Dell Computer: Back to the Future

Abstract

This case tells the story of Dell Computer Corporation, from its beginning, in 1983, through 2007. It describes the famous "Dell Way" process, which uses just-in-time inventory management and lean-production principles, together with direct sales and real-time information management. It also describes Dell's challenges: globalization, new technologies, and evolving market trends.

Excerpt

UVA-om-1325

Dell, Inc., although considered a modern, high-tech company, had the roots of its operational success planted firmly in the past. The famous “Dell Way” process—which used just-in-time (JIT) inventory management and lean-production philosophies, together with direct sales and real-time information management—helped transform the company from a business operating out of Michael Dell's college dorm room into the world's largest PC maker in less than 20 years, with a market cap that at one time exceeded $ 100 billion.

Dell's operational philosophies could be traced back to Eli Whitney. Although most famous as the inventor of the cotton gin, Whitney also advanced the idea of using interchangeable parts to mass-produce goods at lower prices. In 1799, he was awarded a contract to produce 10,000 muskets for the U.S. Army over the course of two years, a tall order considering that, until then, firearms had been produced only by skilled workers.

Although Henry Ford was generally considered the first industrial-age practitioner of JIT and lean production, arguably their contemporary iterations were more properly attributable to Taichii Ohno and his work in creating the Toyota Production System.

The Dell Way, however, was facing challenges from increasing globalization, new technologies, and evolving market trends. For Dell, these challenges were probably more daunting than those faced by its competitors because Dell's operational success over the past 15 years had been substantially greater than that of its competitors.

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Keywords: UVA-OM-1325, mass customization