the Dell accept the overhead for the development of the portal that broughtin-house.

Enterprise Architecture Issues

Supply Chain Management: The acquisition and the number of transactions that Dell has demanded a properly configured and concise business process.
In-sourcing: To meet the market demand for some parts of the process requires the services of other companies, in partnership with Dell.
Quality Assurance: The computer industry is a very dynamic one, can stand high-quality products, when confronted withtechnology-oriented consumers.
Business Automation: How Dell rushed into online markets, the sales staff lose their jobs, afraid for the benefit of automated sales.
Dynamic Industry: The technology industry requires close monitoring to keep the consumer trend to a small distance between the place of demand and the location of the levy. Analysis

Supply Chain Management

Supply Chain Management (SCM) aims to integrate all company activitiesImprove relations at all levels (internal operations, supplier networks and distribution channel) to meet their competitive edge and to satisfy the customer (Al-Mashari and Zairi, 2000) [2]. In order to build an effective and complete business process, SCM, information between all partners support must be shared. The exchange of information over the Internet, the gap in business-to-business (B2B) commerce by seamlessly integrating with business processes between partner countriesCorporations (Archer 2006) [3].

Dell is developing its internal business processes through the creation of cells, the production start assembling at the point of order. Moreover, it was an internal information about the details of the products in their manufacture electronic form, to make all parties in the chain. To manage the delivery of computer parts, Dell maintained close relationships with their suppliers and logistics service providers to manage their vendors, while the inventory system, Dellfocused on product assembly (Kumar and Craig 2007) [4]. Additionally, Dell Enterprise Technology used to make its database and methods available to understand the supplier how Dell works. On the consumer side, orders over the phone or online through made a tracking code produced for the consumer to the status of his order at any time to track over the phone or on the Dell website.


Companies worldwide benefit from thespecialized services offered by various companies. In the shipping and transport arena, companies such as UPS (United Parcel Service) and DHL are available as masters in their industry. UPS and DHL have established offices and transportation vehicles around the world. They offer business services through in-sourcing, which enables them, as part of the internal business processes of enterprises (Marcum 2007) [5]. To a company like Toshiba, for example, would require after-sales support serviceDamaged shipment of the computer and from the side of the consumer. For this would, UPS said, "Look, instead of the machine lifted us from your customers, making it our hub, then we fly them from our hub with its own repair shop and then he flies back to our hub and then from our hub, the house of your customers, we will cut you every step of the middle. We, UPS, it picked up, repaired, and send it right to your customer "(Friedman 2006) [6].

Dell understands that it does not say if itwould have the advantage to get on the market. Michael Dell says that an area of competition is to evaluate and select the best. Concentrated in this context, after-sales services have been with companies that specialize in this area and can be contacted directly fulfill the integrated supply system to the needs of consumers. In addition, treatment is delivered by multiple shippers to provide systems for consumers or to retailers around the world. In addition, Dell has savedOverhead costs for the delivery of "supervised by requesting shippers to ship directly from the vendor of the monitor to the consumer at the same time.

Quality Assurance

In a competitive arena to seek an advantage through means that do not necessarily stand in relation to the price. Restrictions against outsourcing due to excessive decentralization within organizations can have a negative impact on the value chain process. Combing the various options and to be open to the diversificationwould help in increasing speed to market and improve the quality of the products (Ernst, 2000) [7].

Dell has a plant in Penang, Malaysia, the Dell in a central location in the vicinity of places where really most vendors have their factories. Orders for goods come directly to Penang center through the integrated supplier logistics centers (SLC) chain [8]. Penang, the center sends e-mails to vendors requesting the parts to be assembled on the customer's order.The entire model was efficient enough to require no more than 36 hours from ordering to shipping. Has in relation to the quality of services, Dell won many awards for the highest quality. Nevertheless, he is still a means of improving the efficiency of its products to be found. Michael Dell suggested that the reduction of the interaction between people and drives the assembly of the failure rate would decrease. As a result of the decrease in the number of "touches" the failure rate at 20%.


The general attitude of individuals and employees in organizations is that the automation of information systems make it difficult to adjust their internal processes, and could in a reduction in the number of employees (Khatibi, V. Thyagarajan and Seetharaman 2003) [9 results]. There are various psychological and behavioral change with restraint in the growth of e-commerce seem to hinder independent. On the other hand, think no more retailers to their Web pages are simplyadd value to their customers because the ROI (Return on Investment) percentages of online sites, however, far outweighed the bricks and mortar counterparts (Casey 2004) [10]. For this reason, the staff in the traditional markets involved in training to use new technologies and learn how they can benefit from it.

Dell online store the response of consumers was great, but the field staff initially feared that the line would reduce websiteThe number of deals they sell closed. To overcome this put, Dell's cost savings model demonstrates how the online business would help sales staff close more deals and at the same time cost would produce results that would have a positive return on the business.

Dynamic Industry

Customer Relations Management (CRM) is a very important expertise, which was born of the amount of the transaction sales campaigns through call centers. The process of understandingCustomers through the first phase of collecting data, then the analysis of trends and finally building a knowledge base that the profitable relationship (Liew 2008) [11 drive]. Organizations' use of CRM models is an attempt to bring first-hand knowledge that would improve marketing efficiency, greater personalization, and build brands, among other objectives of the type of activity (Anderson, Jolly and Fairhurst, 2007) [12] .

Michael Dell model is basedno inventory to keep on to argue for Dell that it focuses on the segmentation of their customers into scalable business that can be analyzed for their demand. Sales Manager at Dell using communication skills, would give rise to information from the customer that the initiatives further support for the demand forecast of the company. Dell also sent surveys to customers to understand the satisfaction with the service from Dell and change their product range andServices accordingly. In addition, Michael Dell discussed, such as regional meetings in different countries invited to enrich the relationship and potential customers to give room for comments and feedback on the services from Dell. On top of all that Dell tries to gather information for its clients to help them so the right decisions for their IT requirements and to gain privileged information about new and future technologies. Dell invests in the development of a Web portal in the form of "PremierSites for high-end customers and another for small and midsize businesses [13]. Both sides are aimed at providing information to customers and establishing a single point of access for IT customers' service requirements .


Dell is simply a success story, but it shows how a market advantage by allowing you to easy to understand what brings value to customers win. No one, including Michael Dell himself, as he began to think that people would enjoy customizing theirPC commands and wait patiently as the order makes its way back to their homeland. Some studies talk about people questioned how the first shipment estimates provided by Dell to see if they are satisfied.

The amount of expansion of Dell trying to problems like any growing business brought to achieve. However, by adapting the techniques such as in-sourcing, and partnerships of mutual benefit, it reduced its potential employees from 80,000 to only 15,000. Dell was also hindering factors were aware that theirSupply chain. For example, they receive a list of several senders not by unexpected delays and organizational issues will be affected. Moreover, she understands the importance of developing their own enterprise systems in the house to control all variables and maintain their business.

This is one of the best case studies in the IT industry. I think the level of commitment was evident in the Dell model, which he has created inspiring. In the editorial, I think, moreHighlights on the internal structure of the network from Dell would be an understanding of how the supply chain actually worked contributed. Did they use CRM modules, ERP, SCM, or a combination of all? As Dell has to protect their information link with their suppliers, they were all mature enough when it came to information systems?


Organizations should focus on value-adding activities such as setting up online portals for their customers.
Companyshould carry out regular inspections to the level of service provided by them to measure and work on improving their products.
Organizations should decentralize and thus global expansion through techniques such as out-sourcing and in-sourcing.
Building internal enterprise information system is the most effective method for the information and knowledge exchange.
Establishing several points of contact with customers, strengthen ties and increase satisfaction.
Meetingglobal quality standards is the only way to get an advantage in the competition arena.
Internal organization, evaluation and training is crucial for the high spirit of the employees to maintain and increase their productivity.
Support the management and financing is a key element for the success of any information system implementation.

Joan Magretta, "The Power of Virtual Integration: An Interview with Michael Dell Computer's Dell." Harvard Business Review 76, no. 2(March / April 1998): 72-84, 13, 2
Majed Al-Mashari and Mohamed Zairi, "Supply Chain Reengineering with Enterprise Resource Planning (ERP) systems: analysis of a SAP R / 3 implementation at." International Journal of Physical Distribution & Logistics Management 30, no. 3 / 4 (2000): 296-313
Norman P. Archer, "Supply chains and the enterprise," Journal of Enterprise Information 19, no. 3 (2006): 241-245, 242
Sameer Kumar and Sarah Craig, 'Dell Inc.' s closed-loop supply chain forComputer assembly plants. "Information Knowledge Systems Management. 6, No. 3 (2007): 197-214,18.
Marcum, Jennifer. "In-source or outsource?" BioProcess International, June 2007
Thomas L. Friedman, The World Is Flat (New York: Farrar, Straus and Giroux, 2006), 168
Allowed Dieter Ernst, "Inter-Organizational Knowledge Outsourcing: What small Taiwanese firms to compete in the computer industry?" Asia Pacific Journal of Management (Springer Netherlands) 17, no. 2 (August 2000): 223-255, 248
Friedman, The World is Flat, 516
Ali Khatibi, V. Thyagarajan and A. Seetharaman, "E-Commerce in Malaysia: perceived benefits and barriers." Vikalpa: The Magazine for Decision Makers 28, No. 3 (Jul-Sep 2003): 77-82, 6
Bernadette Casey, "Online Monday blacker than in-store Friday." DSN Retailing Today, 13 December 2004: 13-13,0.
Chor-Beng Anthony Liew, "Strategic integration of knowledge management and customer relationship> Management. "Journal of Knowledge Management. 12, No. 4 (2008): 131-146.
Anderson, Joan L., Laura D. Jolly, and Ann E. Fairhurst. "Customer relationship management in retailing: A content analysis of retail trade journals." Journal of Retailing & Consumer Services 14, no. 6 (November 2007): 394-399, 6
Alorie Gilbert, "Dell online marketplace, small businesses." Electronic Buyers' News, 2 October 2000: 58, 0


Tags: ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: