Environmental Management Review of Dell - Case Study Example

Environmental Management Review of Dell Computer "Judge us not by what we say, but by what you see us do." Michael Dell, Chairman and CEO. How true is this statement will be judged by the foregoing statement and data from their Dell's website and other third party testimonies. Founded in 1984 by Michael Dell, the company is a premier provider of products and services worldwide that enable customers to build their information technology and Internet infrastructures. It offers a broad range of product categories, including desktop, computer systems, servers and networking products, mobility products, software and peripherals, and enhanced services. (Values in Action, p. 12) How well does the company use environmental management systems and performance measures to implement its strategy Michael Dell founded the company when he was a 19 year old student at the University of Texas in Austin. He used a basic model: selling PCs to the final customer and built them to users' specifications. Dell Computer still does it today, the so-called build-to-order scheme, although with some modifications. He started with telephone sales using IBM compatible PCs, and then assembling and selling his own brand. This model provided a 24-hour hotline for complaints and guaranteed immediate shipment of replacement parts, that is, 24- to 48-hour shipment (Dell 1999). The improvements in design and production processes have helped Dell cut the estimated production cycle time for a desktop computer - from beginning of the build process to placement on a delivery truck - to 7 hours (McWilliams, 1997, cited in Kraemer et al, 1999:11). At its newest Austin plant, named Metri 12, sometimes a PC can be built, software installed and tested, and everything packed in a box for shipping within 5 hours (Ramstad, 1997, cited in Kraemer, 5). The customization that occurs in production is carried over to sales and service. For instance, Dell installs custom software on the machines that it builds for corporate customers. It also maintains an inventory of its customers. It seeks to lower the total cost of ownership for its corporate customers by helping them manage their PC inventories and offering technologies that reduce the cost of hardware and software maintenance in networks (Dell outlines strategy, 1997). The company applies the principles of resource savings through the following strategies: Recycling Dell recycles unwanted Dell-branded products for free, and reduces impact to the environment through selling refurbished system. This saves money for the customer and lessens the amount of new materials used, while still keeping warranties from Dell. Old PCs, printers, software, modems and other such devices considered separate components, can be donated to charity organizations and foundations, through the company. The National Cristina Foundation and Dell have partnered to provide computer technology to people with disabilities, students at risk and economically disadvantaged persons. Combined with training, this program enables them to lead more productive lives. (Dell website) Dell designs and engineers its products to prevent pollution and conserve natural resources throughout the system's life, achieving environmental responsiveness in tandem with sound business management. Reducing the environmental impact of Dell products begins at the design stage as cross-functional product design teams work to make thoughtful and effective decisions that will have positive environmental results throughout the equipment's life cycle. (Dell website: Environment) Environmental responsibility goals Recycle or reuse 99 percent of waste from manufacturing operations by 2012. Further reduce carbon intensity by 15 percent by 2012 (based on 2006 levels). Improve average score from the LEED (Leadership in Energy and Environmental Design) Green Building Rating System by 2012. Design for the environment Dell pledged to eliminate brominated flame retardants and polyvinyl chloride from new product designs by 2009 that will force widespread changes in their supply chain. As a standards-based organization, they cannot rely on niche solutions; instead, the need to include cost-effective and technically sound solutions in procurement specifications. These solutions must be applicable worldwide. Like the transition to lead-free solders, the campaign to use compliant materials will reach deep into their organization and require attentive coordination by the Dell team and their partners. (9) Climate Strategy Dell has upgraded to its strategy to address climate impacts by designing products that deliver greater performance using the least power. Other efforts in this area include furthering energy efficiency work at factories and in product transportation, and extending customer engagement programs such as "Plant a Tree for Me". This direct model gives the company a unique chance to educate customers on environmental issues and social issues. (Values in Action, p.9) Climate protection Reduce greenhouse gas emissions from Dell operations and products by 25 million tons through improved product performance and preconfigured systems with Energy Smart operational settings. Expand Energy Smart settings into each product category. Reduce emissions from shipping products by optimizing shipping routes, instituting customer delivery-notification process, and opening more facilities to assemble products closer to the customer. Reduce overall transportation requirements by 25 percent by using rail trailers to increase capacity of flat railroad cars, more multi-pack configurations, and shipping efficiencies. Reduce greenhouse gas (GHG) emissions of Dell's freight operations by increasing the percentage of freight shipped through SmartWay Transport Partnership carriers. Reduce greenhouse gas emissions from Dell supplier operations by requesting applicable data and working with suppliers on emissions reduction strategies once data is collected. (9-10) Product design: Implement server-managed power management for customers worldwide to avoid 40,000 tons of carbon dioxide emissions between fiscal years 2008 and 2012. Materials: Avoid 100,000 tons of lead and 60,000 tons of brominated flame retardants (BFRs) between fiscal year 2004 and fiscal year 2012. Eliminate all remaining uses of BFRs and polyvinyl chloride (PVC) by end of 2009, including tetrabromobisphenol-A (TBBP-A) in circuit boards, as acceptable alternatives are identified that will not compromise product performance and will lower product health and environmental impacts. Facilities and manufacturing: Recycle or reuse 99 percent of waste from manufacturing operations by 2012. Further reduce carbon intensity by 15 percent by 2012 (based on 2006 levels). Improve our average score from the LEED (Leadership in Energy and Environmental Design) Green Building Rating System by 2012. Workplace health and safety: Reach 100 percent of Dell employees each year with safety communications and training. Attain and maintain a recordable workplace injury case rate of 0.4 cases per 100 employees. Forest stewardship: Reduce product packaging and shipping materials by 5,000 tons in fiscal year 2008. Use Green Cell biodegradable foam for packing material. Migrate direct mail and inserts to higher recycled content paper and increase amount of Forest Stewardship Council (FSC) certified fiber used. Seek partnerships with suppliers of fiber waste streams for an economical source of raw materials. Product stewardship: Recover 125 million kilograms of discarded product by fiscal year 2010 through asset recovery programs. (10-11) Accountability at Dell starts with living their values each and every day. From ethics to diversity, human rights to privacy, the actions of their employees are key to achieving corporate accountability goals. Dell's definition of corporate accountability encompasses governance, ethics, diversity, health and safety, and global citizenship. (14) Sustainability Council This consists of the company's CEO and chair, its chief legal officer, chief compliance officer, chief procurement officer, and senior executives from finance, engineering, investor relations and communications, human resources, and sales and service. The Council meets quarterly to review sustainability-related risks, opportunities and associated actions. Business owners who are working to address risks and opportunities are invited to provide updates and to seek approval for resources and strategies. This Sustainability Council reports its progress and results to the Governance and Nominating Committee of the Board of Directors, who, in turn, share their counsel and feedback with the broader Sustainability Council to further adjust and confirm the company's strategy. This direct engagement of Dell's executive leadership team has been a key factor in both making progress and spreading the knowledge of sustainable business practices within the company management structure worldwide. (15) The company is included in the Dow Jones Sustainability Index since its inception in 1999. This index ranks companies based on issues such as corporate governance, customer relationships, environmental management, labor practices and corporate citizenship. This accomplishment places Dell in the leading 10 percent for sustainability in the industry, out of the largest 2,500 companies in the Dow Jones Global Index. (16) Dell published a policy on political disclosure and accountability. By including such a report, Dell reassures investors that it has carefully reviewed its political spending and is not channeling contributions to controversial causes through 527 intermediaries. Dell is also requiring its trade associations to clarify how much member dues are used for lobbying and making politically oriented contributions.-Tim Smith, Walden Asset Management, cited in Values in Action, 16. Dell identified a potential issue associated with Dell branded battery packs with cells manufactured by Sony. The battery packs were sold with Latitude, Inspiron, XPS and Dell Precision Mobile Workstation notebook computers. In partnership with the U.S. Consumer Product Safety Commission and regulatory agencies worldwide, Dell announced a voluntary recall in August 2006 of approximately 4.2 million battery packs. The worldwide recall involves the specified batteries only, not the computers themselves. Political Disclosure and Accountability Policy Dell Inc. and its employees are active and engaged in their communities. Whether it is charitable activities or political engagement, employees are informed and involved in the decisions that affect their company. Dell believes that supporting the election of candidates who champion the legislative initiatives and policies that are important to the Company's businesses is appropriate and in the best interest of its customers, employees, and stockholders. Personal Employee Political Activities: Employees are free to engage in personal volunteer political activity but may not use Dell resources. (16) The Soul of Dell The company has a program known as "The Soul of Dell" which defines the kind of company they are and aspire to become, serves as their guide for their actions around the world, and ultimately forms the basis of their "winning culture." The core elements of the Soul of Dell include the following: Customers: Creating loyal customers by providing a superior experience at a great value. They are committed to direct relationships, providing the best products and services based on standards-based technology, and outperforming the competition with value and a superior customer experience. The Dell Team: They believe their continued success lies in teamwork and the opportunity each team member has to learn, develop and grow. They are committed to being a meritocracy, and to developing, retaining and attracting the best people, reflective of the worldwide marketplace. Direct Relationships: They believe in being direct in all they do. They are committed to behaving ethically; responding to customer needs in a timely and reasonable manner; fostering open communications and building effective relationships with customers, partners, suppliers and each other; and operating without inefficient hierarchy and bureaucracy. Global Citizenship: They believe in participating responsibly in the global marketplace. They are committed to understanding and respecting the laws, values and cultures wherever they do business; profitably growing in all markets; promoting a healthy business climate globally; and contributing positively in every community they call home, both personally and organizationally. Winning: They have a passion for winning in everything they do. They are committed to operational excellence, superior customer experience, leading in the global markets they serve, being known as a great company and great place to work, and providing a superior shareholder value over time. 2006 RECOGNITION AND AWARDS Dell has won recognition and numerous awards for its efforts in Global Ethics, Privacy, and Compliance in 2006. FORTUNE Magazine's Most Admired Companies Dell was ranked among the top ten most admired companies globally by Fortune's annual survey. For this "All-Star" list, Fortune asked 13,000 industry executives, directors and securities analysts to vote for the companies that they admired most, from any industry. More than 500 companies in over 60 industries were rated on the following eight critical reputation drivers: quality of management; quality of products and services; innovation; long-term investment value; financial soundness; ability to attract, develop and keep talented people; social responsibility; and use of corporate assets. Business Ethics Magazine's Top 10 Best Corporate Citizens Dell ranked No. 9 in Business Ethics' list of "100 Best Corporate Citizens" among major U.S. companies. The annual "100 Best Corporate Citizens" list evaluates the top 1,000 largest publicly-traded companies in the U.S. and is based on a statistical analysis of performance in the following eight stakeholder categories: shareholders, community, governance, diversity, employees, environment, human rights and product. Dell scored highest this year in the categories of employee relations, community engagement and environmental responsibility. Dell has been ranked for six of the list's seven years of publication. In recent years, Dell has won acclaim for the company's commitment to corporate citizenship, notably as the 2005 winner of the Business Ethics Environmental Progress Award. For more information, see www.thecro.com. 2006 DIVERSITY AWARDS AND RECOGNITION Dell received the following awards and recognition for diversity efforts by a wide variety of organizations and publications in the U.S. and worldwide: Dell U.K. was awarded one of the Top 50 Companies for Female Employees by Aurora and The Times. The Opportunity Award given by the U.S. Secretary of Labor, the country's highest award recognizing voluntary workplace diversity efforts among federal contractors. Voted No. 2 on DiversityBusiness.com's 2006 list of America's leading Fortune 500 companies to promote multi-cultural business opportunities. Dell Bratislava was awarded the Best Family-Friendly Employer award from the Bratislava Ministry of Labor, Social Affairs and Family. Dell's Betty Parston, Senior Manager of WorldWide Procurement, was named 2006 Advocate of the Year by the Central and South Texas Minority Business Council. Dell Brazil was recognized as Among the Best Places to Work in Brazil by poca magazine. Dell was named as one of the Most Admired Companies in a survey of diverse engineers by Hispanic Network magazine. Dell was recognized as one of the Best Places to Work in the U.S. by the Human Rights Campaign (HRC). For the third year in a row, Dell earned a 100 percent on HRC's Corporate Equality Index, which assesses workplace-related policies and practices toward the equal treatment of gay, lesbian, bisexual and transgender employees. Dell earned recognition as one of the Top Corporate Supporters of Hispanic-Serving Engineering Schools by the Hispanic Engineer & Information Technology magazine. The magazine revealed that Dell is among the top private sector supporters of engineering schools at America's Hispanic-serving institutions. Dell's Vice President of Global Diversity, the late Thurmond B. Woodard, was awarded the 2006 Whitney M. Young Jr. Award by the Austin Area Urban League. The League recognized Woodard's efforts in leading Dell's global diversity and ethics efforts and being instrumental in Dell's initiative to build diversity into its core business plan. (23) Supplier diversity is integrated into corporate strategic plans for growth At a recent Dell Supplier Diversity Summit, Dell announced the Direct Talk program to make it easier for diverse-owned businesses to work with Dell. More than 200 suppliers, corporate customers, and Dell purchasing managers who attended the annual summit heard about Dell's commitment to increasing opportunities for established small, women-owned, and minority-owned business enterprises. Direct Talk enables qualified diverse-owned companies to meet frequently with Dell to discuss purchasing opportunities. (25) Workplace health and safety Dell's Environment, Health and Safety (EHS) team engages of its employees worldwide and encourages them to take personal ownership of environmental, health and safety issues and integrate best practices into their daily activities. Accomplishments for 2007 Health and Safety Awards and Recognition; Parmer South 4 (Austin, Texas) office and lab building received certification under the U.S. Occupational Health and Safety Administration's Voluntary Protection Program (OSHA VPP). A total of 10 facilities in the U.S. currently have VPP certification. On October 10, 2006, our EMF3 manufacturing facility in Limerick, Ireland was granted VPP certification under a program jointly sponsored by the Ireland Health and Safety Authority and the U.S. OSHA. The facility became the largest site in Ireland to achieve this recognition. Dell's concern for the environment and the principles of environmentalism deserve due recognition. It has not left behind the programs of corporate social responsibility, the environmental protection that the community deserves from its production of PCs and other non-biodegradable materials. Dell's use of IT plays a vital role in the implementation of its business model. It has used IT to coordinate its build-to-order processes from order taking through procurement, logistics, production, service, and support. It has reduced inventory, speed up logistics and product cycles, understand user markets, and offer additional services to customers. It has also reduced surplus inventory and in the process helping the environment bear with unnecessary materials. The company has extended its reach to millions of potential customers at low marginal cost through its use of the Internet. On the other hand, there are negative comments about Dell which still need to be ironed by the company. Some complaints have not been answered properly, and some are the results of negative blogs on the internet about Dell Computer. The negative comments were customers' reports of unsatisfactory service experiences in the recent past. But the company said that the negative reports are now counterbalanced by the positive stories. The latter is the result of Dell's re-investment in customer service. It took many years for Dell to establish the reputation for exemplary customer service which it had built up in the years up to 2001, and this is still present in some loyal customers' minds. But the effect of the so-called 'Dell Hell', that it doesn't care about its customers, tarnished this image, and Dell has a lot to do to regain its former reputation. (Market Sentinel, 2006) References Kraemer, K., Dedrick, J., and Yamashiro, S. (1999). Refining and Extending the Business Model with Information Technology: Dell Computer Corporation. Available from: http://www.indiana.edu/tisj/readers/full-text/16-1%20kraemer.pdf. [Accessed 28 March 2008]. Market Sentinel (2007). Responding to crisis using social media: Updating the "Dell Hell" case study - are Dell turning opinion round. Available from: http://www.marketsentinel.com/files/Crisisresponseusingsocialmedia.pdf. [Accessed 28 March 2008] National Cristina Foundation website (2008). Available from: http://www.cristina.org/aboutus.html. [Accessed 28 March 2008] Values in Action, Dell's Sustainability Report & Fiscal Year 2008. Available from: http://www.dell.com/downloads/global/corporate/environ/report07.pdf. Read More