Commercial aspects

Traditional business-model

Traditionally, Dell has sold all its products — whether to end-use consumers or to corporate customers — using a direct-sales model via the Internet and the telephone-network. Dell maintains a negative cash conversion cycle (CCC) through use of this model: in other words, Dell Inc. receives payment for the products before it has to pay for the materials. Dell also practises just-in-time (JIT) inventory-management, profiting from its attendant benefits. Dell's JIT approach utilizes the "pull" system by building computers only after customers place orders and by requesting materials from suppliers as needed. In this way Dell mirrors Toyota by following Toyota Way Principle #3 ("Use 'pull' systems to avoid overproduction"). Since the days of the original dominance of telephone-ordering, the Internet has significantly enhanced Dell’s business model, making it easier for customers and potential customers to contact Dell directly. This model also has enabled Dell to provide very customizable systems at an affordable rate, since Dell's manufacturing arm builds specifically for each customer. Other computer-manufacturers, including Gateway and Hewlett-Packard, have attempted to adapt[citation needed] similar business-models, but due to timing and/or retail-channel pressures[citation needed] they have not achieved the same results as Dell.

A Dell executive writes[61]:

Analysts say : They (Dell) have a negative 45 days CCC, which means that their sales are converted in hard cash 45 days BEFORE the sale.

I say : They have a negative 45 days CCC, which means that their sales are converted in hard cash 45 days BEFORE Dell needs to pay for purchase invoices to vendors.

Dell has also sold at retail, as explained in the "Marketing" section of this article.