Dell.com Analysis the Potential theEssay

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[. . .] From the remarks that the Dell Chief Information Officer (CIO) has made about the company's decision to invest heavily in Web-based applications to ensure quoting, product configuration, pricing and supply chain integration are integrated to anticipate demand, it is clear Dell sees this as a major competitive advantage (AMR Research, 2005). Also evident from the company's approach to managing these applications is how Dell segments product lines by level of configuration complexity. The laptops and netbooks, which require very little configuration, are sold through guided selling applications, where Dell relies on an assemble-to-order strategy. The build-to-order strategy is used for the mid-range laptops; configure-to-order for high-end laptops and low-end servers; and engineer-to-order for the most advanced storage networks and advanced enterprise systems the company produces. Figure 2 shows the analysis completed where the Dell online ordering applications on their website are analysed by their breadth of functionality.

Figure 2: Analyzing the Dell Online Ordering Applications

By Breadth of Functionality

Sources of categories:

(AMR Research, 2005) (AMR Research, 2006)

(Gunasekaran, Ngai, 2009) (Liu, Mackie, 2008) (Mylonakis, 2004)

(Pritchard, 2002)

Dell's culture is one that concentrates on measuring, monitoring and modifying performance based on the performance levels of each of their online strategies, as Dell senior management sees the performance of these online applications as indicators of competitive strength or weakness (Gunasekaran, Ngai, 2009). As a result, Dell is a very focused on the performance of all Web-based strategies, from e-marketing through the business contributions of their online applications (Pritchard, 2002). While Dell does not publish the specific results of these applications, after completing an analysis of the reference literature of comparable quoting, product configuration, pricing and services applications, Table 1, Web-based Application Measures of Performance by Process Area was created and is shown below.

Table 1: Web-based Application Measures of Performance by Process Area

Areas of Measurement

Key Performance Measure based on Web Application Performance

Web-based Application Contributions to Business Performance

Company-specific

Project costs and expenses

Use as a baseline for defining ROI

Number of orders per year

Determine configuration's impact on inventory turns

Current inventory and costs

Inventory turn savings

Customer Data

Lifetime cost per customer; avg. deal size by customer

Sales

Order cycle time

Order cycle times reduction of 65% or more recorded with mftrs contacted

Cost of Sales

Days Sales Outstanding reduction from 60 to 29 days on average

Cross-sell and up-sell revenue

Increase of 33% on aggregate

Average sales price per order

Increase from 9% to 26%

Quoting and Ordering

Average costs to complete an order

95% reduction in cost per order

Special Pricing Requests

Over 100% ROI on automating Special Pricing Requests

Bad or incomplete orders

Incomplete order reductions of 20%

Customer Service

Number of customer complaints

98% reduction in cost of simple requests

Revenue lost to churn

60% when cross-selling is used with quote-to-order

Number of calls on order status

Median level of 500 per week to 70

Warranty and Returns

Reduction in warranty cost on customized products

10% reduction at a minimum

Labor cost reductions

Decrease order re-work from 15% to 2%

Sources of the statistics mentioned in this table: (Mandal, Gunasekaran, 2003) (AMR Research, 2006) (AMR Research, 2005 (Mylonakis, 2004) (Pritchard, 2002)

Dell most likely has achieved comparable levels of performance to these figures, and has also been able to integrate their supply chain operations so the second a system of any type is ordered online the parts are ordered from suppliers (Gunasekaran, Ngai, 2009). The CIO on occasion will mention this Dell demand-driven supply network during presentations at industry conferences and has been quoted in industry studies in the past about how critical this link is between operations and the website (AMR Research, 2006).

Conclusion

The Dell website is actually a catalyst of customer listening and interaction that the company primarily relies on to stay in step with customer needs and requirements. The many applications, uses of social media and proactive approaches to using social media bear this out. The many mentions in the company's filings with the SEC of dell.com and the critical role these applications play in their supply chain performance, which is core to their profitability, also underscore how critical the website developments are for the company. At the application level of the website, the continued commitment to creating exceptional quoting, product configuration, pricing and services applications, all integrated back to supply chain systems, continues to be a disruptive innovation in high tech manufacturing. Dell has found a way to use their website as a means to accelerate sales of their products and services while at the same time infusing the content presented with expertise in their core market areas. The website excels because it serves as a catalyst for creating trust with potential customers and staying connected to long-time fans of the company as well.

References

Celeste Altus (2007, March). Dell provides its users a forum to share ideas. PRweek, 10(9), 6.

AMR Research (2005) -- The Handbook of Becoming Demand Driven. AMR Research Report. July 15, 2005. Accessed with permission from the publisher. Lora Cecere, Roddy Martin, Debra Hofman.

AMR Research (2006) -- What is Demand Visibility? AMR Research Report. Published March 14, 2006. Accessed with permission from the publisher. Lora Cecere and Roddy Martin.

Bernoff, J., & Li, C.. (2008). Harnessing the Power of the Oh-So-Social Web. MIT Sloan Management Review, 49(3), 36-42.

Chafkin, M. (2010, September). Social Media Grows Up. Inc., 32(7), 162.

Foreman, J., Gallien, J., Alspaugh, J., Lopez, F., Bhatnagar, R., Teo, C., & Dubois, C.. (2010). Implementing Supply-Routing Optimization in a Make-to-Order Manufacturing Network. Manufacturing & Service Operations Management, 12(4), 547-568.

Gemma Charles (2007, May). Can Dell turn his firm around? Marketing,15.

Gunasekaran, A., & Ngai, E.. (2009). Modeling and analysis of build-to-order supply chains. European Journal of Operational Research, 195(2), 319.

Jennifer Lawinski (2007, June). VAR Finds Its Niche -- Building extreme custom solutions for gaming and government markets drives AVADirect's growth. CRN,(1243), S.18.

Christopher Lawton and Suzanne Vranica (2007, July 10). Dell Pushes Reset Button on Its Image; PC Maker Ratchets Up Its Hipness Quotient To Regain Sales Edge. Wall Street Journal (Eastern Edition), p. B.7.

Liu, C., & Mackie, B.. (2008). Enabling Customization through Web Development: An Iterative Study of the Dell Computer Corporation Website. Journal of Information Systems Education, 19(3), 291-300.

Mandal, P., & Gunasekaran, A. 2003. Issues in implementing ERP: A case study., European Journal of Operational Research, Vol. 146: 274.

McCormick, A.. (2009, October). Dell boosts plans to sell via Twitter. Revolution,8-9.

Edward F. Moltzen (2007, July). 10 Rules For Dealing With Dell -- Dell's new channel… [END OF PREVIEW]

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