Example: Dell
Dell Inc. were the first personal computer
company to organize and build itself around the
idea of direct customer feedback. This new
approach allowed the company to deliver a better
product at a lower cost.
By
developing and building to order only the
systems that their customers wanted when they
wanted then, the company were able to virtually
eliminate the excess cost tied into buying too
many components, having to store them, and then
selling the surplus at a loss. This enabled Dell
to speed up the process of configuring and
delivering their products saving them time and
allowing the company to pass on the savings to
their customers.
By
reexamining their direct model, Dell realized
that inventory management was not just a core
strength; it could be an incredible opportunity
for them, and one that had not yet been
discovered by any of their competitors. The
direct model turns conventional manufacturing
inside out. It has nothing to do with
stockpiling of raw materials and everything to
do with information.
With
more information about
customer needs you need much less inventory.
Less inventory corresponds to less inventory
depreciation. Inventory velocity has become a
passion for Dell and a key to their long-term
success.
