Caso Dell

CENTER FOR RESEARCH ON INFORMATION TECHNOLOGY AND ORGANIZATIONS University of California, Irvine 3200 Berkeley Place Irvine, CA, 92697-4650 www.crito.uci.edu

Dell Computer: Organization of a Global Production Network
AUTHORS: Kenneth L. Kraemer and Jason Dedrick Center for Research on Information Technology and Organizations University of California, Irvine

This research is supported by agrant from the Alfred P. Sloan Foundation.

INTRODUCTION In 2001, Dell Computer became the world’s largest personal computer vendor, continuing to gain market share and post profits in an industry struggling with slumping sales and billions of dollars in losses. Dell sells 90% of its PCs directly to the final customer, largely bypassing the reseller channel that accounts for most of the world’sPC sales. This direct customer relationship is the key to Dell’s business model, and provides distinct advantages over the indirect sales model. Dell’s direct relationship with the customer allows it to tailor its offerings to customer needs, offer add-on products and services, and use the Internet to offer a variety of customer services. In addition, Dell’s PCs are built to customers’specifications upon receipt of an order, giving Dell additional advantages over indirect PC vendors who must try to forecast demand and ship products based on those forecasts. Dell’s direct sales and build-to-order model has achieved superior performance in the PC industry in terms of inventory turnover, reduced overhead, cash conversion, and return on investment (Kraemer, et al., 2000). Dell’s businessmodel is simple in concept, but very complex in execution. Building PCs to order means that Dell must have parts and components on hand to build a wide array of possible configurations with little advance notice. In order to fill orders quickly, Dell must have excellent manufacturing and logistics capabilities supported by information systems that enable it to substitute information for inventory.The demands of Dell’s model have led it to adopt a new organizational structure referred to as a virtual company or value web (Figure 1). It is marked by a focus on a few key strategic activities, and extensive outsourcing of non-strategic activities. Dell works closely with external partners to produce its PC products and to offer its customers an array of additional products and services that addvalue and allow Dell to capture a larger share of the customer’s IT spending. To manufacture its products, Dell coordinates a global production network that spans the Americas, Europe and Asia, combining in-house final assembly with heavy reliance on outside suppliers and contract manufacturers. Manufacturing of printed circuit board assemblies (PCBAs), subassemblies (box builds), and some finalproducts (mainly notebook PCs) is handled by contract manufacturers or original design manufacturers such as SCI, Solectron, Celestica, Hon Hai, Quanta and Arima. Like other PC makers, Dell relies on outside suppliers for components and peripherals such as disk drives, CD-ROM drives, semiconductors, add-on cards, monitors, keyboards, mice and speakers. Its PCs can be bundled with standard softwaresuch as Microsoft Office or with specialized software requested by corporate customers. Dell relies on outside partners for services such as system integration, installation, on-site repairs and consulting. Partners include Wang, Unisys, IBM and BancTec. It also works with resellers who support Dell hardware and receive referral fees for recommending Dell to customers.

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FIGURE 1. Dell’sValue Web Model

CMs/OEMs

Logistics companies

System integrators

Co mponent suppliers

Dell

Custome r

Third party HW and SW suppliers

Distributors

Repair and support companies

Physical flows, including products and services Information flo ws

As Dell has moved beyond its home market in the U.S., it has had to adapt its business activities and organizational structure...