A company’s core competence is something the organizations do especially well in comparison to its competitors. A core competence represents a competitive advantage because the company acquires expertise that competitors do not have. A core competence may be in the area of superior research and development, expert technological knowhow, process efficiency or exceptional customer service. At Amgen, a pharmaceutical company, the strategy focuses on the company’s core competence of high quality scientific research. Rather than starting with a specific disease and working back ward, Amgen takes brilliant science and finds unique uses for it. The Home Depot thrives because of strategy focused on superior customer service. Managers stress on all employees that listening to customers and helping them solve their do-it-yourself worries takes precedence over just making a sale. In each case, leaders identify what their company does particularly well and builds a strategy around it. Dell Computer has succeeded with is core competencies of speed and cost efficiency.
Dell computer is constantly changing, adapting and finding new ways to master its environment, but one thing hasn’t changed since the days Michael Dell first began building computers in his dorm room: the focus on speed and low cost. A major factor in Dell’s success is that it has retained a clear image of what it does best. The company spent years developing a core competence in low cost and speedy delivery by squeezing time lags and inefficiencies out of the manufacturing and assembly process, extending the same brutal standards to the supply chain. Good relationships with a few key suppliers and precise coordination mean that Dell can sometimes receive parts in minutes rather than days.
Consider how the system works at the Topfer Manufacturing Centre, the newest of Dell’s seven plants. Inside the cavernous factory, located near Dell’s headquarters in Round Rock, Texas, parts storage takes up about the space of an average bedroom. The factory is a blur of activity. Boxes of microchips and electronic components skitter by on double decker conveyor belts. Assembly workers use an integrated computer system that practically hands them the right part whether it be any of a dozen different microprocessors or a combination of software at just the right time. The system not only cuts costs, but also saves time by decreasing the number of worker touches per machine. On a typical day 25,000 finished computers head off towards happy customers. Dell’s system offers completely transparent information about orders, shipments and other data to employees, customers and suppliers. Precise coordination aided by sophisticated supply chain software means Dell can keep just two hours, worth of parts inventory and replenish only what it needs throughout the day. The just-in-time system works so smoothly that nearly 85 per cent of orders are built customized and shipped within eight hours.
Dell’s fixation with speed ad thrift is being challenged as the company moves into new areas of business such as storage systems, networking gear and information services. However, founder and chairman Michael Dell believes the core competencies that made Dell a star in PCs and servers can also make the company a winner as it seizes new opportunities . To anyone who doubts that Dell can compete in new markets he says bring them on. We’re coming right at them.
The condition that exists when the organization’s parts interact to produce a joint effect that is greater than the sum of the parts acting alone.
Synergy can also be obtained by good relations with suppliers as Dell Computer, or by strong alliances among companies.
Source: New Era Management