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Dell & Supply Chain Management

SOM 123 M003 Team 1 - Spring 2004

Jessica Altman - Team Coordinator

Supply Chain Management & Customer Satisfaction

Jason Barton

General Business: Dell

Nick Beauregard

Dell Prospers Due to Effective IT Inclusion

Erica Bromberg

Public Relations & Dell

Trina Byers

Finance & Dell

Steve Caplan

Finance and Dell's Competitive Advantage

Table of Contents

Group Report

Executive Summary 3

Focus of the Proposal 4

Research and Analysis:

Dell's Competitive Advantage 6

Dell's IT Tools 9

Dell's Business Model 14

Dell's IT Infrastructure 18

Our Recommendations 22

Resources 26

INDIVIDUAL ASSIGNMENTS

Jessica Altman - Supply Chain Management & Customer Satisfaction 30

Jason Barton - General Business: Dell 36

Nick Beauregard - Dell Prospers Due to Effective IT Inclusion 39

Erica Bromberg - Public Relations & Dell 44

Trina Byers - Finance & Dell 48

Steve Caplan - Finance and Dell's Competitive Advantage 51

Executive Summary

Constantly changing technology directly impacts Dell's success and future. Although Dell is an extremely successful company, there are areas of improvement and enhancement that should be considered. After a thorough analysis of Dell's IT tools, business model, IT infrastructure and competitive advantage, we have developed seven key suggestions. By implementing these recommendations, Dell can keep its high ranking in the competitive computer industry by increasing customer satisfaction, competitive advantage and superior value chain, without changing its principal operations to achieve these goals.

Our recommendations allow Dell to enhance their supply chain management system, increase customer service, gain market share, and increase revenue.

1. Consider selectively adding other vendors to its supply chain management system.

2. Initiate a program to use "Customer Surveys" to gain market share.

3. Invest more in their Research and Development to develop new products and services.

4. Consider offering online data back-up capabilities.

5. Implement a program to reduce errors in their direct Internet ordering system and create a "Clearance" area on its website for systems produced in error.

6. Enhance Dell's customer support services.

7. Increase their company recognition through a national advertising campaign.

Focus of the Proposal

Dell Computer is a leader in the e-commerce computer hardware market. It is an established brand that leads personal computer manufacturers both in U.S. sales and overall online sales. Its trademark method of selling products to customers, corporate and individual consumers, emanates from the Dell Direct model, a Web-enabled infrastructure that allows customers to customize their PCs and order other products they need or desire. This virtual integration structure eliminates the need to manufacture everything, and instead uses the power of the Internet to share and exchange information with suppliers and vendors to build a truly superior supply chain that keeps inventory turnover low and costs to a minimum.

The primary method Dell uses in order to achieve and sustain their competitive advantage is a unique, direct to customer business model. The model is known as Dell Direct, referring to their relations with their customers as being "direct." This model helps Dell focus on price for performance, customization, service and support, latest technology and superior shareholder value. Additionally, Dell is able to distinguish itself from its competitors with its customized on- demand manufacturing. With this customization, Dell is able to offer customers more value for their money by eliminating intermediaries in their procurement, manufacturing and distribution processes.

Dell's primary resources include the most up-to-date technology and IT tools that allow it to successfully move along their superior supply chain and achieve the value they strive for. Dell's value chain allows Dell and its suppliers to exchange information and interact with each other. The Internet, Dell's key IT factor in its success, results in lower costs to customers than other retailers because customers tell Dell exactly what they want and Dell creates products for the consumer without experiencing wasteful resources in production.

Overall, it is evident that Dell's competitive advantage lies in its Direct model success. Through Dell's IT performance, which combines its resources, its relationship with suppliers and its consumer communication capabilities, Dell has developed one big advantage over its competitors.

Research and Analysis

Analysis of Dell's Competitive Advantage:

Dell is officially the No. 1 computer systems company in the world. Dell is able to sustain