E-Business at Dell driving real ROI
Dell generates more than $50 million per day in sales through its worldwide websites, including more than $10 million per day in its European region. E-business is central to Dell's entire operations and Dell uses e-business extensively across its entire value chain to deliver high levels of service to its customers and suppliers.

Dell recently generated almost 300% ROIC on its internet and business automation in Q4 2000. Dell has achieved significant savings and extended these savings to our customers in the form of lower prices and greater value. This article provides a short profile of how Dell uses e-business to generate savings across its value chain.

Dell's Direct Model: Customer Focus Is the Advantage
Dell's direct business model is the heart of our company. "Direct" refers to our company's relationships with its customers, from individual consumers to some of the world's largest corporations. The direct model has three central elements: one-to-one relationships with customers, products that are built-to-order for each of those customers, and the lowest cost structure of many of our major competitors.

Dell's cost advantage is driven by a lack of mark-ups from the reseller channel, our close relationship with suppliers, inventory management and operational efficiency. We manage our inventory more efficiently that just about any other business - and we pass our cost savings on to our customers - thus making us an attractive partner for suppliers and customers alike.

At the same time that Dell was passing the benefits of the direct model on to its customers through low prices, it was focused on capital efficiency and low inventory - allowing customers to rapidly receive the most recent technology on the market. The virtual integration of our suppliers and customer orders helped inventory drop from 33 days in fiscal year 1994 to 5 days at the end of fiscal year 2001.

A key enabler of these efficiencies has been Dell's use of the Internet to manage its supply chain, which means that suppliers have the most accurate, up-to-the minute information about their products which Dell is selling; they have unique insight into volumes, quality issues and customer satisfaction. The global nature of Dell's business provides a sustainable advantage to doing business with Dell.

Via valuechain.dell.com, Dell shares information with its suppliers on a range of topics, including product quality and inventory. This critical supply-chain information allows Dell to offer real-time feedback on inventory management, even improving the quality and timeliness of purchasing decisions from Dell's suppliers' suppliers.

E-Business with customers
Dell first started selling systems over the Internet in 1995; long before the word "e-business" became popular. Dell first used the Internet to serve customers in the late 1980s to allow customers to download technical support drivers and information.

Today, Dell European websites span 27 countries and 18 languages and contain about 150,000 pages of content relating to Dell products and services. The Dell website today includes:

Online orders, 50% of Dell sales, allow Dell to reduce the costs of order management and customer care and reduce the number of errors and returns. Online orders are validated real time to eliminate incorrect configurations and save order management time. Dell also estimates that it saves $8 on average every time a customer uses its online order status.

Core to Dell's e-business success are 60,000 customised Premier Dell.com websites that Dell provides to its customers. The Premier Dell.com website is unique to each of Dell's corporate and public sector customers and contains all aspects relating to your company's relationship with Dell including your negotiated pricing and catalogue, order status, management reports and customised technical support.

B2B E-Commerce
Dell is also working with its customers to provide a B2B e-commerce solution that links their Premier Dell.com site to their ERP or e-procurement system. This solution allows Dell to reduce the time and cost of generating purchase orders. For example, Dell customers such as Aegon Group and Litton PRC have cut their time and cost of generating purchase orders with Dell by about 80%.

Dell can currently integrate Premier Dell.com with the following platforms:

Dell is also completing testing with a number of other major B2B platforms to extend its B2B offering.

Dell Intranet
The Dell intranet includes more than 500,000 pages of information and facilitates greater knowledge transfer and reduces training costs across the organisation. Dell is also using its intranet to automate internal procedures and allow employees to update their global directory entry and manage their performance plans online.

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