Dell’s Channel Transformation: Leveraging Operations Research to Unleash Potential Across the Value Chain

Karl Martin (), Parag Chitalia (), Murugan Pugalenthi (), K. Raghava Rau (), Sudeep Maity (), Rahul Kumar (), Rohit Saksena (), Randhir Hebbar (), Mahesh Krishnan (), Ganesh Hegde (), Chandrasekhar Kesanapally (), Tejinder Kaur Bimbraw () and Sumathi Subramanian ()
Additional contact information
Karl Martin: Dell Computers, Austin, Texas 78759
Parag Chitalia: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Murugan Pugalenthi: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
K. Raghava Rau: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Sudeep Maity: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Rahul Kumar: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Rohit Saksena: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Randhir Hebbar: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Mahesh Krishnan: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Ganesh Hegde: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Chandrasekhar Kesanapally: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Tejinder Kaur Bimbraw: Dell International Services, Domlur, Bangalore, Karnataka, India 560071
Sumathi Subramanian: Dell International Services, Domlur, Bangalore, Karnataka, India 560071

Interfaces, 2014, vol. 44, issue 1, 55-69

Abstract: Dell pioneered the direct sales model by offering its customers technology solutions through full-system configurability. In 2007, Dell launched several strategic initiatives to drive channel transformation by offering fixed configurations through online channels, retailers, distributors, and other channel partners. Dell's center of excellence (CoE) in analytics developed solutions that apply operations research (OR) to address key challenges across the value chain and enable profitable growth in the new channels. These solutions include (1) a configuration optimizer to reduce product complexity by identifying fixed hardware configurations (FHCs), which Dell builds and stocks, (2) an online conversion rate accelerator to improve the online customer purchase experience, leading to increased revenues and customer satisfaction, and (3) a retail margin maximizer to improve forecasts, mitigate inventory risk, and recommend promotions to increase margins. Since 2007, OR has helped Dell solve complex business problems and has facilitated its growth in the FHC business to $15 billion. Since 2010, these OR solutions have delivered a margin impact of more than $140 million by reducing markdown expenditures, improving online conversion rates, increasing ocean shipments, and enhancing customer satisfaction.

Keywords: channel; demand clustering; forecasting; multivariate testing; A/B testing; factor analysis; text mining; inventory modeling; ARIMAX; CPFR (search for similar items in EconPapers)
Date: 2014
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