To help its production organization, Dell passes information from sales directly into
logistics and assembly, letting its suppliers and the factory floor know the real time demand
for PCs and components. By logging all of its customer service interactions, Dell also gets
real time information about the performance of its products, enabling it to respond to
problems faster and avoid costly refunds and service calls. A good example was provided
by Dell’s ability to respond rapidly when Intel shipped faulty Pentium chips to computer
makers in the mid-nineties. Dell knew exactly where the problem chips were and could
easily help customers to replace them. Competitor firms did not know. They had to stop
production and go to channel partners to find the problem chips thereby incurring
considerable time and cost. The delay, plus the fact that Dell could shift to faultless chips
immediately because it had no inventory, caused new customers to look to Dell rather than
its competitors.