Michael Dell and SCM

Michael Dell Decides to Sell PCs Directly to Consumers and Built-to-Order • Michael Dell decided that to be successful in the PC (Personal Computer) business and to gain a significant competitive advantage he would bypass the dealer channels through which personal computers were being sold. Dell developed and deployed their own channel for manufacturing and selling PCs. This personal channel eliminated the reseller markups and large inventory expenses and allowed Dell to operate with lower costs than anyone in the industry, which led to higher profit margins. Discuss YOUR THOUGHTS on this considering what we have learned in class about SCM. • What has happened to the profit margins in the PC business over the past 17 years? What is the trend? Can you see smart mobiles taking a similar path with margins decreasing over time like the PCs did? What did IBM do with their PC business considering the tightening margins? (Hint: Lenovo) • Can efficient SCM and software that provides strong visibility in the supply chain reduce buyer power? Please explain (in your own words). • Dell started selling PCs directly to customers from his dorm room in college… was this entrepreneurial at the time? Can you see yourself being entrepreneurial and starting a business some day? • Michael Dell understood that consumers were getting smarter and that customer service abilities were becoming more sophisticated. Beginning with telephone sales, and then moving to Internet sales, Dell bypassed retailers and targeted corporate accounts. Dell understood that tailoring products to meet specific requirements of large accounts could be accomplished not only more cheaply, but also more effectively without an intermediary. How do you think the retail stores (Think of a Best Buy for example) at the time felt about being “cut out” of the process? (Again, your thoughts… read about it with some basic research and formulate your own thoughts) • Dell used to boasts sales of over $12billion and is the world’s number one direct-sales computer vendor. The company’s Web site currently generates over half of its orders. Everybody in the industry was trying to imitate Dell’s strategy. • Dell was one of the leaders in “just-in-time inventory” … why was this important to the PC industry (hint: Moore’s Law and technology obsolescence) • Dell purchased EMC (a computer storage company and owners of VMWare) for over $67B… What might be the strategy here? Do you think this was a good move? Why? Why not? What might the future of the Dell look like? (More of a business services company like IBM as opposed to a PC company? Why?) • What might the future of Dell look like? – Make a connection with Moore’s Law – Use BPR – Please answer all the questions. – Use critical thinking – I don′t need any references – Do not copy anything from the internet

 

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Michael Dell and SCM was first posted on March 24, 2020 at 9:37 pm.
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