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1. 5. Dell
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Want a made-to-order computer in a week? Go to Dell.
"A huge inventory!" You hear companies boast this on commercials, and it sounds like a great
thing. However, for many businesses, inventory is a bane. Until Dell came along, a vast
inventory was considered a necessary evil for computer companies, who watched as their
shelves of pre-ordered parts grew outdated by the second.
Dell adopted a process Toyota used first in the 1960s called the Just-in-Time (JIT) method.
Under this process, Dell no longer had to predict the right parts to order. Instead, it almost
completely eliminated inventory. At one point, this meant keeping one week worth of
inventory on hand, and later as little as two hours' worth of supplies [source: Holzner].
The JIT method combined with Dell's direct-to-consumer process made for a dynamite
business model. In the end, Dell was able to cut out the retail middleman and instead sell its
products directly to the consumer. This cut down on costs (resulting in a competitively low
price for the consumer), and it also contributed to faster service.
Customers order what they want, and after they pay, Dell orders the necessary parts from
suppliers and builds the custom PC. Dell can wait up to a month before paying its suppliers,
so the company earns interest on customer payments in the meantime.
Dell raised consumer expectations for good, fast service in the PC industry -- and companies
such as Apple are following suit. The Dell business model paved the way by streamlining and
increasing efficiency on the supplier end [source: Breen].
From :
5 Influential Business Models
by Jane McGrath
http://money.howstuffworks.com/5-influential-business-models1.htm