The Ignominious Fall of Dell

snydeq writes "InfoWorld's Bill Snyder discusses the ignominious decline of Dell, one akin to that of Computer Associates, leaving the company forever tainted by scandal and a 'shocking breach of faith with customers.' Dell's pioneering business model and supply chain helped make desktop computing ubiquitous, affordable, and secure. But years of awful quality control and customer service have finally caught up to the company in a very public way that will do irreparable damage to the company for years to come. 'What we've learned about Dell recently doesn't qualify as an understandable mistake. Only a rotten company sells defective computers and lies about it.'"

Comments

My company builds stuff in China

[Trip6]

Anyone who outsources manufacturing of any kind has faced this problem. Component suppliers provide defective parts to factories, and when the first parts that contain a defect not seen before arrive, incoming QC hasn't seen the defect yet and so might not test for it. The parts are then used, and if the defect allows the product to pass inspections and burn in, you now have your supply chain infected with product containing the bad part. The consequences of the bad part range from outright consumer danger (e.g. exploding batteries), to shortened product life resulting in expensive warranty repairs and a damaged brand reputation, to very little impact resulting in just a few consumers experiencing annoying problems.

Once you learn of the bad part and the consequences, you're like the CDC (center for disease control). You have to find out how bad the outbreak is, what the return rate is, how much of the supply chain is infected, what the consequences of the failure are, and then decide what should be done about it.

If the failure rate is below, say, 10% and the consequences non-life-threatening, you will likely do nothing and deal with it in the repair channels, and make a running change to your incoming QC processes and manufacturing lines. If there is extreme personal risk you might have to do a recall, and you probably have to suspend your entire supply chain until the root cause is found and everything from raw materials to subassemblies to product in transit to store inventories to consumer's products is fixed.

In this case, Michael Dell was more than likely in the CDC meeting, and data was probably presented that pointed to the fact that a recall wasn't necessary. However, it looks worse than that, and Dell is being painted as a greedy tyrant who shipped bad parts knowing full well he did so.

I guarantee this is NOT the whole story, and there was some serious gray area involved at Dell as to what to do about this issue. More than likely, this was a calculated risk that the problem would not turn out as big as it is.