Dell Computer - Inventory Management and E-Commerce

Dell Computer- Inventory Management and E-Commerce

Accelerating improvements in the Internet and computer technology have dramatically affected the computer industry. Many companies have succeeded and achieved growth while others have failed to survive in such a volatile industry. Dell Computer has been one that has succeeded and remained competitive in the computer industry. Dell’s sales have increased from roughly $8 billion in 1998 to more than $50 billion in 2007. Many reasons exist for Dell Computer’s success over the past few years. One of the most interesting reasons is Dell’s impressive success in managing its supply chain.

The most important factor to Dell’s successful experience is the company’s ability to assemble and provide high-tech, custom-designed computers in a short period. Traditionally, producers of customized computer products had two alternatives: 1) Maintain large amount of inventories in stock in order to meet customers increasing demands, 2) Have the consumers wait for days and sometimes weeks while the custom-designed inventory turns to finished goods. In contrast to traditional personal computer manufacturers, Dell sells low costs, high volume products directly to end-users. Assembly begins immediately after receiving the customer order. However, traditional computers manufacturers have already assembled �ready for purchase PCs’ at retail stores. Dell Computer depends largely on the Internet to promote its computers and increase it sales. The company’s web pages enable its customers to place orders, select recommended PC configurations, customize their configuration, and track their purchases. “By using direct sales �Internet to sell PCs, Dell is able to eliminate distributors and retailer margin and increase its own margin” (William & Hodges, 1999).

Dell’s order processing and assembly line are designed such that all components on which customers are offered customization can be assembled in a matter of hours. This technique allows the company to put off assembly until after the customer order has been placed. Dell also applies information technology techniques in order to better coordinate its production level decision with its suppliers, manufacturers, and consumers. If the company’s suppliers desire to build sustainable business with Dell, they must be able to provide the required supplies as effectively and quickly as possible with the lowest possible prices. The suppliers who meet such requirements will be rewarded by increased business volume and a long-term business partnership with Dell. On the other hand, the suppliers that fail to meet the company demands lose their business with Dell. Moreover, the information technology techniques used by Dell helps the company collect data and information for the improvement of custom-designed products and increased customer satisfaction.

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