Dell: Simple little slogan generates big payoffs
By J.D. Mosley-Matchett -- Movers & Shakers, 6/1/2000
To anyone claiming that portable devices herald the demise of PCs, Michael Dell has only one thing to say: 'You can't find a Palm Pilot user who doesn't have a PC.' The namesake and CEO of Dell Computer is decidedly bullish about the future of PCs. He's the industry's longest tenured CEO and he's also the youngest person ever to lead a company into the Fortune 500. In fact, Dell has attained many firsts. With his $21.49 billion net worth, he easily tops Fortune Magazine's list of the 40 wealthiest people under 40--outpacing second-place Jeff Bezos of Amazon.com by more than $15 billion. His company breaks records, too. Dell's Web sales currently exceed $40 million per day, a truly astounding figure when you consider that most online retailers seem incapable of turning a profit. To reach these dizzying heights, Dell fervently follows a deceptively simple platitude: eliminate unnecessary steps. His 'Dell Direct' slogan is more than a phrase--it's a mantra that has propelled Dell from constructing PCs by hand in his University of Texas dorm room to being the leading supplier of PCs to business customers, government agencies, educational institutions, and consumers in the US.Dell's direct model allows his firm to sidestep intermediaries, maintain the leanest possible distribution channel, streamline communication, and eliminate bureaucracy. Dell calls it 'frictionless commerce.' By building to order, Dell Computer avoids overstocking and second-guessing. 'While other companies had to guess which products their customers wanted because they had built them in advance of taking the order,' he says, 'we knew--because our customers told us before we built the product.' This tactic also provided Dell with timely insights regarding the ebb and flow of configuration trends. A model of efficiency, Dell Computer has not only streamlined its direct-marketing channel but also pared its component inventory to skeletal dimensions by integrating the company's production database with its suppliers' manufacturing and delivery capabilities. Not just a simple extranet link, the integration actually merges the supplier's computer system with Dell's. When companies lacked the technical sophistication to create the necessary programming hooks, Dell Computer sent its own programmers to perform the task. The result is more than a Just-In-Time (JIT) delivery program; it's closer to a uniform meld of purpose and task. Winning ways The high level of trust and cooperation exhibited in such a union is high testimony to Dell's sterling reputation for integrity and competence. While most JIT schemes merely transfer the inventory storage task from the manufacturer to the supplier, Dell has transformed JIT into a win-win proposition by creating production efficiencies for the suppliers as well. The same integrative concept lies at the heart of Dell's Premier Pages service. This option for business-to-business sales extends Dell's online efficiencies into its customers' business structures. Each Premier Page is actually a customized extranet connection into the Dell Website, complete with online sales and invoicing. More than an Internet storefront, a Premier Page can reflect the purchasing company's existing Web presence by integrating the firm's logo and purchase order form. Links to and from that company's intranet generate a further sense of seamlessness. Auto-login for each approved purchaser can be set to a pre-specified user access level, offering a level of security and management that keeps the purchasing manager in control while reducing administrative headaches. By adhering to its mantra of simplification, Dell Computer has become the undisputed model for how to profitably conduct business electronically. Nearly half of Dell's sales currently are Web-enabled. Online transactions constitute 40 percent of the company's technical support activities and 70 percent of its order-status investigations. Now Dell is leveraging that expertise by becoming an e-business mentor. The company has introduced a portfolio of services, called Dell E Com, through which Dell Computer passes on its first-hand knowledge of how to succeed online. The portfolio includes consultative support services, Web hosting, and connectivity solutions. Select companies can even tap into incubation services and an equity investment fund. This brand extension even includes an online training center dubbed Educate U. A compendium of hundreds of Internet-based classes offers training for both businesspeople and consumers, with a host of topics ranging from programming to finance. Critics allege that Dell Computer is infringing on the business of the very companies that purchase its servers. Dell counters by emphasizing his company's unique advisory capacity; the PC giant is simply sharing the benefits of its online experience with small firms that would otherwise lack the resources to succeed in an increasingly complex electronic marketplace. It remains to be seen whether this expansion from manufacturing into consultancy is a stroke of genius or a miscalculation. Regardless, Dell has a long track record of managing to 'under-promise, and over-deliver' while confounding conventional wisdom. The CEO has repeatedly baffled the nay-sayers who asserted the impossibility of his goals even as he exceeded his objectives. |
