Demand Forecasting
Management believed that accurate sales forecasts were key to keeping costs down and minimizing inventories, given the complexity and diversity of the company's product line. Because Dell worked diligently to maintain a close relationship with its large corporate and institutional customers, and because it sold direct to small customers via telephone and the Internet, it was possible for the company to keep a finger on the pulse of demand—what was selling and what was not. Moreover, the company's market segmentation strategy paved the way for in-depth understanding of its customers' evolving requirements and expectations. Having credible real-time information about what customers were actually buying and having first hand knowledge of large customers' buying intentions gave Dell strong capability to forecast demand. Furthermore, Dell passed that knowledge on to suppliers so they could plan their production accordingly. The company worked hard at managing the flow of information it got from the marketplace and seeing that it got to both internal groups and vendors in timely fashion.