Integration of Financial and Operational Management Essay

Integration of Financial and Operational Management - Essay Example Dell has committed itself to operate in a way that would not only achieve excellence in operations but also benefit the company financially and would result in satisfied customers. Because of its commitment to constant improvement the company installed the direct selling method where JIT system and lean production were adopted which improved company’s efficiency and effectiveness in many areas. On the other hand the company used the rapidly growing IT technology well by working on customer focused ordering system which enable them to design their own product, which resulted in much satisfied customers and zero inventory level. Zero inventory level was further implemented by changes in the supply chain and integration of the entire company’s operations into the supply chain. Through redesigning of systems and process, Dell is able to become the most efficient PC manufacturers in the world. However, it should be noted that although Dell has installed a system which serves as a benchmark for many manufacturing companies, Dell still needs to focus on few areas which if not attended can turn out to be bigger operational issues in the future. Introduction: Dell is one of the largest American multinational company which deals in selling and supporting computers and related products and services. The company is involved in selling, manufacturing and distribution of high technological products like PCs, servers, data storage devices, printers, cameras, HDTVs soft wares etc. Dell is the third largest IT Company of the world and faces close competition from its competitors HP (Hewlett Packard), Acer, Apple, and Lenovo etc. Managerial Challenges: Dell has been in business for over 28 years. Since its inception, Dell has faced many operational and financial difficulties and has adopted numerous strategies to overcome its challenges and restore its profitability. Dell’s operational strategy since its early days had been to use interchangeable parts to pr oduce goods of mass-production at lowest possible prices. However, due to rapid increase in the demand of technology, globalization, new and evolving market trends and technological demands the company faced operational challenges in many fields. Excessive and Obsolete Inventory: Dell had faced numerous problems in the early stages; the company in its early stages expanded into traditional retail channels which it stopped later on due to heavy obsolete inventory and thin margins in the business. Later on in 1990 the company faced another operational issue of excess component inventory and abandonment of production line. This caused heavy losses to the company despite of doubling sales during the period. The major problem that Dell faced at that time was the excessive inventory along with the prevailing recession made it report a huge loss of $36 millions in 1994. (Ireland, Hoskisson & Hitt. 2012) Dell struggled with great difficulties in inventory management area as it used the trad itional manufacturing ordering system by ordering components in advance on the forecast basis and if the forecast went wrong the company had major write-downs. (Ireland, Hoskisson & Hitt. 2012) Changing Customer’s Demands: The technological business is a rapidly changing business where the introduction of a new technology can cause heavy losses. Dell’s main concern was about the inventory in hand that became obsolete due