By the time they go to use the component it had become outdated so it increases their costs. Dell keeps their inventory costs at a minimum. Dell's inventory turnover rate is about 4 days while the industry's is around 15. This model also helps to avoid competition for shelf space in the retail markets.
Dell's direct distribution strategy can be credited for the company's lean cost structure. The company is heavily exposed to the slow growing PC market however, Dell's market share continues to accelerate compared to the rest of the industry. As the industry continues to move towards standardized technology, cost structure will become a key issue and Dell already has an advantage over the rest in this area.
…
