Traditionally, Dell has sold all it's products - whether to end use customers or to corporate customers - using a direct-sales model via the Internet and the telephone networks.Dell maintains a negative cash conversion cycle 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 a just-in-time inventory management, thereby profiting from it's attendant benefits. Dells JIT approach utilises the "pull" system by building computers only after customers place orders and by requesting materials from suppliers as needed. In doing this Dell mirrors Toyota (use "pull" systems to avoid overproduction)
Dell's manufacturing arm builds specifically for each customer, other computer manufacturers have tried to emulate this but have not achieved the same results as Dell.
Analysts say: They (Dell) have a negative 45 days CCC which means that their sales are converted into hard cash BEFORE THE SALE.
If all businesses, whether small, medium or large could follow their example - cash flow - which can be the bain of many a business, would be eleviated.
In my view, Dell's customers will pay for their product 45 days before they take delivery ,because they know the product is going to be excellent and the follow up service and support is in place should their be a problem
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