* Supply Chain Management In IBM:
* Early 1990’s: decentralized geographic and functional departments * Mid-late 1990’s: Distribution and logistics functions centralized into a global organization with world-wide responsibility * Early 2000’s: merger of Customer Fulfillment, Procurement, Manufacturing, and Global Logistics/Distribution functions into a new global Integrated Supply Chain function * Result: cost savings of $5.6B in 2002 and $7B in 2003 * A Case study on IBM
* IBM developed the supply chain professional career path in support of its evolving view of the supply chain itself. Specifically, IBM is transforming its supply chain into one that is on-demand. An on-demand supply chain is integrated end-to-end across the company’s entire operations and with key partners, suppliers, and clients. It can sense and respond with flexibility and speed to any client demand, market opportunity or change in the marketplace—no matter how frequent or sudden. The on-demand supply chain leads to competitive advantages than enable the company to gain market share, boost client satisfaction, and effectively adapt to any changes in the market * As part of this transformation, IBM is developing talent that has deep functional expertise in such areas as procurement and logistics as well as cross-functional breadth. Here is the IBM story. * History of IBM’s Supply Chain
Previously, IBM’s supply chain was fragmented into several individual business units. Supply chain operations consisted of the unconnected activities of negotiating contracts; procuring parts; transporting them to manufacturing; loading them onto planes, trains, trucks, and ships; and then shipping them to clients’ loading docks on time. In general, the company viewed its supply chain as a cost of doing business, rather than a strategic weapon. * In the late 1990s, IBM changed its perspective on supply chain management. Instead of looking at it as just overhead, the company considered how the supply chain could provide value to the enterprise and its shareholders. To begin, IBM’s goal was—and still is—to revolutionize the very concept of a supply chain by transforming it into a powerful force that could drive efficiency, make life easier for its clients, and improve customer satisfaction with IBM as a strategic partner. If that could be achieved, IBM believed that it could grow revenue while reducing expenses. Of course, this meant dramatically improving operations. It also meant making the supply chain accountable to the business and establishing fundamentally different expectations of how the supply chain produces benefits. * To achieve this goal, IBM in 2002 created a single business unit called the Integrated Supply Chain (ISC). Overnight, the ISC emerged with 19,000 employees in 56 countries responsible for $40 billion in spending. Exhibit 2 illustrates the ISC organizational structure. The goal of the ISC was to build a supply chain that stretched from “opportunity to cash” —meaning from the raw materials at one end of the manufacturing operation to the ongoing support it provided for clients at the other. Importantly, ISC would collaborate with every aspect of IBM to play an active role in aligning and integrating the company horizontally. * The philosophy was simple: A supply chain is greater than the sum of its parts. IBM focused not only on preserving and enhancing functional excellence but also on creating the capability to see, understand, and leverage the interdependencies across the entire supply chain. IBM’s approach to managing the supply chain allows it to do both. * For one thing, IBM didn’t disband the supply chain silos because it would continue to need experts with deep knowledge and experience in each area of the supply chain. Yet IBM also needed visibility across the supply chain. To develop this capability, the company formed three teams to manage issues cross-functionally in the areas of...
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