Dell Computer Corporation

There are several factors to consider in distribution, customer service, and logistics. Dell Computer Corporation incorporates all of these factors seamlessly in its design, manufacturing, sales, and delivery of technology products. The company has grown from a University of Texas dorm room to an international leader in technology manufacturing.

Choosing the right distribution channel is crucial in getting products to the right target market's place. That alone however doesn't ensure that products are placed within an arm's reach of desirewhen and where, in the quantities that customers want them and at a price they're willing to pay. Marketing managers ensure that they have physical distribution systems that meet their customers' needsat both an acceptable service level and an affordable cost.

Decisions in the logistics area may also have a very significant impact on the cost of a marketing strategy. The total cost approach to physical distribution, the physical distribution concept, and customer service levels are all important ideas which have significantly improved some companies' marketing strategy planning.

In this exercise, please read the mini-case and answer the questions that follow.

Dell Computer Corporation is a case study in entrepreneurship. Michael Dell, who as a teenager analyzed newspaper buying patterns to customize his subscription sales for the Houston Post targeting newly married and people who had moved earned enough to buy a BMW prior to enrolling at the University of Texas in 1983. By 1984 his dorm room business of selling handmade computers was bringing in $80,000 a month. Dell incorporated Dell Computer Corporation in April 1984, dropped out of college, and launched a company that is now an international leader in technology sales. Dell focused on customer service and direct sales. In 1990 Dell was the top rated company in the first J.D. Power & Associates ranking of personal computer manufacturers. In 1992 Dell instituted its Professional Services Capabilities Unit. It coordinated the international services of Dell's global programs. In 1993 Dell initiated a program that allowed customers to select the level of service they received when buying a computer.

Initially direct sales were handled by phone. The direct sales model allowed Dell to build computers when they were ordered, allowing inventory costs to be kept at a minimum, compared to competitors who build thousands of computers in different configurations for sales in stores or by catalogues. In 1996 Dell started selling computers on the World Wide Web. The direct sales model migrated easily to the Internet, including automation of not only customer services but also supply chain management. Over the next 10 years inventory control of components through the supply chain of subcontractors and products was cut from a week to fewer than 24 hours. Dell incorporated transportation and logistics management of its international manufacturing to include all forms of transportation for efficiency, creating an integrated physical distribution concept. The customers, when making an order, choose the final physical distribution based upon how quickly they want delivery of their computer. Empowering the buyer with the decisions of the computer components, delivery, and service increased customer satisfaction. Dell's decision to utilize "Green" technologies to become a carbon neutral company increased customer satisfaction with companies and individuals concerned with the environment. In 2009 nine of its European and American facilities were powered by renewable energy, including 100 percent of its 2.1 million square-foot global headquarters at Round Rock, Texas.

1. Dell's management of its supply chain and online ordering process allows it to lower its costs through

a. trade offs among distribution and customer satisfaction.

b. the total cost approach.

c. efficient use of distribution centers.

d. a just-in-time delivery system.