Essay About Dell Computer And Receipt Of An Order

Dell Computer: Organization of a Global Production Network
Dell Computer: Organization of a Global Production Network
Introduction:
In 2001, Dell Computer became the worlds largest personal computer vendor, continuing to
gain market share and post profits in an industry struggling with slumping sales and billions of
dollars in losses. Dell sells 90% of its PCs directly to the final customer, largely bypassing the
reseller channel that accounts for most of the worlds PC sales. This direct customer relationship
is the key to Dells business model, and provides distinct advantages over the indirect sales
model. Dells direct relationship with the customer allows it to tailor its offerings to customer
needs, offer add-on products and services, and use the Internet to offer a variety of customer
services. In addition, Dells PCs are built to customers specifications upon receipt of an order,
giving Dell additional advantages over indirect PC vendors who must try to forecast demand and
ship products based on those forecasts. Dells direct sales and build-to-order model has achieved
superior performance in the PC industry in terms of inventory turnover, reduced overhead, cash
conversion, and return on investment (Kraemer, et al., 2000).
Dells business model is simple in concept, but very complex in execution. Building PCs to
order means that Dell must have parts and components on hand to build a wide array of possible
configurations with little advance notice. In order to fill orders quickly, Dell must have excellent
manufacturing