Chuzzlewit and All, I quote Mike Dell from HBR "We substitute information for inventory. We have real time information on what the demand is and all our supplier has to do is get the product to us. They need go to only one of three manufacturing centers: Austin, Ireland, and Malaysia. Its almost ideal from a supplier standpoint."
This is great, indeed, the whole interview is great. But then Dell goes on to say
"because we build our customers' order, typically with just five or six days of lead time, suppliers don't have to worry about sell-through. We only maintain a few days of ...raw materials on hand..."
What does he mean by "sell-through" in this quote?
and at another point he says "the direct model has allowed us to leverage our relationships with both suppliers and customers to such an extent that I believe its fair to think of our companies as being virtually integrated....Ten years ago, the Digital Equipments of this world had to build massive structures to produce everything a computer needed..As a small start-up Dell couldnt afford to create every piece of the value chain. But more to the point, why should we want to. We concluded we'd be better off leveraging the investments others have made and focusing on delivering solutions and systems to customers."
question no 2. what does he mean by "leverage" and "leveraging?"
In these two instances the jargon words, "sell-through" and "leverage," stand in the way of communication. I don't quite grasp what Mike Dell means. can you clarify?
He also describes virtual integration, which I understand and it's wonderful. Additional comments?
quotes are from the March-April 1998 Harvard Business Review, pp. 73-84. Someone should see if this is on the Web and post it to the fact/information thread.
thanks
jhg |
