chapter  4
24 Pages

E-business and the virtual organization

Dell Computer is the poster-child of the virtual organization. Almost every article and study examining the emergence of virtual organization and the Internet refers to Dell's success in setting up the "fully integrated value chain" (The Economist 1999; see also Dedrick and Kraemer 2002; McClenahan 2000; Sheridan 2000). The Austin-based computer manufacturer has mastered the art of "build-to-order" production, electronically mobilizing its internal operations and globalized supplier chain to build and deliver computers in response to Web-originated orders from its customers. Case-Western University Economics Professor Susan Helper and Wharton Management Professor John Paul Mac Duffie review the key features of Dell's accomplishment. They note that Dell's direct sales model is based on a reconfiguration of the supply chain, tight integration of B2B and B2C operations, and new approaches to handling customers. In particular, they write:

Consumers choose a custom configuration at Dell's web-site, arrange purchase and payment details online (often with phone support ... ) and then can track the progress of their order through every phase of production, right up until delivery. Orders go directly from the web-site into Dell's production schedule, parts are ordered from suppliers only after the order (and payment) is received, parts are kitted immediately before production and built up in cells, and the final product is tested and loaded with software before shipment.