Customer Reviews

How Dell Does It

5 star:		(0)
4 star:		(2)
3 star:		(5)
2 star:		(2)
1 star:		(1)

 

 

Very rarely is a company able to completely alter the rules of business. One of those companies is Dell, who redefined how computer manufacturing, and even manufacturing in general, can be done. Steve Holzner examines their business in the book How Dell Does It.

Normally, I'd put the table of contents here, but this time I'll have to pass. I finished the book at the airport waiting for some luggage to arrive, and then left the book in the luggage cart when I drove off. Such is life... :)

Holzner does a good job in examining some of the core tenants of Dell's business model, such as marketing direct to the customer and keeping virtually no inventory. Dell has taken the "just in time" inventory philosophy and pushed it to the extreme, often having suppliers make deliveries every two hours in order to have inventory supply meet the current order demand. And since the customer pays right away and Dell pays the suppliers in 30+ days, they are able to finance their business with "free money" to a large degree. With their marketing plan of going directly to the customer, they are also able to understand *exactly* what the customer wants, and they focus on the large sweet spots that can be effectively covered with few variations. Why offer 10 different component options to hit 100% of the customer base, when 3 will cover 98%? Techniques such as that have allowed them to achieve margins that are not approached by other computer makers.

To Steve's credit, he also points out where some of the practices hit up against logical limits. For instance, you can push off most of the inventory supply and risk to your suppliers. They in turn try to do the same thing to *their* suppliers. At some point down the chain, someone's taking a lot of risk for extremely small margins. He also covers some of the moves by Dell to market indirectly (like through WalMart) that failed miserably. Even with those "spots" being covered, I still am a bit cynical that it all runs like a well-oiled machine. I was an Enron employee during the time when they were touted as the most innovative company in America, only to see all the flailing around that happened behind the scenes. And we all know now how it turned out. By no means is Dell an Enron. But I always wonder how much of a gap exists between what executives say in books like these, and what really happens on the shop floor...

My cynicism aside, this is a book you should read if you're interested in how innovative companies can change the rules by which everyone operates. Dell wrote the book on how to connect the customer to your business...

The is the best book available about Dell right now which isn't saying alot since not much else is out there. I have seen the rise of Dell since it's inception in the 80's. I think Dell is a company that was, and is, very successful but is now on the wrong track. The author pointed out the extensive concern by Dell's customers regarding poor technical support but I don't think he went far enough. I also think some of the "innovations" that made Dell successful are not as helpful as they once were or are not working as well. For example;
1. For those who are familiar with Six Sigma, Dell is either really bad or maybe just tone deaf to the "voice of the customer". Customers want a good price,quality, and support when they buy a computer. Computers are not toasters and all three are still important. The voice of the customer did not ask for bloatware on their PC's that slows down the machine and makes it less stable. they did not ask to be put on hold for hours, transferred endlessly, hung up on, or to talk to people they can't understand when they need technical support. They did not ask for an overly restrictive choice of what they can choose for their computers. The customer did not want discussion and help forums on Dells site shut down.
2. Just in time manufacturing is not a Dell innovation but they did put it to good use. However go look at Dells web site anytime and you will see that there are many items listed as delaying shipment of the whole computer if you order it.
3. The author describes standardization as being a Dell strength but Dell has customized motherboards and power supplies for the sole purpose of making the computer non-upgradeable. Thats not standardization and only benefits Dell not the customer.
4. Corporate and indivudal customers want AMD processors. Dell has steadfastly refused to produce servers with Opteron chips that are vastly superior to Intels Xeon or to equip indiivudal computers with AMD chips which are faster, cooler, and much better dual-core than Intels kludged efforts. Dell talks about selling AMD but just uses it as a way to drive down Intels prices.
5. Dell views employees as disposable assets they can treat anyway they see fit.
6. Michael Dell once said that Apple should liquidate the company and distribute the proceeds to it's shareholders. Now he wants to make Mac clones and Apples market cap is higher then Dells. Dell also just discontinued their feeble second attempt at a hard drive based MP3 player.
7. Dell recently eliminated it's 30 day money back guarantee and replaced it with a 21 day guarantee with a minimum 15% restocking fee.
8. Dells latest attempt to resurrect their image using the Dimension XPS line has been a failure as the machines are loaded down with bloatware the high prices charged for special support have resulted in poor support, and they are already pricing the XPS line down with coupons.
9. My personal beleife is that you should only buy a dell if you are willing to take a chance that it will have no issues ever. Trust me...you really don't want to ever have to reach their customer support.

All of these point to a company on the decline whose brand is no longer seen as premium. Where does Dell go from here? If the author had brought up this issues or had any real discussion as to Dells' future it would be a much more interesting book.

I was very excited to get around to reading about 'how Dell does it.' I have admired Michael Dell and his company for many years as an IT professional. I'm very interested in their supply chain management system that allows for the phenomenal Dell Direct process.

With this said - I was deeply disappointed with this book. Mr. Holzner, IMHO, needs an editor. The chapters do not flow. I was constantly distracted by his cross-referencing that litters far too many paragraphs. Here is an example sentence from page 25, "Dell also cuts its inventory radically (Chapter 5), works with standard components (Chapter 4), is perpetually streamlining (Chapter 6), and puts enormous pressure on suppliers (Chapter 8). There is a Table of Contents on page iii that tells me where these topics are covered. I do not need constant reminders throughout the chapters.

An editor would have minimized or eliminated this along with Mr. Holzner repeating himself a few times in each chapter.

Lastly, I also felt that Mr. Holzner relied too much on Michael Dell's book and various magazine articles. There was very little first-hand information that I couldn't find using Google and buying 'Direct From Dell.'

I really liked the topic, I just wish I wasn't so distracted by the writing style. If you're interested in reading this book, go to a bookseller and sit down and read the first chapter and then look at the endnotes. If it still appeals to you after this, go ahead and make the purchase. Otherwise I recommend a pass.

I am still reading this book. I have gone through around 100 pages or so.

A lot of things are widely known. But worst of all, I don't know if I can believe this book at all.

The author included a lot of quotes from articles and Dell's website.

Has the author interviewed any insiders who might have offered insights into how Dell is managed ? Or did he just bash together this book from all the anecdotes available after "googling Dell" on the web.

Fortune dubbed Dell as the "Most Admired Company in the U.S." in its 3/07/05 issue. It is now a $49 billion company, with 57,000 employees worldwide. Formed in 1984, three years after the IBM PC, it was only 25th among computer manufacturers in the early '90's, but, according to Holzner, still made the Fortune 100 in '92.

Dell was fortunate that when he began IBM could only meet about 10% of its demand, and it had made both the software and hardware open-source (no patent protection). Dell not only was one of many to take advantage of the situation, but added the competitive advantage of using a low-cost direct sales model. (Dell estimates this eliminates the need for an additional 25-45% markup.)

Dell also soon concluded that selling direct allowed better understanding of customers (vs. receiving information filtered through a retailer), and management of inventory (order data was not "confused" by retailer actions - eg. sales, hoarding). Soon Dell had a strong presence thanks to selling at about half IBM's price, while providing as much as twice the CPU speed. Dell also recognized that an unknown firm would have difficulty winning acceptance, and so was one of the first to offer a guarantee (30-days), and then went competitors one better by providing ono-site service.

Holzner points out that Dell moves into products after they become standardized, but before commodities. Relatively recent areas include printers (also punctured H-P's major profit source, decreasing its ability to fund new attacks on Dell), servers, and AV equipment.

Dell uses standardized parts, thereby minimizing need for R&D expenditures (Dell < 1% of sales, Sun Microsystems 14.7%, Hp and IBM about 6%).

Lately Dell has come under attack for significant service problems - long waiting periods on hold, clueless technical support, and hard-to-understand representatives. (The latter is due to outsourcing to India, and the "cluelessness" due to an inability to get both English-speakers and technical competence in a single representative.) This has angered many former supporters, including myself; however, Dell points out customers have an option to pay extra for better service. Thus, the new policy can be justified on the basis of meeting Return on Invested Capital (ROIC) measures - the basic evaluative tool used throughout the firm. (Underlying Logic: A tech-savy customer should not have to subsidize support for those who are novices.)

Dell segments its business by customer type, not product. (Large business, small business, home user, etc.)

The other Dell technique heavily emphasized in "How Dell Does It" is minimizing inventory - eg. two hours' worth on hand. However, Holzner would do well to also point out that this is nothing more than part of the Toyota Production System, applied to P.C. manufacture, and pursued by most every other reasonably successful firm today.)

Bottom Line: "How Dell Does It" provides minimum information that one would not have already surmised.

How Dell Does it looks at the existing model of direct to the customer the Michael Dell built and assess the various scenarios where market efficiencies and strategies have been carved out to apply those to business lessons. It focuses on flexibility, speed, innovation, and fluid inventory to achieve superior results and new ideas. From prompt customer service (in house even) to customization, at a time when the computer choices were the equivalent of black or black ala Henry Ford, this book covers the strategies that made Dell a wining company. I do agree with the other reviewers that editing was badly needed and chapters repeated themselves and did not flow together. It was more a series of independent articles that were cobbled together into a book but the information is still strong and good analysis is provided. It gets a little pedantic at times and bogged down in terminology but for those with a true business interest they will get a lot out of the book as opposed to the casual reader. Overall a solid analysis of Dell but could have been pulled off more fluidly.

I was completely disappointed with first few chapters itself. The author needs to be assisted by a professional editor.
I bought this book in a bookstore before reading the reviews. That's the problem.

The silver cover reminds me of computers and the future, while The words inside the book are about DELL the best computer company in the world.

Why wouldn't you buy (and then read) this book.

I ws a little dissapointed however, i thought this book would have has some info on CPT Johnathon P Dell, the original creator of DELL.

Also there was almost no information on how to make your own DELL a home.

I can't believe he was paid to write this book. The book is overly repeatative. Truthfully the book could be condensed into about 1/3 the size. The writer is obviously bias toward the Dell to the point that they slant all of the information and views.

It does contain some usefull information. The good news is that it is so repeatative you should have the information memorized by the time you are through.

Using material from Direct from Dell, by Dell Computer founder Michael Dell, and from computer industry Web sites and trade publications, author Steven Holzner does a solid job of describing Dell's rise over the past two decades and explaining what it is doing now to expand its market dominance. If you want all the details, though, you may feel frustrated. For example, Holzner says that Dell obsessively tracks the profit and loss of every business unit. However, he does not explain how. Which metrics does the company use, other than the often-cited ROIC, and how did it develop them? Similarly, Holzner notes that Dell analyzes markets and moves into them at just the right time. But how is it able to judge them so accurately? The book plateaus at the level of reportage, rather than rising to the level of inside analysis. However, if you are looking for a summary of Dell's very successful business strategy, we recommend this overview.