Dell's e-system: Order fullfillment process

Fullfilling orders
In order to support the direct sales model Dell utilizes a build-to-order manufacturing system. Dell's e-commerce system is integral to the manufacturing of computers and provides a mechanism through which orders flow from the customer through internal systems and onward to Dell's suppliers and vendors that provide components or services required to manufacture computers.

Dell organizes it's manufacturing by region, with one or more assembly plants to service each regional market according to Kenneth et al[2]. Kenneth describes this part of Dell's I.T. system thus, "A key to manufacturing is managing inbound logistics with suppliers and contract
manufacturers. To have the parts it needs at the right time to assemble a PC, Dell requires
suppliers to hold inventory in warehouses within a 15-30 minute drive of its plants. Dell then
informs the warehouse when parts must be replenished, and they are trucked to the plant, where they are pulled off of the trucks as needed. When a PC is fully assembled, it is sent to an
outbound logistics hub where it is joined with the monitor and peripherals so that the complete
system arrives at the customer’s site together. All of these logistics are coordinated by Dell
through its internal IT systems and via electronic linkages with suppliers, its own logistics hubs, shipping companies, and distributors who handle third party items."

It is clear that the e-system employed by Dell, for the purpose of facilitating a virtual company is an impressive and complex use of information technology. Within the order fullfillment subsystem, control of ordering and logistics both internally and with suppliers ensures that the company has high levels of control over stock levels, shipping schedules and so on.

How does this benefit Dell's bottom line? By utilizing a direct sales and build-to-order model, Dell does not have to build up a large inventory of components or completed goods, either internally or within retail sales channels. Typically, Dell has an inventory turnover rate of approximately 60 times per year, compared with only 15-20 times a year for a typical indirect computing manufacturer. Kenneth[2] notes that this is key point, computing equipment can lose value significant value whilst waiting to be sold, especially if new product or component models are forthcoming.

References
[1] Kenneth Kraemer and Jason Dedrick, Dell Computer: Using E-commerce to support the virtual company, http://www.crito.uci.edu/git/publications/pdf/dell_ecom_case_6-13-01.pdf

Dell's e-system: Business to Business (B2B)

Selling computers to business via the internet

Short post to the blog this time around. In this posting I want to briefly discuss the B2B portal called "Premier Pages" that Dell customize for various business that have or intend to make large or consistent purchases from Dell.

"Premier Pages" (PP) are part of Dell's e-commerce system that provides a public webbased portal for potential or existing business customers to order computers. The portal is designed so that each business accesses a customized series of web pages. From these pages a user can review and purchase computers and related equipment. In most cases, the computers available for order a pre-configured to the specification of the businesses I.T. department. Furthermore, the PP offers a business the ability to review historic orders, modify any existing standard configurations for computers and accessories and generate paperless purchase orders.

According to Kraemer et al [2], Dell's PP is an extremely valuable part of Dell's e-commerce system. Firstly, it provides a means by which it can attract large companies to select Dell as a supplier of their computing equipment due to the features and ease of use associated with it. Secondly, the PP portal provides a paperless B2B mechanism through which business can place orders with Dell. Once orders are received the PP portal can pass the order directly onto the appropriate order component of the e-system.

Conclusion

Beside the standard consumer/smb website, the PP portal is the other primary means by which Dell can receive electronic orders for computers directly from other businesses. It forms a critical part of Dell's e-commerce system as it essentially represents the "frontline" of the system

References
[1] What is Premier, Dell Computer, http://www1.ap.dell.com/content/topics/topic.aspx/ap/topics/main/en/whatispremier?c=au&l=en&s=lca

[2] Kenneth Kraemer and Jason Dedrick, Dell Computer: Using E-commerce to support the virtual company, http://www.crito.uci.edu/git/publications/pdf/dell_ecom_case_6-13-01.pdf

Dell's e-system: Business to Consumer (B2C)

Selling computers to consumers and SMB's via the internet

Although it may seem common-place now, with many companies selling their goods and services via the internet, Dell was one of the pioneers of the direct sales via the internet model back in the mid 1990's. According to the Business2000[2] website case study on Dell, since 1996 when Dell opened its website www.dell.com for e-commerce the company has had huge sales success. By 1997 the company recorded $1 million in online sales. By 2000 the company’s internet sales had reached $50 million a day.

Dell markets it products and services directly to the consumer. The advantages of this for the consumer are that they may take as little or as long as they like to choose a product and configure it to suit their needs and budget. The screenshot below depicts the current homepage for Dell Australia. Dell splits up their product line into home/small office, medium business and large business categories.

Once a category is selected the user can view the product range to select the type of product that they are interested in purchasing. The screenshot below shows the product range for laptop computers in the home/small office group. Note the use of clear, colorful pictures and eye-catching product offers. According to Maguire[3], Dell has been one of the pioneers of direct consumer sales via the internet and their webpages are prime examples of the right way to sell products on the internet.

Once a particular product is selected. The purchaser has the opportunity to customize that product with peripherals and additional accessories to suit their requirements. As the product is customized the website recalculates the total cost.

Upon completion of the product customization or selection of a product model without change, the website allows the user to add the product to an online shopping cart. If the user elects to go ahead with the purchase of one or more products within their online shopping cart, the purchase may take place online, via a secure payment system, through Dell's finance services or the consumer may elect to call Dell to make payment. Once the payment has been made, the purchaser may return to the Dell website to track their order as it passes through the build-test-package-distribute cycle.

The direct-to-consumer via the internet sales approach also has advantages for Dell. Kraemer et al[4], note in their research paper on Dell that the value chain created around their products is simple: Suppliers->Dell->Customer. This simplified value chain allows Dell to have direct interaction with their customer and it saves them money by only building computers once a customer orders it (reduced warehouse related costs).

Conclusion

This blog entry is intended to be an informative piece that illustrates the unique method of directly selling computers and related products to consumers via the internet. In the mid 1990's Dell was a pioneer of this technique and remains so to this day. Their computer value chain is simpler than other PC manufacturers and does not introduce channel conflict with this model.

In researching this entry, I learnt that Dell had, prior to 1996, actually sold their computers via the traditional PC manufacturer model. But, they realized the value of the direct sales model through the then rapidly expanding internet and began moving their sales, service and manufacturing systems across to an e-commerce model whereby they effectively have become a virtual company.

References

[1] Dell Australia public website, http://www1.ap.dell.com/content/default.aspx?c=au&l=en&s=gen

[2] Business2000 website, Dell Case Study, http://www.business2000.ie/cases/cases_7th/case8.htm

[3] James Maguire, Case Study: Dell.Com, http://www.ecommerce-guide.com/news/trends/article.php/10417_2013731
[4] Kenneth Kraemer and Jason Dedrick, Dell Computer: Using E-commerce to support the virtual company, http://www.crito.uci.edu/git/publications/pdf/dell_ecom_case_6-13-01.pdf

Dell - a giant of e-commerce

Dell Computer is known around the world for it's ability to offer user customized computer systems quickly and simply via the Dell website to both consumers and businesses alike. It represents one successful example of a large company that has moved completely out of the "old world" retail channels into the virtual retail marketplace that the internet offers. According to Maguire[1], Dell launched it's website as nothing more than a static web page in 1994. By 1997, it was the first company to ever record one million dollars of online sales.

The remainder of this blog is dedicated to examing the underlying architecture and e-systems that compromise Dell Computers e-commerce platform. It is my intention to start at the "forward facing" components and work backward in in order to exame the architecture that forms the underpinnings of an extremely successful e-commerce company.

References:
[1] James Maguire, Case Study: Dell, http://www.ecommerce-guide.com/news/trends/article.php/10417_2013731

Some definitions first: Client-server computing and e-commerce

Introduction
The purpose of this research blog is to delve into e-commerce applications and investigate the pervasive usage of the client-server computing model that has been utilized by many systems to underpin this type of system.

Before going into detail, it is worthwhile researching and defining exactly what client-server computing and e-commerce actually is.



Client-server computing

The Wikipedia article[1] summarizes client-server computing thus, "Client-server is computing architecture which separates a client from a server, and is almost always implemented over a computer network.". A simplified yet detailed description of this computing model is described by Morgan[2] as a distributed computing system where a one program (on a client computer) communicates with another (on the server computer) for the purpose of exchanging some type of information.




According to Morgan, a typical data exchange commences with the client program making a request to the program running on the server. The server then prepares the response, with the actual processing that occurs being dependant upon the type of program, underlying data store and so on. Once the information has been prepared a response is sent by the server back to the client, therefore completing the request-response cycle.

E-commerce
E-commerce is the practise of utilzing computer networks, such as the internet, as a marketplace for activities directly or indirectly associated with the selling of goods and/or services. The Wikipedia e-commerce article states, "Electronic Commerce is exactly analogous to a marketplace on the Internet. Electronic Commerce (also referred to as EC, e-commerce eCommerce or ecommerce) consists primarily of the distributing, buying, selling, marketing and servicing of products or services over electronic systems such as the Internet and other computer networks". Brain[4] has written a great e-commerce primer at the website "HowStuffWorks".

References:

[1] Wikipedia, Client-server computing, http://en.wikipedia.org/wiki/Client-server_computing
[2] Eric Lease Morgan, Infomotions, http://www.infomotions.com/musings/waves/clientservercomputing.html
[3] Wikipedia, E-Commerce, http://en.wikipedia.org/wiki/E-commerce
[4] Marshall Brain, HowStuffWorks, http://communication.howstuffworks.com/ecommerce.htm

Welcome to Michael's research blog

Greetings one and all.

This is my research blog for the ITC565 subject that is part of the Master's degree I am currently studying for. The intention of this blog is to investigate, analyse and comment on the recent advances, associated technology and architecture of e-systems for the purpose of e-commerce.

My personal blog can be found at http://www.mickp.net

Cheers for now,

Michael Pearce.