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Dell and Nestle Companies Strategy in Using IT

Introduction

In most organizations, the identifying appropriate supply chain strategy has proved to be a dilemma that many resolves through outsourcing. However, some costs will be incurred by using this strategy. Other businesses may invoke the services of a warehouse though this method may seem effective it comes with a huge bill that many organizations while trying to reduce expenses would rather not venture, this is because the need arises amid peak period of production when the order becomes paramount for the warehouse to handle. Hence, most businesses have resolved to come up with individual strategies anchored in SAP and ERP to maximize their production via the supply chain.

This paper explores Dell and Nestle companies on strategies and practices they have incorporated in using information technology in enhancing service delivery.

Dell Company and E-commerce

Dell is one of the companies embracing the value of information technology in its businesses processes. Dell has automated its business processes such as; technical support, production and order processing. Kraemer & Dedrick (2001), notes that this has been successful by embracing the power of technology.

Information technology has encouraged mass customization thereby reducing product cost to its consumers. Application of mass customization in business enhances Information sharing among all department of production without a business incurring huge costs. Dell e-commerce is aimed at improving efficiency, encouraging customer satisfaction, penetrating new markets and providing a competitive edge to its competitors.

Dell Business Strategy

Dell business strategy is anchored on principles of build- to -order, and direct sale plan for producing and selling computers. Its strategies have been concentrated in mass customization; simply reducing the cost on the final product which in the real sense would be costly (Kraemer & Dedrick, 2001).

Dell has built on its business strategy to grow and expand rapidly whereas accruing more profits according to Van Hoek & Commandeur (1998). The advantages Dell derive from its business model i.e. direct sales and build to order is; production is customized saving the cost it would have incurred at the end as most productions are done by a different organization with little market value or obsolete (Williams, 2008). Besides, all major cost that is incurred in the development of the products is reduced to only potential products that have high demand in the market.

Dell e-commerce encourages postponement which is more cost-effective to the customer (Boone & Hanna, 2007). This is because when production is centralized on products that are flowing in the market, the production will be plenty and may exceed the demand so to combat this, the organization has to implement new incentives that will lure more consumers to use these products. This, however, will be to the benefit of customers who in turn will appreciate by being loyal to the brand (Van Hoek & Commandeur, 1998).

Dell business principles include; building computers basing on customers requirements, assigning asset tag to a computer to simplify tracking through the developmental lifecycle and pre-loading firmware and hard drive. This process has been developed for a while by the company and forms the basis of its capability of utilizing the supply chain technology (Kraemer & Dedrick, 2001). Hence, minimal human involvements during production make selected suppliers have freedom in selecting quality products because they are physically involved in the production cycle.

Nestle ERP

Nestle is one company that has appreciated the value of ERP in their business practices. Nestle signed a million worth contract with SAP and paid additional costs for continued consultancy and maintenance services. The aim for this expensive venture was aimed at centralizing Nestle operations of more than 200 subsidiary companies around the world.

Implementation of SAP/ERP

According to Worthen (2002), Nestle implemented its SAP solutions modules covering sales and distributions, purchasing, financials, accounts receivable and payable and the supply chain module. Each of the mentioned modules was deployed in every division of Nestle. Deployment was aimed at customizing its departments to enhance smooth service flow and improve efficiency.

Challenges in SAP/ERP Implementation

However, Implementing SAP solution was no easy task. Employee’s resistance to change and technical issues such as Y2K was common. Moreover, common names existing between departments and systems and the inability of integration with other modules such as sales, financial and planning group made the undertaking more challenging (Worthen, 2002).

The implementation of the SAP solution has facilitated e-commerce. Most of the company’s processes such as common business processes and databases provided a new operating efficiency at Nestle. Apart from improving service delivery, SAP has simplified and reduced conventional inventory management processes in the supply chain by linking subsidiary Nestle companies online around the world as asserted by Worthen,( 2002).

Nestle SAP utilizes common data; hence this has facilitated Nestle USA to use this data in forecasting its business process to reduce the level at distribution centres. The solution has saved the company expenses hence the company is focusing on quality service delivery to its customers.

Conclusion

Most companies have embraced e-commerce because of reliability, efficiency and reduced cost. Dell and Nestle business strategies in e-commerce have simplified inventory management because e-commerce has fixed mass customization of products through a streamlined supply chain process.

References

Boone, C. & Hanna, J. (2007) Postponement: An Evolving Supply Chain Concept. Web.

Kraemer, K. & Dedrick, J. (2001) Centre for Research on Information Technology And Organization. University of California, Irvine, 6-13-01.doc.

Van Hoek, R., and Commandeur, H., (1998) Reconfiguring Logistics System through Postponement Strategies. Journal of Business Logistics, 19 (1), 33.

Williams, G. C. (2008) Implementing SAP ERP Sales & Distribution, McGraw-Hill, New York

Worthen, B. (2002) NestlĂ©’s Enterprise Resource Planning (ERP) Odyssey. Web.