DELL outsousing
1. What are the key challenges DELL should be concerned with as it enters the large-scale server market? (3 Points)
Unlike PC market, the support service was more critical for server market since a problem in server even for a short time could cause serious problem in the customer’s business. Competitors such as Hewlett-Packard and IBM had begun offering variety support service aggressively to enhance the quality of their service. DELL, through a business model that focuses on direct PC sales, make to order model, low-cost production, and superior customer service, will definitely face some challenges or even have to change their strategy in order to guaranteed their high quality service when they enter the larger-scale server.
The challenges are list as follow:
• Inventory: To provide field service adequately, DELL has to keep their inventory higher than desired. However, this operating strategy is opposite of their philosophy where they believed there is an inverse correlation between the quality of information they have and the amount of inventory they need.
• Customer service: The response time also will be a challenge for Dell since they promised to provide on-site service in less than four hours which was not Dell's core capability. If DELL wanted to have on-call technicians or the parts ready, their promising operating principles had to change, and that would seriously threaten profitability and also have the risk to damage their brand image if they fail to satisfy clients need.
• Skills: Server problem dispersed across the nation and the support service for servers cannot be solved mainly depended on call center or service website as Dell did on PC market. Therefore, it required more highly skilled workers ready to handle the various problems. To fulfill that, DELL have to train number of technicians at a high cost which will continue decrease their profitability.
• Cost: The cost will increase as the inventory goes up and the size of the
Unlike PC market, the support service was more critical for server market since a problem in server even for a short time could cause serious problem in the customer’s business. Competitors such as Hewlett-Packard and IBM had begun offering variety support service aggressively to enhance the quality of their service. DELL, through a business model that focuses on direct PC sales, make to order model, low-cost production, and superior customer service, will definitely face some challenges or even have to change their strategy in order to guaranteed their high quality service when they enter the larger-scale server.
The challenges are list as follow:
• Inventory: To provide field service adequately, DELL has to keep their inventory higher than desired. However, this operating strategy is opposite of their philosophy where they believed there is an inverse correlation between the quality of information they have and the amount of inventory they need.
• Customer service: The response time also will be a challenge for Dell since they promised to provide on-site service in less than four hours which was not Dell's core capability. If DELL wanted to have on-call technicians or the parts ready, their promising operating principles had to change, and that would seriously threaten profitability and also have the risk to damage their brand image if they fail to satisfy clients need.
• Skills: Server problem dispersed across the nation and the support service for servers cannot be solved mainly depended on call center or service website as Dell did on PC market. Therefore, it required more highly skilled workers ready to handle the various problems. To fulfill that, DELL have to train number of technicians at a high cost which will continue decrease their profitability.
• Cost: The cost will increase as the inventory goes up and the size of the