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Guardrail to guardrail
March 13, 2006
In discussing Dell's recent weakness in an interview with the Financial Times today, the company's CEO, Kevin Rollins, makes a revealing confession:
"We were fearful that we moved to the low end too aggressively [in the second quarter]," he says, referring to the company's decision to focus on the market for low-cost consumer PCs in the US. "We moved to the other guardrail of all high-end stuff, which was a mistake in Q3 ... It was a bit of a guardrail-to-guardrail swing."
Dell's a very well managed company, and it has long been held up, for good reason, as an exemplar of supply-chain efficiency and the effective use of information technology. Because the company waits to make a computer until it gets an order, it operates with essentially no inventory and needs little in the way of working capital. Because it takes orders directly from customers, it has a perfect window onto the market - and it shares its moment-by-moment information on demand all the way back through its supply chain. Tightly woven together with sophisticated software, Dell's business is about as close to "transparent" and "real time" as you can get.
Yet just a few months ago, the company misjudged near-term demand and found itself bouncing between guardrails.
It just goes to show: Nobody's perfect. And neither is any information system. Companies today are often told that "business intelligence" is something produced by software. But while information technology can certainly help managers collect and analyze the information flowing through their business, it can't provide good judgment. It's just a tool. As Dell's glitches show, not even the most sophisticated software can supply you with data on tomorrow's sales.
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Comments
Dell is better than zero inventory -- effectively they're more like "negative inventory".
Posted by: Don Marti at March 14, 2006 01:05 PM
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