Question 7
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CASE STUDY - OPERATIONS IN PRACTICE
It all started as a method of cutting out the 'middleman' and delivering quality PC-compatible computers direct to the customer without having to pay retail mark-ups. But using its
direct selling methods, Dell went on to become the number one computer maker in the business world and is quite clearly a success story in an industry where many brand names
disappeared as competition became fiercer. There are several reasons why Dell has been successful, but most of them come down to the way the company has developed its position
in the supply network.
Founded in 1984, the company introduced its first computer system to its own design a year later. Through the rest of the 1980s and the 1990s, growth was rapid. Dell's first
international expansion began with the opening of its UK subsidiary in 1987. Now from its corporate headquarters in Austin, Texas, the company controls sales and service subsidiaries
around the world as well as its six manufacturing locations. One reason for the company's success was the realisation that direct contact with its customers could lead to some
significant business benefits. For example, you know what your customers think without the information being passed back up the supply chain. It also allowed some customisation,
with individuals specifying key components. With some clever product design, Dell can offer a wide variety of products by combining a far smaller number of standard modules. By
using the company's website, or by calling its sales representative, a customer can be guided through a step-by-step 'design' process which specifies the computer's speed, storage,
type of monitor, etc. This information is passed on to a Dell factory which 'kits' the order (that is, collects the specific modules which will go into that computer) and makes the
computer 'to order'. Fast assembly and delivery times ensure that a computer specified by a customer and made specifically for that customer is delivered fast and efficiently.
Relationships with component suppliers are similarly close. Dell says it regards its suppliers as partners in creating value for customers. 'When we launch a new product,' says Michael
Dell, 'suppliers' engineers are stationed right in our plants. If a customer calls up with a problem, we'll stop shipping the product while they fix design flaws in real time.'
Source: Slack, N. Chambers, S. and Johnston, R. 2007:148. Operations Management. 5th edition. England: FT Prentice Hall: Pearson Education
2.2 Discuss customer relationship management (CRM) {5} and identify how Dell used CRM to advance its business offerings. {1}
(6)
Customer relationship management (CRM) is a method of learning more about customers’ needs and behaviours in order to develop stronger relationships with them. it is a process
that helps to understand customers’ needs and develop ways of meeting those needs while maximizing profitability.CRM tries to help organizations understand who their customers
are and what their value is over a lifetime. It does this by building a number of steps into its customer interface processes. First, the business must determine the needs of its
customers and how best to meet those needs.
From the case study Dell used CRM to advance its business offerings in different way. dell removed third parties in the supply chain to remove the mark ups. The case study indicates
that It all started as a method of cutting out the 'middleman' and delivering quality PC-compatible computers direct to the customer without having to pay retail mark-ups. One
reason for the company's success was the realisation that direct contact with its customers could lead to some significant business benefits.
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Assessment 6
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