April 18, 2005
Cash Flow and Manufacturing Drive Dell's
Financial Strength, Says Schneider
By Sandie Taylor
Just about every company receives the occasional accolade, but when a firm is named America’s Most Admired Company by Fortune magazine, it must be doing many things right. James Schneider, senior vice president and CFO of Dell Inc., said the recent acknowledgement from Fortune will motivate Dell in its quest to become the world’s No. 1 PC provider.
“We’re flattered and amazed that a company as young as we are could be thought about that way,” Schneider said. “We want to keep this credibility going.”
Schneider expressed high hopes for the future. He believes that the company’s $1.8 billion in cash flow is the backbone of Dell’s financial strength and will foster further success.
The cash flow itself, Schneider explained, results from Dell’s direct model—Dell eschews storefronts, maintains no inventory, and pushes hard to collect receivables. This lean, mean operating style enables competitive pricing, which has helped Dell acquire a 17 percent share of the world’s PC market. That market share gives Dell tremendous leverage with suppliers.
Of course, Schneider added, Dell’s leverage with suppliers is reinforced by the company’s relative lack of dependence on suppliers. “We’re the only computer company that actually makes our own products,” Schneider remarked, noting that Dell conducts 69 percent of its operations in America. “Most others outsource.”
With its stake in the PC industry secure, Schneider said, Dell is beginning to branch out by offering new products and services and expanding their reach in international markets. The company now produces printers (selling more than 5 million last year), MP3 players, HD televisions, and family projectors.
“We have lots of room to grow, and lots of challenges along the way,” Schneider said, adding that his role as CFO gives him the opportunity to always be thinking strategically about how Dell can be more effective and more efficient.
While the role of finance is important, Schneider added, the ability to keep employees and customers satisfied is another key point in Dell’s success. “You have to look at the softer side of things,” he says. “We’re very data-driven, but we want to have a direct impact on customers and bring people together in a strong work environment.”
“I spend a third of my time on people development—the 'Soul of Dell,’” Schneider said, referring to the company’s relatively new work-life balance initiative. “It’s a tough job from that perspective because you’re always on the road building business relationships, visiting factories, and talking to employees to see if you’re developing them and retaining them.”
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