PartPart One Case Studies Dell - Pioneers in Mass Customisation John Mangan Newcastle University, United Kingdom Dell Technologies is today one of the world's largest technology companies and comprises seven industry leading brands, namely Dell, Dell EMC, Pivotal, RSA, Secureworks, Virtustream and VMware.1. The combined organisation is active in a range of technology sectors from cloud computing to hardware manufacture. One of the organisation's most significant milestones was when Dell and EMC joined forces in September 2017 in one of the largest technology mergers in history. Our interest in this case, however, extends to much earlier than this and focuses in particular on its pioneering new way of manufacturing and delivering computers and related devices since the establishment of Dell in 1984 by a young medical student in Texas, Michael Dell. Today those products are manufactured in the Dell division/brand within Dell Technologies and comprise not only desktop computers but also laptops, 2in1s and thin clients, as well as monitors and other peripherals; services too are provided such as security solutions. Dell ascribed much of its success to its expertise in supply chain management and the velocity with which it is able to process and deliver orders - in the personal computer sector where competitors often take weeks to build and ship product, Dell's metrics are hours and days. Its successful production model has been imitated by many other companies both in the technology sector and other sectors too. DIRECT TO CUSTOMER Central to Dell's phenomenal success is its distribution strategy: since it started to build its own machines in 1985 (prior to this the company had focused on upgrading old IBM machines), it has sold direct to the customer, disintermediating any 'middlemen' and getting product faster to the customer. The computers themselves were viewed by some as not particularly remarkable from a technological perspective, so much so that in 1996 The Economist magazine described Dell as 'selling PCs like bananas'. The business market segment is highly important to Dell, and the company has invested in CRM in order to stay close to key customers, while also evaluating the costtoserve different customer segments and designing product offerings accordingly. Finished products are delivered by thirdparty logistics partners direct from the manufacturing plants to customers, often mergingintransit with peripherals. FULL VISIBILITY AND PARTNERSHIPS WITH SUPPLIERS The Internet is central to Dell's strategy, allowing direct communication with customers and realtime visibility of purchasing patterns. Indeed, a key attribute of the Dell supply chain is full visibility along the chain with sales and production systems linked to suppliers who supply components justintime, usually direct to the production line and often with very short lead times (sometimes even as little one hour!). Consequently, Dell needs limited warehouse space for inbound raw materials. These preferred suppliers and their expertise in vendor managed inventory (VMI) play a key role in Dell's success. FOCUSED MANUFACTURING AND BUILDING TO ORDER Dell pioneered the adoption of standardisation and postponed manufacturing (also known as mass customisation) in the electronics industry (Figure 1). This involves producing a small number of common platforms which are then customised according to customer demands (the customer generally recognises more so what is different among products, not what is the same!). Before standardisation (left side of Figure 1), there are multiple product lines at both the upstream and downstream ends, whereas after standardisation (right side of Figure 1) the number of different product lines upstream reduces considerably and products are only customised (i.e. configured into different products) at the downstream end (once customer orders are visible). The benefits of this strategy are many and include sharing of common components across product lines, thus reducing the number of stock keeping units (SKUs) which have to be carried. This strategy is now increasingly also adopted across a range of other sectors including the automobile (e.g. Volkswagen Group) and fashion (e.g. Zara) sectors. Schematic illustration of the Principle of postponement.hour!). Consequently, Dell needs limited warehouse space for inbound raw materials. These preferred suppliers and their expertise in vendor managed inventory (VMI) play a key role in Dell's success. FOCUSED MANUFACTURING AND BUILDING TO ORDER Dell pioneered the adoption of standardisation and postponed manufacturing (also known as mass customisation) in the electronics industry (Figure 1). This involves producing a small number of common platforms which are then customised according to customer demands (the customer generally recognises more so what is different among products, not what is the same!). Before standardisation (left side of Figure 1), there are multiple product lines at both the upstream and downstream ends, whereas after standardisation (right side of Figure 1) the number of different product lines upstream reduces considerably and products are only customised (i.e. configured into different products) at the downstream end (once customer orders are visible). The benefits of this strategy are many and include sharing of common components across product lines, thus reducing the number of stock keeping units (SKUs) which have to be carried. This strategy is now increasingly also adopted across a range of other sectors including the automobile (e.g. Volkswagen Group) and fashion (e.g. Zara) sectors. Schematic illustration of the Principle of postponement. 'single person build' rather than traditional assembly line techniques. This leads to both increased job satisfaction and product quality. Modular manufacturing using standardised components is employed to build the 'vanilla products' which are then customised for market. Increasingly, Dell is moving into higher value offerings and markets. In their view, they sell solutions, not products. The company has not, however, been immune to problems. For example, difficulties in the past associated with faulty laptop batteries, which attracted a lot of negative publicity to the company, led to some product recalls. Intense competition combined with rapid changes in technology are ongoing challenges that characterise the sectors within which Dell now operates. QUESTIONS What are the fundamental reasons for Dell's success in the personal computer market? What should Dell do next to maintain their competitive advantage in this market? Will configuretoorder and postponed production work in other sectors? If not, why not