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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (33696)	3/10/1998 9:47:00 PM
From: stephen wall	Read Replies (1) \| Respond to of 176387

Mohan, More excerpts from Harvard Business Review interview with M.Dell: Q. So, over time, you cut the market into finer and finer segments? A. Yes, for a lot of reasons. One is to identify unique opportunities and economics. The other is purely a managerial issue: you can't possibly manage something well if its too big. Segmentation gives us better attention and focus. [See the exhibit "Fast-Cycle Segmentation."] Each segment has its own issues. In education, for instance, how do you get tech support to a classroom when the teacher doesnt have a telephone? You need a totally different approach. Segmenting lets you tailor your programs to the customers' needs. If you just lump diverse customers together, you can be sure that some of them will come last on some managers's list, and he may never get around to solving their problems. That's why we make serving one segment the manager's only job. Q. Do you get other benefits from segmenting your customers? A. Segmentation gets us closer to them. It allows us to understand their needs in a really deep way. This closeness gives us access to information that's absolutely critical to our strategy. It helps us forecast what they're going to need and when. And good forecasts are the key to keeping our costs down. We turn our inventory over 30 times per year. If you look at the complexity and the diversity of the product line, there's no way we could do that unless we had credible information about what the customer is actually buying. It's a key part of why rivals have had great difficulty competing with Dell. It's not just that we sell direct, it's also our ability to forecast demand-it's both the design of the product and the way the information from the customer flows all the way through manufacturing to our suppliers. If you don't have that tight linkage-the kind of coordination of information that used to be possible only in vertically integrated companies-then trying to manage to 11 days of inventory would be insane. We simply couldnt do it without customers who work with us as partners. Q. Could you describe how you forecast demand? A. We see foreecasting as a critical sales skill. We teach our sales-account managers to lead customers through a discussion of their future PC needs. We'll walk a customer through every department of his company, asking him to designate which needs are certain and which needs are contigent. And when they're contingent on some event, the salesperson will know what that event is so he can follow up. We can do this with our large accounts, which make up the bulk of our business. With smaller customers, we have real-time information about what they're buying from our direct telephone salespeople. And we can also steer them in real time, on the phone, toward configurations that are available, so this is another way we can finetune the balance between supply and demand. Q. So some of your coordination with customers is made possible through technology, but theres still a good measure of old-fashioned, face-to-face human contact? A. Yes, thats right. The idea is to use technology to free people up to solve more complicated problems. For example, a customer like MCI can access our internal support tools on-line in the same way our own technical support teams do, saving time and money on both sides. They simply go to www.dell.com, enter some information about their system, and they have immediate access to the same information that we use at Dell to help customers. These tools are used by internal help-desk groups at large companies as well as by individuals. We've developed customized intranet sites called Premier Pages for well over 200 of our larget global customers. These exist securely within the customers firewalls, and they give them direct acccess to purchasing and technical information about the specific configurations they buy from us. One of our customers, for example, allows its 50,000 employees to view and select products online. They use the Premier Page as an interactive catalog of all the configurations the company authorizes; employees can then price and order the PC they want. They are happy to have some choice, and Dell and the customer are both happy to eliminate the paperwork and sales time normally associated with corporate purchasing. That frees our salespeople to play a more consultative role. We also have developed tools to help customers set up their own customized versions of dell.com. There are about 7,000 of these to date. ------------------------------------------------------------------- When looking through all these prices for Dell computers, how many IT departments are going to give up this value-added servicing to save a hundred bucks? stephen