Michael Dell speech on Virtual Integration to the 1988 World Congress on Information Technology, 24 June 1998.
dell.com
(I believe that although the article is dated, its content has become even more relevant. Excerpt follows:)
... We are using the Internet to openly share our own applications with suppliers and customers, creating true information partnerships. We are developing applications internally, with an Internet browser at the front-end, and giving them to our customers and suppliers.
In this way, the Internet provides us the key to increasing the speed of information flow. In an era where physical assets are becoming secondary to information assets, rapid information flow saves time and money. It transforms organizations by eliminating paper-based functions, flattening organizational layers and integrating global operations, seamlessly.
We believe those companies that position themselves to take advantage of the Internet to build information partnerships with their suppliers and customers, have the potential to fundamentally change the face of global competition -- and change our definition of the value we provide to our customers and constituents.
...
The Premier Page is a Dell-developed web page that resides in a password-protected area on www.dell.com. Each page is uniquely designed for each customer, consistent with Dell's heritage as a strictly build-to-order company. The pages contain account team information, and procurement and purchase-order processes unique to the company involved.
Ford Motor estimates it saved $2 million in initial procurement costs placing orders through its Premier Page, and Shell Oil saved 15 percent of its total purchasing costs.
Premier Pages also allow us to deliver critical service and support information directly to our customers, based on the specific products they buy and use. This information is drawn from the same databases our own technicians and engineers use.
This doesn't necessarily result in major cost savings for Dell. But it HAS resulted in significant cost-savings for our customers, enriching their relationships with Dell.
The Internet also is changing the way we work with our technology partners. We are moving to truly collaborative research and development models, using the Internet to openly share information and work together in real time.
We can also engage our customers in our product development, giving them the same level of access to critical information as our own people have.
For example, we were able to develop and introduce an award-winning line of notebook computers using the Internet to keep a common set of notes by engineers in the United States and Asia. By making the same information available to critical partners we were able to close the information loop. A traditional, vertically integrated company would have spent months, if not years, designing parts and building them.
Finally, we are applying the same Internet technologies to create virtual links with our suppliers, just as we have linked with our customers and technology partners.
We are building supplier web pages for our top 20 suppliers, covering 85 to 90 percent of our procurement needs. These will allow our suppliers to provide us with rapid information on their capacities, upside capabilities, inventories in their supply lines, component quality as measured by Dell's own metrics, and current cost structures.
Similarly, we provide our suppliers with direct and immediate customer feedback gathered, in part, through our customer Premier Pages. This feedback covers areas such as quality in the field, current forecasts and future demand, special technical requirements and end-user market pricing.
For example, the web-based link we have designed for Intel, our supplier for microprocessors, allows us to much more quickly and efficiently manage order flow and to control just-in-time delivery of inventory.
We are currently conducting pilot programs that will link our internal management systems to suppliers overseas and ultimately, directly to supplier factories producing the components.
By virtually integrating with our suppliers in this way, we literally bring them into our business. And because our entire production is build-to-customer-order, it requires dynamic and tight inventory control. By working virtually with Dell, we challenge our suppliers to reach new heights of quality and efficiency. This improves THEIR process and THEIR inventory control, which creates greater value for them, as well as for Dell. ...
(Poster's Note: QT, I join you in thanking Laura Wolf for establishing this thread, and all the contributors for their 'value added'.)
bachman (jbn3, aka 3) |
