Dell Computer Value Chain

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ORGANISATION:Dell Computer Corporation
Founded in 1984 by Michael Dell with the aim of building relationships directly with customers. Dell is a premier provider of PC products and services sought by customers worldwide to build their information technology and internet infrastructures. Through its direct business model it designs, manufactures and customises products and services to customer requirements and offers an extensive selection of software and peripherals. Dell’s operations using Porter’s value chain -

Inbound logistics:
Dell has three main factories globally in Austin, Texas; Limerick, Ireland and Penang, Malaysia. The majority of components have to be warehoused within close proximity so suppliers are located close to the factory plants as this facilitates the ease of dispatch of goods whilst lowering costs. Dell established partnerships with its major suppliers using JIT (Just-In-Time) deliveries. Where necessary, Dell provides sales forecasts to suppliers for non-JIT deliveries. To minimise inventory costs Dell opted not to take delivery of bulky items such as monitors and speakers. Such items as dispatched directly to the customer from the suppliers warehouses. Operations:

Time and cost savings are key issues and Dell utilises the JIT manufacturing process, loading software and testing the PC’s assembled to order. Finished goods are kept to an extremely low-level hence minimising the risks associated with buffer stock. Dell sees its manufacturing process as a way to cut costs and maintain its competitive advantage. Outbound logistics:

Dell provides direct delivery by courier of the finished goods to the final customer. Supplies of sub-assembly components are delivered directly to the customer by the supplier. Marketing and Sales:

Dell utilises telesales, media (TV, newspapers and magazines) advertisements in addition to online ads as marketing tools. There are provisions for customer advice on PC specifications and price. This leads to more up to date product specifications due to low quantities of buffer stocks being held in-house. Dell uses its marketing and sales to continually improve and develop its relationship with the end-user/customer. Services:

Dell provides installation services by Dell experts as well as 24/7 online support for large businesses and institutions as well as for small businesses and home PC users. Asset recovery and recycling services in an environmentally friendly manner are offered. PC support services in case of malfunctions and protection services against accidental damage are provided. Procurement:

Dell built strong supplier relations through their close proximity to the factories in return for guaranteed orders. In this way suppliers inventory levels rarely pile up thereby keeping their costs down. Through the creation of supplier hubs (supplier-managed distribution points) near Dell plants the company was able to limit the number of suppliers required globally. Technology department:

Dell has developed e-services and 24/7 online support via their website More recently Dell is investing in network server technology and building partnerships. Human Resources Management:

At Dell, HR is divided into Operations and Management. HR Operations coordinates transactional functions such as benefits, compensation and employee relations through a service centre. Staff members report directly up the chain through HR and rarely have contact with the core business units. HR management includes Dell University, the company’s education and training function, staffing and HR generalists who report to both the VP of a business unit and the VP of HR. Management deals with tactical rather than transactional issues. These HR employees attend the business unit’s staff meetings as consultants, develop the leadership team, produce matrices for such thing as turnover, productivity and cycle times and develop HR strategy for that particular line of business....
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