The Operation Management of Dell
Dell, Inc. is an American multinational computer technology corporation based in 1 Dell Way, Round Rock, Texas, United States, that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest technological corporations in the world, employing more than 103,300 people worldwide. Dell is listed at number 41 in the Fortune 500 list. It is the third largest PC maker in the world after HP and Lenovo. With a net revenue of $61,133,000,000, Dell becomes the second largest computer manufacturer company in the world. It focuses on Business to Business (B2B) and Business to Consumer (B2C) commerce to satisfy their business and individual customers. Dell differentiates its customers depends on the needs of their business customers; those who buy large quantities of computers are different from the individuals who want to configure only one single unit.
The operation strategies of Dell are reflected in its product design process, production process, and distribution policies.
1. Product design process For Dell, globalization has impacted directly in the management of the product life cycle involving more stakeholders during the process of product development. The most important factor introduced in the product life cycle is the environmental issue. To avoid unnecessary materials and to be easy to use, the design of products must be energy efficient, which is supported by rigorous business controls and supplier audits. Dell delivers optimized performance per watt, and help customers deploy systems efficiently. It is an important way to decreasing cost of ownership and enhancing productivity while reducing a customer’s carbon footprint. Dell also eliminates the use of unregulated substances and if alternatives are not yet viable, Dell will work to develop reliable, environmentally sound and commercially scalable solutions.
2. Production process The well known operation model of Dell is called “Dell Direct”. It eliminates intermediaries in procurement, manufacturing and distribution processes. The technology used by the company in the manufacturing process is the base of its success, which plays a very important role in its operations. Dell’s technology allows the company to combine its resources and relationship with suppliers and its consumer communication capabilities, which is an great advantage over its competitors. Dell is in “Mass Production” process category due to mainly the stable demand of products, the assembly work as a main line of production and with a good level of efficiency. To consider Dell as a manufacturing or assembly company is a constant discussion even for the employees of the company. Due to the nature of the products (mainly computers) they build new products that do not exists in the market, in this sense they are manufactures. But in another sense they just assemble component which production is on suppliers, in this sense could be considerate that dell “buy to sell”. In this document the company will be considered as a manufacturer company. The generation of innovative ideas for the production line is pulled due to the necessity of new kind of products defined basically due to the interaction with suppliers and customers. All the Dell manufacturing centers around the world use the same processes controlled by the same system and are measured in the same way, this ensures the consistency of the quality of products across the global network.
3. Distribution policies Dell has developed a very good supply chain. It put itself in the in the middle of all the operations between suppliers and customers. The simplicity of this model presents the absence of intermediaries in the supply chain, which brings forth low cost and a fast answer to client’s orders.
[pic] It can been seen in the image above that the communications between Dell and suppliers are on the Internet, which means that the suppliers are constantly monitoring the status of components in order to prepare new orders and negotiate the prices on demand. Usually suppliers have warehouse buildings nearby Dell’s manufacturing centers in order to reduce the risk of the lack of components in the main assembly line of Dell and avoid the inventory costs.
Dell’s official websites provide not only introductions to its productions, but also services, shopping guide and recommendations for best selling products and pioneer products. Moreover, Dell renders a special service that customers can configure the devices of the computer according to their own needs, and then the company will offer an evaluation to the “DIY-computer” for free.
Even though Dell is considered a very successful business model, the company still has been involved in many problems. The Internet is the base of its success, it is a big problem for Dell as well, since the point of view that important bloggers has been complaining in the net about the pour quality of services and this has spread quickly among users. Dell is working on this blog phenomenon, paying attention on every comment done on the Internet about their products and services. Another problem faced by Dell is that it is becoming victim of its size because they are trying to keep the rate of growing in a market where the value of their products fall significantly every year , this means that to keep the rate of growing, it is necessary to have a higher rate of sales. As a final weak point, Dell is relaying increasingly on new markets which means that Dell is just applying best practices and knowledge in the field rather than go deep with a study of the new entrance. 