Operations Management of Dell Corporation (Term Paper Sample)

Operations Management of Dell Corporation
Student’s Name
University Affiliation
Operations Management of Dell Corporation
Introduction
Michael Dell founded the Dell Company in 1984 when he was on 19 years old. Michael, as a resident student at the University of Local Retailers, introduced features like memory and disk drivers which he sold from his car trunk. He boosted his $1000 personal savings with a bank loan which he obtained with his car as the collateral. The capital helped him employee a few friends and post advertisements in the local newspapers to popularize his 10%-15% below the retail price computers. Within a short time, Michael recorded a monthly turnover of $50,000 worth of PCs to local businesses. In fact, his first business year sales amounted to $600,000, which doubles every preceding year.
These turn of events pushed Dell out of school at the freshman level to fully manage his businesses. By 1985, Michael Dell started assembling his own computers, which he marketed via advertisements in the computer trade publications. Two years later, his company went through remarkable change as it initiated its first product catalog, reached out for large corporate accounts and became a public firm. Moreover, the company changed its name to Dell Computer Corporate from PCs and established its first global subsidiary in Britain.
In 1992, the Dell Computer Corporate featured among the Fortune 500 roster of the world’s biggest companies for the first time. Three years of serious business, following the fortune 500 listing, increased the company’s sales to about 3.5 billion dollars making it the largest direct marketer of personal computers. In same 1995, the firm appeared among the world’s leading PC vendors. This prompted the Dell Company to roll out its e-commerce marketing strategy in 1996 through the Dell.com website. In 2001, Dell topped in the global market share and the US for the consignments of customary Intel architecture servers. Two years later, the company rebranded its identity to Dell Inc. to mirror its diverse supplier of technology products and services (Dell, 2014).
Dell Inc’s 2005 Fiscal year was a terrific one because the company earned revenue of $55.8 billion, which translated to a net profit of $3.6 billion. The company defied the effects of cost pressure and increasing competition and increased its revenue to $57.4 billion, $61.1 billion and in 2007 and 2008 respectively. However, its net profit margin slightly dropped to $2.6 in 2007 but picked up again in 2008 to deliver an increase of $2.9 billion in 2008. The 2008-2009 great economic recessions did not spare the Dell Company. It lowered the company’s revenue to $52.9 billion with a net profit of only 1.4 billion dollars (Dell, 2014).
As the world started the economic recovery in 2010, Dell’s sales picked up becoming the world's number on healthcare information technology services provider. Consequently, it has won over 300 awards. In 2011, they rejoiced over a record-breaking fourth quarter with a double-digit increase in the strategic investment solutions and business space, and the biggest single-year revenue increase in the company’s backdrop. For the first moment in its history, Dell Corporation starts paying quarterly liquid dividends to shareholders (Collier & Evans, 2010).
Dell’s Supply Chain
Dell’s supply chain is a design to reduce cost, material and time waste to benefit the company's customers. Dell, therefore, relies on direct customer model, which constantly delivers directly to its customers the relevant technology and services at the best prices. The company invests in efficiently manufacturing and logistics to achieve a lower cost of technology. Dell’s supply chain, therefore, works in the following process (Linderman & Chandrasekaran, 2010).
Customer places an order, through the company’s website or via a phone call.Dell processes the order through evaluating its financial and technical feasibility within2-3 daysDell processes the order to manufacturing center closer to the customerThese manufacturing plants can assemble, test and pack the item in roughly eight hoursDell normally makes shipment arrangements of the finished product within a maximum of five days from the day it received the order.
Dell’s supply chain management
Dell Company's supply management has efficiently used the direct build-to-order model by observing five important strategies. The five strategies include fast time to volume, build-to-order goods, and eradication of reseller mark-ups, advanced customer support/service and low inventory and capital investment. The direct model, therefore, bypasses middlemen, and the company sells personal computers straight to the customers. Consequently, this avoids delayed delivery and additional costs caused by middlemen in supply chains. Moreover, the model allows the company to avoid selling of discounted old products due to warehousing for a long time.
Dell’s supply chain system provides for optimal levels of flexibility because it integrates its manufacturing supply chain with its procurement activities. This strategy Dell aimed at achieving through Global operations Organization. The introduction of this supply chain model accomplished Dell’s dream to remove overlapping activities and introduce new manufacturing and distribution models, which are customer centered (Boyer & Verma, 2010). The company has boosted its supply chain by adopting a supply chain management that plans orders and alerts suppliers every two hours, which enhance processing of orders that meet all of the customer's specifications (Gilmore, 2011).
Dell Company’s suppliers are spread out into the various parts of the world in which its branches are located. Materials reach its hub networks through road, water, and air within a month. From the hubs, the materials take 2-3 days to reach the company's processing plants through road. The next step is working on the customer's order to deliver them within one week.
Dell’s high-end customers were very prepared for direct delivery with very efficient customer support networks. This prompted the company to develop ell developed a set of new operation capacities in five essential areas. Firstly, Dell developed a flawless make to order system that captured its customers’ trust and confidence of convenience in the model. Secondly, the company worked overtime to establish an efficient supplier management functions so as to reduce the component lead duration and uphold the supreme quality standards. The third area touches on the company’s supply and demand. Dell Company developed a strategy based on "sell what you have" scheme, which is very crucial in matching supply and demand. The approach has also ensured the elimination of excess supply or demand of materials and products respectively (Linderman & Chandrasekaran, 2010).
The second last strategy introduced a uniquely hard set of product life-cycle administration capacities that yielded immense cost minimizations and strategic benefit. In this approach, Dell Company looks forward to manufacturing environmental friendly products by tracking their processing right from the raw materials to disposal. Finally, Dell’s suppliers collaborated with the company to reduce the life cycle of their products, which expanded the Dell’s business to the whole supply chain system (Collier & Evans, 2010).
Competitive Advantage Strategy
Dell Company's management understands well that price or market wars between competitors hurts business and the industry's reputation. It has therefore, married completion with corporation to create a reliable, competitive advantage over rival firms. In other words, Dell knows that it can trade customers at lower margins to register great market share gain through the straightforward competitive intellect (Collier & Evans, 2010).
The first strategic move is by investing more in its already existing diversification of personal computers. Customers worldwide are interested in a variety that meets their tastes and preferences. Dell can expand its diversification by exploring different parts of the world like the Middle East, India and Europe to learn more on potential customers’ preferences. For example, has established a Supply Chain Management Institute in Chinese Xiamen, which starts from the customer to the producer from customer giving the customer’s needs first priority (PI Staff, 2012).
Dell also combines customer intimacy, product leadership value, and operational excellence to stay ahead of its competitors. By attending to its customers directly, they get to understand their customer's needs first hand and respond to them immediately. It, therefore, brings this value proposition into play by establishing one on one relationship with the customer. This strategy beats its competitors who mostly rely on agents and middlemen to respond to their customer's needs. Besides, Dell offers direct line order placement and customized product delivery at low manufacturing and supply cost. In this way, the customers end up paying less hence saving. The company also gives their customers access to products and services like Microsoft within its supply chain hence providing everything under one roof (Boyer & Verma, 2010).
Commitment to Quality and Excellence
Dell Corporation knows that its public and business image is embedded on quality of its products and services. The corporation has achieved ISO certification several years such as ISO 9001, ISO 14004, ISO 27001 and OHSAS 18001 (Dell, 2012). To ensure that it is persistent in production of high quality products, Dell insists on contract...