Overview of Dell

Mission

Benefits

The management style

Dell’s Management principles

Dell’s value chain management

Performance GAP

Contemporary Decisions Taken by Dell

Conclusion

Overview of Dell

Dell is known worldwide as a top personal computer producer and one of the most successful organizations in the world. It is founded by Michael Dell in 1984.The single concept is selling computer systems directly to customers. Much of Dell’s success is attributed to its quality products and strategic management. The company realized that its products depreciate in time and keeping them in warehouses will cause them tremendous loses. In order to avoid this, the company established a revolutionary supply chain strategy which targets very minimal (almost close to zero) inventory. DELL is designed and built the first computer system of its own design in 1985 was one of the first computer companies to send a technician to homes to service personal computers in 1985. Dell introduced the 316LT, the company’s first notebook computer in 1989 and joined the top-five computer system makers worldwide in 1993. It’s earning approximately $1 million per day 7 months after the launch of dell.com in 1996. It introduced E-Support, an online tool to provide technical support to customers in 1999.For the first time, in 2001 Dell achieves No. 1 ranking in global market share.

Mission

High Customization (Mostly based mission on High Customization)

Fast Response

Lowest Cost (Highest Value)

Fast response and cost considerations are not as high as customization considerations.

Benefits

Early to Market

Payment Advantage

Customization Option

It is obvious that it is management style for any business to be competitive in the market not the technology rather it’s an assistance to support the management to achieve business goals. The management style if dell is as follows.

The Management Style:

Michael Dell started his empire from his bedroom with $1000. Let’s see what CIO,s and general management can learn from this icon of modern business and technology.

1. Constant analysis:

Successful businessman and leaders are constantly looking for information to improve their business. MD makes the most of this to maximum advantage. It is through constant analysis that Dell successfully started its own range of printers. From the early days, MD realised that a business MUST support itself from revenue generated and not through financial borrowing.

2. Family commitment:

This is an important aspect of life that every one should accept. Time cannot be turned around or replaced. It is very important that spending time with spouses and spending time with children. As they grow up it has to ensure that they become responsible and active citizens. A workful/life balance is crucial and ensures that we work optimally.

 3. Spotting opportunities:

We need to mark opportunities for improvement. It is not enough, however, just to spot them, the responsibility is to spot them and then to create an environment to leverage that opportunity and make the plan is complete.

4. Business/IT Strategy:

When people enjoy their work, it is always more productive. Create an environment that encourages employees to deliver to their best capabilities. An environment that is not dependent on an individual’s contribution but where people work together, feel valued, are rewarded as a team and therefore can work towards a better future for the organization.

5. Know your business and innovate:

The CIO and the entire IT department need to develop an innovative mindset. IT needs to help the business by understanding each department and then helping that department through innovative use of technology. Innovation is combination of existing add in new change of the present situation. That assists towards building relationships and reinforces the transformational capabilities of IT.

6. When the going gets tough, investment in people always pays:

One person alone cannot handle everything. The secret is to surround you with employees that are smarter than yourself. These smart people will challenge organisations and force them to think differently. CIOs need to understand the importance of retaining and investing in people as one of the business’s most important assets is yet again confirmed by another business leader.

7. Success in general may be built on failure:

Businesses in general do not stand for failure and that drop down to the employees. Employees are encouraged to succeed at all costs. Yet, both at Apple and Dell, failure

is accepted as a route to success. Dell’s venture into personal organisers (The Axiom) was not successful but its move into the printer market has been successful. The secret is to learn from your mistakes, put them behind you and move on.

8. Learning:

All great leaders have made it a habit to constantly learn. MD visits the companies that impress him by paying them a visit to learn how to improve himself and Dell. Other leaders such as Bill Gates are very well read and read books to improve their knowledge. The knowledge of all great minds, past and current, is available. It is upon us to seek that knowledge.

Dells Management Principles

Dell’s management principles as well as its supply chain (including inventory) is founded in “Build-to-Order” philosophy. This philosophy is aligns Dell’s business units and people. At the heart of the success at Dell was their strategy of exchanging inventory for information. This meant that instead of keeping inventory in hand at Dell, or on hand in a warehouse, or on hand at a retail outlet, Dell kept information about customer orders, needs and forecasts. Manufacturing predicted what orders would come in, alerted suppliers of anticipated needed parts, and staffed up to meet demands. This gave Dell an advantage in the marketplace for several reasons.

o Information was easier to store than inventoryo Information was easier to move than inventory

o Information was easier to discard than inventory

o Information was less expensive to have than inventory

Dell’s Value Chain Management:

Dell used its direct sales and build to order model to develop an exceptional supply chain

Close relationship with customers and suppliers

First-hand and pure customer feedback

High volumes of customer information

High Amount of Exceptional and

Customer information Excellent SupplyChain

These relationships with customers and suppliers allow us to know what we must be able to supply in real time and then very quickly and precisely meet that demand while maintaining low inventory.” says Dave Schneider, continuous improvement engineering manager of Dell.

Dell has exploited the advantage of the Internet to improve performance

Dell established a unique e-commerce model by embracing the Internet in its supply chain. Dell brings products to market faster than its competitors. Customization and quick response attract large business customers; reduce Bullwhip Effect and collecting the payments. Dell brings products to market faster than its competitors Dell uses direct sales via Internet, whereas Traditional PC manufacturers previously assemble PCs ready for purchase at retail stores. PCs have life cycles of only a few months. Thus, Dell enjoys early-to-market advantage.

Performance GAP:

The performance gap between Dell and its competitors looms as large as that between Toyota and its also-rans –and is just as threatening. The sale of IBM’s PC

business to China is clear evidence of the inexorable pressure that the genuine 21st Century company is exerting on formerly dominant laggards. True, the pressures could lessen if flexible networked companies become the norm, as forecast. This will surely have major impact, but the here and now is where some key battles are already being won and lost.

The struggle for supremacy certainly embraces the impact of products that are both highly personalised and dynamically priced. Throw in the role of customer service as a key differentiator with great impact, and you can see that the ambitiously athletic management will have to raise its game simply to stay in the competition. Yet the traditional corporate structure is designed for stability rather than adventure – and there’s the real rub.

The impact of this current and future management incapability is indeed certain to be great. The new ‘hard soft’ technology of management is the decisive factor in mastering change and innovation.

The key battleground is the intellect. Companies depend more than ever before on the mental powers of their people, especially the innovators. These brains need the greatest possible space to deploy and share their thinking. Here soft management holds the reins. You want freedom of thought to flourish. You need self-managed bands of brothers and sisters who set their own targets. Your model is the university, not the military camp. But in this soft habitat, paradoxically, you require a focus of the hardest military intensity.

Contemporary Decisions Taken by Dell

In challenging economic times, the confluence of rapid data growth and the need to protect it for long periods has created significant challenges for IT leaders, who must find resources to store and manage this data while keeping costs under control. To effectively overcome these challenges, organizations must reconsider how they manage and use their data throughout its life cycle. Current data management solutions that can meet these needs, however, are typically costly and complex. This problem is especially acute for small and medium businesses (SMBs), which are generally restricted to a limited and poorly integrated set of options.

Dell is working to simplify IT with products, services, and partnerships that enable SMBs to easily and cost-effectively manage their data from creation to end of life using a strategy called Intelligent Data Management (IDM). IDM is designed to encompass growth planning and analysis, data protection, archiving, discovery and compliance, and optimization of server and storage resources in the data center. This strategy includes a line of integrated Tier Disk systems—including Dell™ Power Vault™ DL2000 disk-based reduplications and backup solutions based on CommVault® Simpana® and Symantec™ Backup Exec™ software—along with tiered Dell EqualLogic™, Dell PowerVault, and Dell/EMC storage and Dell consulting services to help assess existing environments and develop new implementation plans. In the future, Dell anticipates developing a range of additional IDM-based solutions—focused on storage resource management, data replication, continuous data protection, server virtualization, fixed-content retention and governance, and more—designed to provide further cost-effective, simplified solutions that can help meet IDM goals.

Present Scenarios of Dell’s Strategies

Dell Computer have recently announced changes to their business strategy and supporting supply chain. They will no longer focus on a made to order direct sales model for their personal computers. Nor will they continue to refine their renowned supply chain model that supported their sales model. Instead, they will be looking to produce personal computers with fixed configurations at lower prices. Dell has changed their strategy, and then considers the customer value proposition of the new strategy. According to Michael Cannon, Dell's President of Global Operations, the key differentiators that have made Dell so effective for nearly two decades are its made to order direct sales model and its innovative supply chain (SCN, 2008). 

Historically, personal computer companies produced most of the components for a computer which they assembled into their final products and distributed to resellers. The manufacturing of these components was vertically integrated into the organisation. Dell, as a small start-up, could not build this infrastructure. Instead, they developed a model where they developed relationships with organisations that could provide these components, allowing Dell to focus on selling and delivering computers. By selling directly to customers, initially through mail orders and later by using the internet, Dell avoided reseller mark-up. Dell also enabled customers to order customised computers, which Dell then assembled after receiving the order (Magretta, 1998, p.73-74). “Customers got exactly the computer they wanted and Dell saved money making the computers only when they were ordered” (Hill & Seggewiss, 2008).

ConclusionDell also focused on developing an efficient and innovative supply chain, providing customers with their products within 2-3 days after ordering (Bozarth & Handfield, 2008, p.26). Dell has also focused on building strong partnerships. Dell has strategic management philosophy that supports a well designed supply chain management strategy. Dell’s management philosophy is the corner stone of its success. As Dell endeavour to produce quality product in real time and reach their customers as fast and as efficient as possible it will continue to aim for zero inventory.

Reference

http://ivythesis.typepad.com/term_paper_topics/2009/02/dells-management-principles.html#ixzz1LOcBakmn

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