The Dell Shell

The myth is that Dell is the low-price leader. The reality is that Dell is exceptionally good at marketing systems that appear to have a low price to end users, but more often than not, when one actually configures the system with the appropriate amount of memory, drives and graphics cards to be really useful, it winds up costing as much as any other comparable system. In some cases, the price tag may come in at even more than what rivals are charging for the same fully configured system.

But once a customer becomes engaged with Dell, he or she tends to overlook the fact that Dell is essentially using a bait-and-switch sales tactic. That's because the one thing Dell does really well is manage supply chain logistics.

When Dell says it can ship something, it usually keeps its promise. And that promise is usually measured in days, not weeks. From a customer's perspective, working with Dell results in a hassle-free transaction compared with the uncertainties associated with running an order through the supply chain process of rival vendors.

One of the best things about Hewlett-Packard's decision to hire Mark Hurd as its CEO is that as an operations guy, he gets the impact that logistics have on how customers perceive you. To that end, HP last week recruited Randall Mott to be its new CIO. Mott's most recent prior jobs include the CIO position at Dell and a variety of technology positions with Wal-Mart. In short, this is a guy who knows something about optimizing operations vs. making lame excuses for an inability to execute, such as some customer prefers to buy direct or that Dell has an unfair advantage in the way it sources products.

Solution providers have reason to be optimistic that Hurd will bring a laser-like focus to HP's logistics side. Similarly, they can expect the new people running operations at Lenovo to have the same amount of zeal.

The upside is that without a logistics advantage obtained by default rather than earned, Dell will not be nearly as formidable a competitor in 2006 and beyond as it is today.

What's your logistics logic? I can be reached at (516) 562-7477 or via e-mail at [email protected].