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icio.us, which enable users to publish, categorize, and share their bookmarks
• Enables users to create and edit the content of a Web site, leveraging the expertise of online users
• Consumer Wikis enable users to comment on content, in addition to editing content
• Wikipedia, a community Wiki encyclopedia, includes approximately 1.3 million English-language articles
Sources: (Bernoff, Li, et.al)
This is revolutionizing the role of e-commerce today and leading to much faster rates of response to strategies, tactics, and mass customization strategies overall. As the speed of response has grown exponentially, it has been critical to manage credibility and seek to continually gain and keep the trust of customers through consistency of e-commerce strategies. It is in fact infeasible to discuss e-commerce today without taking into account the fundamentals of social networking (Bharadwaj, Al-Shamri, 37). When combined with the concepts of mass customization and the delivery of experiences through the use of product configurators, the potential exists for greater tailoring of customer experiences as well (Bharadwaj, Al-Shamri, 39, 40).
Web 2.0 technologies and the social networking applications they support can also aid in the development of e-commerce strategies that are profitable as well. One of the most difficult challenges in creating a product configuration strategy that addresses the needs of prospects and customers is in anticipating which product features to add, which services at which cost, and how the entire purchasing and product use experience can be optimized. In the optimization of these three factors is the essence of creating profitable product configuration strategies. The analyses and research of how social networking is contributing to increased product customization accuracy and resulting increases in profitability is seen in case studies presented across industries (Bernoff, Li, 37, 38). In the research completed by Bernoff & Li (et.al.) the inherent value of collaboration is quantified and shown to be critical to excelling at e-commerce strategies. Taking collaboration a step forward and bring it into the context of listening to customers from an e-commerce standpoint, then integrating the lessons learned into product configuration forms the basis of e-commerce strategies that deliver financial results. This essential link of e-commerce systems and the strategies they enable being able to deliver not only increased sales, but process-related improvements are what is revolutionizing this field today. The delivery of experiences, tailored to the specific expectations and requirements of customers, is also progressing and is the next phase of growth of e-commerce globally as has been discussed by Pine and Gilmore (39). Looking at how the leaders in e-commerce who have created successful mass customization strategies illustrates how e-commerce can be both a revenue generating strategy and one that also leads to process improvement over time.
Evaluating the e-Commerce Strategies of Dell Computer and How They Make Mass Customization Pay
Dell is a global leader in the selling, manufacturing and servicing of laptop, desktop, server, storage area networks, and enterprise-class rack-mounted systems for both the consumer and business markets. Dell is also a recognized leader in the sales of Intel-based systems of all types to educational and government institutions. The company rose to prominence in this industry due to its unique direct selling model combined with build-to-order manufacturing that is considered the most efficient in this industry (Liu, Mackie, et.al.). This highly customized approach to attracting, selling, and serving customers requires the Dell e-commerce and broader IT systems to have a very high level of integration and synchronization around the customers' specific needs. Dell pioneered this aspect of e-commerce, specifically the area of integration between e-commerce systems and ERP, pricing, manufacturing and logistics systems (Sharif, Irani, Lloyd, 2007).
Dell's approach to IT specifically supports e-commerce strategies that are tied to and measured by a series of Key Performance Indicators (KPIs) or metrics of performance. Dell has a very metric-driven corporate culture as a result. This is one of their core strengths and also useful in seeing how IT systems support the mission statement, and in Dell's case their focus on attaining a higher number of inventory turns every quarter and year is a critical metric of how well their supply chain systems are managing to support Vendor-Managed Inventory (VMI) strategies and initiatives. Dell relies on VMI-based strategies with suppliers and the synchronization of their Supply Chain Management system, to their ERP systems so that orders, or signals of demand, are captured and planned for every two hours. This gives visibility into and makes the overall systems more aligned with the inbound orders from multiple channels, all of which sell build-to-order product configurations. Presented below in Table 2, Analyzing Dell's KPIs Relative to the Quote-to-Order Process, illustrates how the analytically intensive culture of Dell quantifies the contribution of e-commerce on the most essential business strategies that emanate from the company's mission statement of providing exceptional experiences to every customer (Columbus, et.al.). This ability of Dell's internal system to track internal process efficiencies while also concentrating on providing exceptional experiences to customers through the quote-to-order and product configuration processes is symptomatic of how e-commerce is fundamentally changing.
Analyzing Dell's KPIs Relative to the Quote-to-Order Process
Areas of Measurement
Baseline: What is Measured
Project costs and expenses
Use as a baseline for defining ROI
Number of orders per year
Determine configuration's impact on inventory turns
Current inventory and costs
Inventory turn savings
Lifetime cost per customer; avg. deal size by customer
Order cycle time
Order cycle times reduction of 35% or more recorded with mftrs contacted
Cost of Sales
Days Sales Outstanding reduction from 55 to 23 days on average
Cross-sell and up-sell revenue
Increase of 46% on aggregate
Average sales price per order
Increase from 7% to 29%
Quote and Order
Average costs to complete an order
91% reduction in cost per order
Special Pricing Requests
Over 92% ROI on automating Special Pricing Requests
Bad or incomplete orders
Incomplete order reductions of 30%
Number of customer complaints
89% reduction in cost of simple requests
Revenue lost to churn
69% when cross-selling is used with quote-to-order
Number of calls on order status
Median level of 15,000 per week to 200
Warranty and Returns
Reduction in warranty cost on customized products
14% reduction at a minimum
Labor cost reductions
Decrease order re-work from 18% to 1%
The high level of integration requirements necessary for the Dell business model to consistently deliver product orders on time, in the right configuration, to the right location necessitates a multiple of systems working on synchronization with one another (Sharif, Irani, Lloyd, 2007).
The ability to ship orders accurately, on-time with no errors is critical to the company's e-commerce strategy generating profits over time as well, as it is for the managing and exceeding of expectations. In fact the entire e-commerce strategy of Dell is predicated on meeting or exceeding expectations on a continual basis to earn customer loyalty and trust
Figure 2 graphically illustrates the Dell Computer Corporation e-commerce system requirements overlaid to their most critical IT systems. This graphic illustrates how e-commerce plays a critical role in their business model. One factor contributing to Dell's success in the market is their ability to align IT resources to their supply chain and e-commerce system requirements, all in support of the company's mission of delivering profitable experiences to customers globally.
Figure 2: Analyzing the e-commerce topology of Dell Computer Corporation (Columbus, et.al.)
Not shown in Figure 1 but equally important are the many customer service, pricing, customer relationship management (CRM) and pervasive use of the Dell Premier Page extranets. Dell considers Premier Pages to be a highly effective IT strategy that has delivered major competitive gains in enterprise-class, small and medium businesses, and in many state, local and federal governments. While Dell is understandably reticent to discuss this major competitive advantage the company has, it did at one time quote the figure of 50,000 of these extranets being in existence, in 14 languages (Liu, Mackie, 299, 300).
The criticality of IT systems and their integration to e-commerce systems, their critical role in executing Dell's strategies have proven invaluable in making the company more competitive selling over the Internet, linking its quote-to-order processes into the many systems shown in Figure 2. The role of the quote-to-order process is also critical from the standpoint of being able to accurately sense customer demand and respond to it efficiently globally through the company's e-commerce systems. All of these integration points have in turn allowed Dell to create dashboards based on the KPIs and metrics as shown in Table 2.
In conclusion, Dell shows how difficult it is to create the level of interprocess integration that is critical for e-commerce strategies to succeed while also…[continue]
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