In a competitive arena, companies seek to have an advantage through means that are not necessarily related to price. Constraints against outsourcing due to excessive decentralization within organizations can have a negative impact on the value chain process. Combing various options and being open to diversification would support in increasing the speed-to-market and enhancing the quality of products (Ernst 2000).
Dell has an operational facility in Penang Malaysia, which places Dell at a central position near to where most suppliers actually have their factories. Orders for goods come directly to Penang center through the integrated suppliers’ logistic centers (SLCs) chain. The Penang center sends emails to suppliers requesting the parts that will be assembled based on the customer’s order. The entire model was efficient enough to require no more than 36 hours from order to shipping. In terms of quality of service, Dell has won numerous awards for highest quality. In spite of that, it continues to find means to increase the efficiency of its products. Michael Dell suggested that reducing the human interaction with hard drives during assembly would decrease its failure rate. As a result, the reduction of the number of “touches” dropped the failure rate to 20%.
The general attitude from individuals and employees within organizations is that automation through information systems complicate their internal processes, and might result in cutting down the number of staff (Khatibi, V.Thyagarajan and Seetharaman 2003). There are several psychological and behavioral problems associated with reluctance to change, which appear to impede the growth of E-commerce. On the other hand, retailers no longer think their web sites are simply an added benefit for their customers since the ROI (Return on Investment) percentages from online websites have far outweighed their bricks-and-mortar counterparts (Casey 2004). For that reason, the staff involved in the traditional sales process requires training to embrace new technologies and to learn how they can benefit from it.
For Dell online store the response from the consumers was huge, however, at first the sales representatives feared that the online website would reduce the number of sale deals they closed. To overcome this, Dell introduced the cost saving model showing how the online store would support sales representative close more deals and at the same time would produce cost effective results that would have a positive ROI on the business.
Customer relations management (CRM) is a very vital competency that was born from the amount of transactional sales deals through call centers. The process of understanding customers goes through the initial phase of collecting data then analyzing trends and eventually building a knowledge base that will drive the profitable relationship (Liew 2008). Organizations’ use of CRM models is an attempt to get firsthand knowledge that would improve marketing effectiveness, bring more personalization, and build brands among other objectives based on the nature of the business (Anderson, Jolly and Fairhurst 2007).
Michael Dell model is based on keeping no inventory, in order for Dell to maintain that they focused on segmenting their customers into scalable businesses that can be analyzed for their level of demand. Sales executives at Dell used communication skills to elicit information from customers that would further support the demand forecast initiatives at the company. In addition, Dell sent surveys to customers to further understand the satisfaction level with the services provided by Dell and modify its product line and services accordingly. Furthermore, Michael Dell discussed how regional meetings in various countries invited potential customers to further enrich the relationship and give room for comments and feedback about Dell’s services. On top of all that, Dell strived to provide information for its customers to help them make proper choices for their IT requirements and gain privileged information about new and upcoming technologies. Dell invested in developing a web portal in the form of “Premier Pages” for high-end customers and another for small to medium businesses at Dellmarketplace.com. Both sites aim at providing information to customers and establishing a single point of access for customers’ IT service requirements.