Impact of Innovation and Creativity

Introduction

The paper analyzes three different organizations for benefits and drivers proposal. The three organizations selected for analysis are Dell Computers, McDonalds and Wal-Mart. The assignment in the first part would evaluate the innovation and creativity on the organizational strategy, processes, products, and services of these three organizations. Further it would identify innovation considerations for the selected organizations. Lastly, I would analyze the importance of these considerations for the organization.

Impact of Innovation and Creativity

Innovation and creativity had a positive and rewarding impact on all the three selected organizations. This part would analyze this impact for Dell Computers, McDonalds and Wal-Mart. Dell was incorporated in 1994 by Michael Dell while he was a student at University of Texas, Austin. From its very first initiatives, direct selling model was adopted. In the beginning PC’s were sold over the phone and they were customized according to customers’ specifications. Dell returned to its direct selling model after using the retail channel from 1990 to 1994. In mid 1990’s, the company grew rapidly, thus becoming number one PC seller in the US and number two worldwide in 1999.

Dell’s strategic choices and ways of realizing those choices have played an effective role in story Dell’s success. The supply chain management of the company is the key element in its successful business model. The core element of the company’s business m model is its direct sales model, referred as ‘direct mode’, with the build to order strategy. This differentiated model of dell help it creates a niche in the distribution channel and eliminates the entire mid channel members to arrive at cost leadership position in the industry.

Dell directly sells to all its customers, regardless of a home-PC to world’s largest corporations. The direct relationship with individual customer creates a great source of competitive advantage for Dell. This creates a valuable information about the end customers, and thus Dell knows who are the end users of their product, what they have purchased from the company, what are their future preferences, a fact that allows the company to stay closer to their customers by offering add-on products and services.

Wal-Mart has remained a largest retailing company in the world. The company is much bigger compared to its competitors in the US- K-mart, Sears Roebuck, Nordstrom and JC penny combined. The company always emphasized on the need of reducing its purchasing costs for offering best prices to its customers. Wal-Mart procured its products directly from manufacturers, by passing all the involved intermediaries. Wal-Mart always remained a tough negotiator on prices, finalizing a deal only if it feels confident that the products it bought are not available at lower prices anywhere else.

The company also spent its significant time in meeting its vendors an understanding different cost structures if their businesses. By this process of transparency, the company was certain that the manufactures are doing their best to cut down costs. Wal-Mart always believed in building long-term relationships with their manufacturers, once they are satisfied with them. The company did not spared even big manufacturers like P&G (Procter & Gamble).

Wal-Mart developed the ability of catering the individual needs of all its stores. Stores chose from a number of delivery plans. The company invested heavily in the stores across the US. Along with the rapid expansion of stores within the country, it became essential to quip itself with the good communication system. The company set up its own satellite communication system in 1984. The company also allowed stores to manage their own inventory, reducing sizes across major product categories along with timely price markdowns. This helped the company in reducing un-productive inventory. Wal-Mart also made use of it information technology capabilities for making inventories available in the situation of high demand towards certain products, further reducing the overall inventory levels. The suppliers of the company were also networked through computers. The system at the company identified the item which was low in stock and accordingly signal was sent to P&G. The collaboration between P&G and the company was win-win proposition for both the companies as Wal-Mart could monitor stock levels in its stores constantly and could also identify the items that are moved out fast as the result of high demand.

McDonald Corporation was created in the year 1955, when Ray Kroc opened his first restaurant in Des Plaines, Illinois. He soon realized this success could be duplicated across the United States and beyond, if consistency and quality could be maintained. Quality is the mirror of any organization, customers could judge about the organization based on the level of the organization quality, therefore the first step to attract customers is through quality objective which is in somehow is to guarantee that customers will return back again, in this part McDonald provided high quality products and services though standardize all its branches, and therefore McDonald obtained customers satisfaction additional to made the operation more easy for the staff, for example McDonald deal with over 20 bakeries to standardize the products in all the united states in terms of color, flavor etc (Gale/Online), the target of standardization is not only to aim to standardize the food in all restaurants but also to reduce the possibility of mistakes and therefore reduce costs too, another part of the quality objective that McDonald provided which consider as rare in front of many restaurants is providing customers with nutrition information, thus customers can select the meal that applicable to their health.

McDonald is one of the rare organization that succeed to balance between its operation strategic and customer demands, McDonald combined order-winning and qualifying factors, in terms of order-winning which refer to the “customer as key reason of purchasing the product or service”.

Innovative Considerations

Dell represents the most successful e-commerce, logistics and supply history. To compete with the giants Apple, and Compaq, company has adopted a different strategy to market their PCs. They chose the e-commerce route. For ordering a PC with desired configurations and specifications, the customer has to log on to the Company website, place an order and complete the outline commercial formalities. Very often the customer gets his PC very next day, if he happens to be in USA. The electronic commerce system installed on the Company website registers an order after online completion of commercial formalities. The system estimated the demand of the various components going into commercial formalities. The system estimates the demand of the various components going into the computer and place orders for parts with the various suppliers. The supplier delivered the parts to predetermined supply centres wherein the computer is assembled. The system, while registering the order, communicates to its logistics partner, the details of the customer and the delivery location as well as the assigned supply chain for picking up the consignment. The supply chain partner’s office nearest to the Company supply centre is activated for material pickup and delivery. The result of this effective process is nearly zero inventory and total customer satisfaction.

Wal-Mart was among the first companies to use RFID tags. RFID tags were attached to manufactured products. The tags emit signals that were read using transmitters. These transmitters were connected to the ERP systems in the company. When the product with the RFID tag passed through an electro-magnetic zone, the tag responded to the reader’s signal and transmitted the information back to its reader.

Conclusion

Each of the selected companies reaped high benefits by innovating within their business. Considering the fact of Wal-Mart, the benefits of an effective and efficient SCM includes fastest inventory turnover, reduced lead time, accurate forecasting of inventory and demand levels, additional warehouse space, reduction of safety stock and superior working capital utilization. The company’s SCM practices resulted in high efficiency in operations along with better customer service. Similarly in case of Dell, the company via its partnership model has completely changed the industry methods. It has integrated the value chain by its access to information. Industry is facing stiff competition and in such a competitive scenario Company has differentiated at cost and also at offering.

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