04
Dell Direct
Class 1: IT & Business Strategy
Stanford Case – EC-17
Case Summary by: Silvie Hwang
Main Takeaways
Dell Direct Model focused on speed of execution and minimum inventory. Dell eliminated the
costs from reseller and introduced latest technology faster than competitors. Additionally, the
internet increased the efficiency of the sales process. The internet helps Dell to start ecommerce
and provide more intimate customer service through customized homepage “Dell Premier
Pages.” Dell also used the corporate intranet to streamline information flow within the company.
Likewise, Dell used extranet “Valuechain.dell.com” to exchange real-time information with
suppliers.
More in-depth Summary
Operational excellence: Dell Direct Model helped Dell improve operational excellence by
minimizing operation costs and providing reliable products and service.
Dell Premier Pages
- Allows customers to order and track on line, and also provides online troubleshooting and
online software update. Saves operational costs and time for both Dell and its customers.
- Integration: to a corporate employee, the Premier Pages appear as corporate intranet.
- Centralized control: employees were given different levels of password-protected access to the
site, depending on their business needs.
Valuechain.dell.com
The extranet allowed suppliers to share real-time information with Dell on their capacities,
inventories, quality metrics and costs, with Dell provided them with information on customer
demand, product quality and technical customer requirements.
Customer intimacy: delivering customer solutions by segmenting and targeting the market then
tailoring the product or service to satisfy specific customer needs within each segment
Dell Premier Page
- Automated Purchasing: corporate users ordered from pre-approved configurations at prenegotiated prices. Premier Dell provides answer to almost all the questions and requests
customers might have.
- Facilitated Access: Premier included customized contact information for Dell’s account and
service and support team members assigned to the account.
- Management Reporting: Customers could use their Premier site to obtain management reports
to track orders and deliveries, to itemize and summarize computer expenditures, and to manage
their PC assets.
Customer Segmentation
Other than customized homepage, Dell segments customers by different accounts: platinum and
gold
Case Discussion / Digest Questions
Dell Direct Model
 No intermediate seller
 Minimal inventory
 Close relationship with
supplier/customer
 Customized computers
 Aggressive pricing
 Online support
 Customer website
Internet with Five Forces
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Responsible of service & support
Customer segmentation
Fast time to market
Linking order entry with operation
Outsource component supply
Trusting relationship with suppliers
(information sharing)