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Operating Management

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In today’s society, most of the people cannot be separates from an electronics product. Without electronics, our life would be at a deadlock and nothing would get complete quickly. In 1984, the legend of Dell began in American. There was a student Michael Dell at the University of Texas in Austin who would like to build relationships directly with customers. In order to focus full-time on his fledgling business, he dropped out of university. After a decade, Dell has become the largest technological corporations which employ more than 103,300 people over the world by starting with the expansion-capital of $1,000 from his family. One of the main factors that make Dell success is operation management. Nowadays, operation management plays a central part of any organisation as holding the whole operation system of the organisation. It leads to positive results of helps business in gaining high profit like cut down the labour costs. Since operation management makes business practices more efficient, Dell continuously attempt to move from being focused on operation management to maximise profit and strategy.

Nowadays, operation management plays a crucial role in base-lining, budgeting and controlling costs. As an international corporation, Dell is having enough skill and knowledge to carry out its global strategy, bring a great competitive advantage to the company. One of the elements of Dell’s competitive edge can be credited to its strong SCM process which gives them superiority on the competition. In order to gain an advantage over its competitors, Dell locates its factories in close proximity to its regional market like Ford, Boeing, and Texaco to cut down delay between purchase and delivery. Hence, an assembling, testing and packing process can be completed in just eight hours from the time an order is received. To create a competitive advantage, Dell adopts the direct-sales model into its manufacturing process which has an extremely low transfer time and produces goods and services quickly as well as of high quality.

In such a rapidly growing society, the living standards of people continue to step forward and the demand of people is getting more diversified. To satisfy with a variety of customer requirements, customization production is becoming and be widely used by a firm as it can achieve variety and high customer satisfaction. In the computer industry, the key factor for enterprises survival lies in keeping a good and strong connection with customers. Unlike other competitors, Dell spends a lot of resource on efficient installation and configuration of PCs. It uses the Web-based information system which increases the relationship with its customers as well as its suppliers. Based on modules, the product can quick in reacting to address various issues or provide help when necessary or get to know the needs of different customers. A successful mass customization strategy offers high customer satisfaction which leads to improving Dell’s reputation and sales and even brought diverse interest from competition from all industries. In addition, with customized and order-based assembling, Dell enjoys a lower-cost production of goods and sustained low prices. With the core mission of attaining excellent quality, competitive pricing, and warranties, Dell gains a great customer demand and market growth.

Electronic waste is one kind of the solid wastes, the number of which is increasing drastically as the result of the rapid development of information technology. Simultaneously, as a global producer of the computer product, Dell aims to achieve the positive impact of creating a favourable environment for their customers and the planet. It designs a product with the technology of closed-loop plastics. Dell uses plastics from old computers recovered from technology gathered through their recycling effort to turn that back into new plastic parts gives these plastics a prolong life. Using recycled materials rather than virgin content results in a smaller carbon footprint and even reduces costs or improve service and enhance customer loyalty.

In recent years, like other companies, Dell faces the biggest challenges of improving the product that is high quality but low in price. In the late 2000s, a desktop computer which was the key focus of Dell was being overtaken by laptop and smartphone. While technology is changing swiftly as time goes, it drives many new competitors entering the market like Apple and Acer adopted an extremely focus on worldwide innovation. Nevertheless, Dell was still consistent with its own perspective and refuse to make and keep up with technological change. Dell comes off it’s ranking as the leading global computer maker.

Like any start-up, Dell fails to achieve their goals because of poor strategic planning. As we can see, the market is rocky and the economy is wobbling, in the recent month foreign exchange value of the dollar had weakened and Dell had to pay more to their foreign counterparts. Shareholders of Dell are suffering from the fact as the investment interest is not assured and that in return affects Dell fall in share prices and unable to generate strong liquidity cushions as well as maintain a sizeable cash balance.

As an old saying goes, every coin has two sides especially inventory level. Due to the success of its direct sales model, it leads to an inability to scale and meet demand as order-processing consume times and costly. In some stores, it causes a long delay in people getting their order and turn some regular walk-in customers away. Sometimes, customers will change its mind at the last minute which also takes up an increasing portion of resources. As a result, this may cause a strong impact on Dell’s net sales and revenue. Traditional strategic planning was often build on previous data and create huge blind spots in the final strategic plan. Therefore, this is the reason that why Dell is struggling so badly as it cannot figure out the needs of their customers except for the low prices.

In the high-tech area, most of the companies are shifting to a build-to-order process and Dell is no exception. At Dell, a build-to-order process is called “pull to order” which is similar to total quality management. It is only one part of Dell’s approach to efficiency as they can eliminate their warehouses in factories and reduce one half of the need for human intervention. With the pull-to-order system, Dell is able to accomplish a four-hour production cycle time. Therefore, Dell generally satisfies customer requirements within five days.

In supplier relationships, Dell is able to perfectly maintain the balance between demand and supply and its stocks are declined to only three days’ worth by using its Internet-based ordering system that updates suppliers with the latest demand trends. It also improves cash flow or shore up balance sheet by paying suppliers after customers have paid off the credit. Without a vast inventory, this leads to a marked increase in keeping the costs small for their customers.

To support the mass customization process strategy, Dell adopts a JIT methodology to manage and minimise the level of inventory in the industry and become a power that supports it much success. In such a short period of time, Dell’s share price rise sharply by 17% as its earnings go up to $16 billion at the annual growth rate of 50 percent. JIT methodology not only provides Dell to have the opportunity in the huge changes such as develop a good relationship with the supplier and increase customer satisfaction, it also freeing up funds for other departments of the organisation as less storage space needed with a high turnaround good. Keeping off unnecessary stock investments help Dell stay competitive, maintain a healthy cash flow and expand to international markets.

Dell expects to be able to give customers high quality but low in price. To achieve this objective, Michael Dell establishes a direct model which cut out the middleman. The net effect took the company into being a big-players and away from being the low-cost provider such as cutting operating costs. The direct model offers several key benefits. By allowing to get even closer to the customers, Dell can customize their requirements according to the consumers’ needs, improve delivery time or maintain customer service.

From this study, we can realize that operation management is the core support of any business including Dell. Dell’s advanced operation management systems and innovation work culture together with the integrated marketing communication contributed to its success in business which not only cut the budget deficit and times as well as offers them superior services and competitive advantages as they could comprehensively solve the troubles.

Dell rise and fall in the computer industry have sent a message and reminder to itself that all good things come to end. Therefore, Dell needs to make a considerable change to its structure. It could consider the type of wholesale restructuring which will offer a comprehensive restructuring out of the glare of the open market and catch the buyer’s eyes in order to maximize profitability.

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