How the policy of working capital was a competitive advantage for Dell?
The working capital policy constituted a competitive advantagefor Dell, as the use of a strategic marketing chain characterized by the work system "on demand", which directly integrated customer orders in the system of production company ,reversed the concept of the need for working capital to get that flow of money before delivering the products, then the case of a negative working capital.
Thus, the companycould offer a high level of customization and implementation of a manufacturing process "Just In Time", which minimizes the level of stock and work in the moment with allcomponents and peripherals available on the market. As well as improve the level of their inventories and increase the speed of rotation of its assets, consequently resulting inimproved productivity, which is the key to its success.
This strategy is important because not only allowed him to have the prompt availability of cash, but also to reducefinancial costs, such as:
- Storage: Cost of space
- Management: The cost of management time in the count, inspection.
- Obsolescence: Risk that the product is transformed intounsaleable if it remains too long and require improvement.
- Damage: The inventory has the potential to become unsaleable
- Theft: The removal of the inventory
2. How doI finance Dell 52% growth in 1996?
In the period 1996, Dell Computer Corporation reported a revenue growth of 52% over the previous year, with a record $ 5.3 billion, whichwas financed entirely with internal funds.
This funding was made possible by Dell changed the traditional model of making computers, combined with management of "Just in Time