Dells Operation Strategy - Research Paper Example

? DELL TABLE OF CONTENTS Introduction 2 Application of OM in Dell’s workplace 2 2 Quality 2 2.2 Supply chain at Dell 3 2.3 Maintenance management 3 2.4 Global management 3 3. Customer benefit packages 3 4. The Value Chain at Dell, Inc. 4 4.1 Getting a customer 4 4.2 Creating value 4 4.3 Retaining customers 5 5. Green Operations and Vocabulary 5 6. The Value of a loyal Customer at DELL 6 7. Gaining Competitive advantage in Dell’s Operation strategy 6 8. Understanding customer wants and need 7 9. Statistical Forecasting Models used at DELL 7 10. Managing Inventories and handling orders 7 11. Conclusion 8 12. References 9 Graph 1 1 table 1 6 1.1 Introduction Dell Inc. is a United States based multinational firm that manufactures and develops computers and its associated products and services. It is the fastest growing computer companies in the world. Its growth strategy includes both acquisitions and increases its customers. Its most prominent mergers have been with Alienware and Perot Systems. Dell is known for its supply chain management and online sales where it focused on “configure to order” strategy where every product was customized (Fuller, 2012). It initially worked but as the demand became global the strategy was just too hard to keep up. Customers became smarter and wanted to use the products before buying which weakened Dell’s online selling strategy (Eden, 2012). Graph 1. Dell’s market share in U.S. and Worldwide (in Q1 2009) compared to other top PC makers http://www.casestudyinc.com/dell-supply-chain-case-study According to Atikan (2012), from 1997-2004 was an era of growth for the firm where the firm got a number one position for customer services and reliance. In 2002 the firm expanded its product portfolio to include televisions and printers etc. it also acquired Converge Net Technologies. In 2004, with the change in management, Dell’s ties with Microsoft and Intel deteriorated and in 2005 Dell lost 25% of its shares. With the market now stretching across the globe, Dell could not maintain its customer services nor manufacture customized products. Moreover, the prices per product production reduced cutting down on Dell’s profits. Adding to it Dell spent less on its R&D, which retarded its future growth prospects. The firm undertook many acquisitions as an attempt to rise again with its latest acquisition in September 2012 of Quest Software. Today it has gained strength by transforming into an IT solution provider and is successful in the Virtual Era (Fuller, 2012). 2 Application of OM in Dell’s workplace Operational management is primarily how Dell manages its quality, supply chain, maintenance, global locations and human resources. 2.1 Quality Dell was always known for its quality products however, as the market expanded globally, the firm had increasing difficulty to produce customised products and thus quality also suffered leading to complaining customers and a slow customer care. Every market has a different requirement and to cater to that it became difficult for the firm. This was also adding to the cost where Dells products were marked higher than the market price (Chen and Press, 2012). 2.2 Supply chain at Dell The firm has stringent legal frames that it follows and ensures that its suppliers follow that too. Maintaining that has enabled Dell to reached the global markets as the quality is maintained and at the same time the suppliers realise the standards they need to maintain if they intend to work with Dell. 2.3 Maintenance management Dell trains and develops its employees continuously and has highly skilled employees because the products are customised and thus require specific skills to follow this strategy. As per Atikan (2012), Dell aims to converge its technology that will simplify operation and make performance better simultaneously reducing operational costs. Dell claims to have a holistic approach that helps its customers with managing their virtual and physical IT needs thereby achieving their objectives. 2.4 Global management Dell’s acquisition of Perot Systems and integration into Dell Services enabled Dell to develop its applications services, strategic consultations, interagration of its systems etc. However, currently only the US and India has all of Dell’s business functions. 3. Customer benefit packages Chen and Press (2012) explain that Dell focuses on individual, educational and corporate customers. Dell boasts as a one-stop center and reduces the line of vendors that other brands in the industry offer. This is also very price competitive and in turn Dell offers a lower price to its customers. The firm also offers customization for consumers where the products can be chiseled to fit individual customer needs. Dell also gives the options to its customers of financing the products through Dell financial Services. Technical support and consultation is also available through Dell call centres. Dell also offers spectacular after sales customer services and has a well developed website and blogs which enable the firm to interact with its customers more efficiently than its competitors. According to Atikan (2012), they also have warranties and the products are “green by design”. They have online ordering options, the software and hardware are licensed and a customer support system that’s exemplary. 4. The Value Chain at Dell, Inc. 4.1 Getting a customer Dell believes in a value chain that offers its customers highly customised products. Dell is currently working with 96% of the Fortune 500 firms entailing their global networking, servers, mobile and cloud computing etc. the firm also offers many attractive products and services (Howell, 2012). The firm also has many partnerships with key firms that act as corporate partners with 200 major clients in their portfolio that who have the option to order online through their secure websites (Howell, 2012). 4.2 Creating value Value creation begins with customer order, which entail the quality of the products, and services, the innovativeness and the overall costs involved of the product. What gets the firm orders is the efficiency with which Dell delivers its promise and how effectively the product has been customised to the specification of customers. Moreover, Atikan (2012) adds that the firm produces made to order, which reduces their inventory and believes in mass customization of their products. The finished products are shipped directly to the customers and there on Dell provides consultation to its customers. 4.3 Retaining customers The billing is mainly online of the Premier Page customers. The firm also facilitates its customers with installation, warranty and repairing services. There is also online training provided for customers. Such services ensure retention of customers. 5. Green Operations and Vocabulary The firm has been involved in several green activities. Their main contributions include their e-waste recycling which they execute through Dell’s Reconnect in conjunction with Goodwill creating 250 employment opportunities and diversion of 200,000 pounds of e-waste (Chen and Press, 2012). The firm also uses packaging for Dell servers that is completely organic in content. Their Dell Social Innovation Challenge enables creative college students to get new ideas globally. Dell also helps many firms adopt green practices especially their partner firms. http://www.thegreenitreview.com/2009_05_01_archive.html 6. The Value of a loyal Customer at DELL. According to Chen and Press (2012), Dell aims to create and maintain customer loyalty. The firm does that by giving the customer and excellent experience from the purchase to after sales services thereby building value. The firm also aims to maintain a one to one relationship with its customers and aims to give its customers quality products with explicit technology along with effective customer services and in all tries to give an overall superior package than its competitors, which causes the customers to remain loyal. 7. Gaining Competitive advantage in Dell’s Operation strategy Dell initially had a few main operational strategies. Firstly, the firm manufactured on a build to order basis. This saves storage and costs and unlike competitors the firm doesn’t have to wait to clear the old lot before launching a new product. Also, Chen and Press (2012) add that unlike competitor products Dell products are built to customer needs. Strategic partnership with suppliers gives the firm a competitive edge over its competitors. Just in time inventory saves costs unlike competitors. Additionally direct saes to customers enables long-term relationship building with customers unlike its competitors. However, it is now a difficult task with the market going global. One place Dell excels at is its customer service and technical support to its customers globally, which the competitors are not able to provide to its customers. Lastly, the firm also started using online means to sell its products and to maintain a relationship with its customers before anyone else in the industry. 8. Understanding customer wants and needs Since the firm has a direct relationship with its customers through online sources, blogs and its website. Along with that, Howell (2012) adds that the firm has customer service call centres and it stays directly connected with its customers. Thus the firm is better able to understand the wants and needs of its customers when compared to the competitors. 9. Statistical Forecasting Models used at DELL Transforming into an IT solution provider has caused many innovative changes at Dell. The firm now uses predictive analytical statistical models of forecasting for marketing. Which customers to target, purchase trends are monitored resulting in increased revenue and a close connect with its customers. 10. Managing Inventories and handling orders According to Howell (2012), once a customer places an order either by phone or the internet, the order is directed to its manufacturing unit located in Texas where the order is built, test-run and then packed within 8 hours. Dell targets shipping within 5 days. Since many suppliers are in Southeast Asia, time is required for parts to reach to assembling unit. Thus Dell requires suppliers to hold inventory in revolvers, which is indirectly charged to Dell (but not owned by Dell) and in turn product price. Dell’s strategy is to hold minimum inventory. Dell shares its demand forecasts with its suppliers so that there is minimum inventory. The whole system depends upon speed and quality. Communication between the suppliers and Dell are key to maintaining low inventory levels and keeping costs under control. 11. Conclusion Del is one of the leading firms in the industry globally. Dell works with a strategy of low inventory and made to order products. The forecasting software have revolutionised the firm bringing in profits and building a closer bond with the customers. Through the suppliers are far, the facilities are such that the orders are completed on time and inventories are minimum. Technology within the operations has converted the firm into an IT solution provider. Close relations with suppliers has enabled better production and cost savings. Also, the green initiates of the firm have been beneficial for society and set an example for others to follow. However, their current challenge includes maintaining their made to order strategy with a global market in perspective and to maintain its standards of customer care at a global scale. References Atikan, D. (2012). Dell’s Operation Strategy. Accessed on 7th Nov. 2012. Available at: http://www.studymode.com/course-notes/Dell-s-Operation-Strategy-1165571.html Chen. J and Press, E. (2012). Predictive analytics reforms Dell’s strategy. Accessed on 7th Nov. 2012. Available at: http://www.slideshare.net/Dell/how-predictive-analytics-transforms-dells-marketing-strategy-white-paper Eden, W. (2012). Dell-New Product news. Accessed on 6th Nov. 2012. Available at: http://www.information-management.com/infodirect/2011_252/Oracle-Dell-GE-new-products--10022835-1.html Fuller, E. (2012). The power to do more. Accessed on 6th Nov. 2012. Available at: http://blogs.citrix.com/2012/10/12/the-power-to-do-more-with-dell/ Howell, P. (2012). Dell’s empowering approach to sustainability. Accessed on 7th Nov. 2012. Available at: http://parkhowell.com/green-advertising-and-marketing/dells-empowering-approach-to-sustainability-twitter-qa-with-its-director-of-global-sustainability-operations Read More