LSCM: Individual AssignmentAnalysis of IBM global supply chain

Amar Kumar GMP 2013 Submitted to: Prof. Kampan Mukherjee

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Introduction
About 20 years ago, IBM started reorienting the entire value chain- from how it sources materials to how it sells and services its solution- around the need of its clients. The system would eventually drive integration of IBM global supply chain. It would foster IBMs emergence as a globally integrated enterprise, where work is performed whenever, and wherever, is best for the client. And it would lay the foundations for the clientoriented system of business that it now calls Smarter Commerce. The Globally Integrated Supply Chain Complex and vast supply chain is key area of focus in the IBM global integration concept. Not only to its own supply chain, IBM operates procurement and supply chain processes for clients in diverse industries around the world. The integrated supply chain has become a smarter commerce engine for IBM. The IBM Globally integrated supply chain can be split in three concurrent and interrelated areas: Central procurement and customer fulfillment Central global enterprise platform Talent management

The global integration of IBM's supply chain serves as the foundation for two principles, or axes, underpinning the company's service philosophy. The first is the "pillars of strength." The supply chain organization provides strength and stability to the company because there are uniform practices at its centers for procurement, manufacturing, and order fulfillment around the globe. Process standardization also allows IBM experts located anywhere in the world to support customers wherever the company does businessat any hour of the day or night. The other axis, dubbed the "pillars of value," relates to effectiveness in serving customers. It refers to the fact that supply chain professionals, located in a center anywhere in the world, can work on developing a specific solution to meet the needs of a particular industry, geography, or group of customers. By applying its expertise to solve a particular problem, IBM is able to increase customer or shareholder value.

Figure 1: IBM spends $39 billion to manage its complex supply chain.

1. What are the supply chain partners in the supply chain I was associated with? What is the supply chain structure?
Supply chain partners Following are the major partners in the IBM supply chain: a. Customers and clients - IBM believes that its entire supply chain is in service of its clients. This is why it went to extraordinary lengths to include its clients in the design of our integrated supply chain. Clients were the impetus for the integrated supply chain transformation because they wanted a standardized, seamless approach. b. IBM global procurement suppliers -IBM Global Procurement is responsible for buying products such as computer parts and services like Travel at the lowest possible prices in the industry. Each year, Procurement saves billions of dollars which benefits all stakeholders. Procurement evaluates Supplier performance regularly to ensure that the best products and services are provided to IBM. c. Independent software vendors (ISV) -IBM has developed an ecosystem of ISV partners identifying best-of-breed solutions and enabling them on IBM platforms. These solutions from IBM ISV partners will assist clients in moving closer to becoming an On Demand Business. d. Business partners (for software applications) -The IBM business partners provides proven solutions in industires, spacialities and product areas. e. Strategic alliances-IBM has strategic alliances with Cisco, Dassault systems, Oracle, SAP etc. IBM provides cutting edge solutions to the modern challenges of the industries with the help of strategic partners. f. Recrutiment agencies- IBM trusts several recruitment agencies to hunt talent pool of niche skill set. IBM supply chain structure Earlier, the IBM supply chain had been designed to support local and regional computer sales and delivery. That fragmented approach prevented IBM from capitalizing on one of its greatest strengths: the ability to leverage its purchasing power with vendors around the world. However, IBM has restructured its supply chain structure to adopt the changing csutomer needs. It has switched from a focus on regional business units to operating as a global organization and to create a single, integrated supply chain aligned with the new business model. The giant company earned more than US $106 billion in worldwide revenue from hardware, software, and services in 2011. Its supply chain management organization works out of 360 locations in 64 countries, tracking more than 1.5 million assets for both IBM and its clients. The organization also deals with about 23,000 suppliers in nearly 100 countries. It has also IBM

established Global Sourcing Councils where procurement executives could exchange knowledge with their counterparts in other countries. These councils also allow professionals with deep sourcing expertise to work together to solve problems and coordinate with other functions. IBM's supply chain operation oversees two critical processes for the corporation. 1. The order-to-cash cycle The process starts when a customer is ready to do business with IBM. It continues with the placement and then the execution of the order, including manufacturing and delivery. The cycle also encompasses billing and invoicing, accounts receivable, and postsales support. 2. Procure-to-pay- It encompasses purchasing and payment of suppliers. The procure-to-pay systems enable the integration of the purchasing department with the accounts payable department. In fact, these systems are designed to provide IBM with control and visibility over the entire lifecycle of a transactionfrom the way an item is ordered to the manner in which the final invoice is processed Integrated Supply Chain

Global Logistics

Worldwide manufacturing

Operations & Strategy

Human Resources

Customer Fulfillment

Procurement

Special Projects

Figure 2: IBM integrated supply chain structure

Figure 3: IBMs Supply Chain is Complex, Extensive, Contains high value items and Controlled Technologies.

2. What are the prime competitive strategies of my previous organization?

The company has shifted its business mix, exiting certain segments while increasing its presence in higher-value areas such as services, software and integrated solutions. IBMs clear strategy has enabled steady results in core business areas, while expanding its offerings and addressable markets. The key tenets of this strategy are: Deliver value to enterprise clients through integrated business and IT innovation; Shift the business mix to higher-value areas; and Become the premier globally integrated enterprise

These priorities reflect a broad shift in client spending toward integrated solutions, as companies seek higher levels of business value from their IT investments. IBM has been able to deliver this enhanced client value thanks to its industry expertise, understanding of clients businesses and the breadth and depth of the companys capabilities. Consistent with this strategy IBM is leveraging its capabilities to build and expand strong positions in targeted growth areas. IBMs growth initiatives include Smarter Planet, Growth Markets, Business Analytics and

Optimization and Cloud Computing. Each initiative represents a significant growth opportunity with attractive profit margins for IBM. To implement the competitive strategies, IBM follows on demand business- an enterprise whose business processes, integrated end-to-end across the company and with key partners, suppliers, and customers, can respond with flexibility and speed to any customer demand, market opportunity, or external threat. As an on demand process, IBM is responsive, variable, focused and resilient.

3. What are the major drivers of the supply chain? What are their roles in achieving strategic fitness between competitive strategies and supply chain strategies?
Major drivers of the IBM supply chain I. Facilities IBM has world class facilities services- responding to the demand for flexible, scalable technologies and reducing costs. IBMs site and facilities services helps to: Align IT with business requirements Lower total cost of ownership Mitigate operational risk Limit downtime and extend business continuity Support compliance with regulatory mandates and privacy laws Build data centers and facilities that support growth Manage all aspects of facilities planning, design and construction Supply chain strategy Drive focus, flexibility, quality, and cost competitiveness- ISC achieves economies of expertise by outsourcing non-core functions. ISC seeks sense-and-respond flexibility by deploying risk-resilient processes.

Competitive strategy Shift the business mix to higher-value areas; and Become the premier globally integrated enterprise

Role in achieving the strategic fitness between these two strategiesIBM has shifted its focus from hardware to software services. The global development centers have played a vital role in this transformation. It has offices in the low labour costs countries and this gives IBM a cost competitive advantage.

II.

Information The information plays a vital role in connecting and coordinating various stage involved in the value chain. Competitive strategy Supply chain strategy Roll out IBMs core strategic processes across the glob- ISC will Deliver value to harmonize discordant functions and integrate them into end-toenterprise clients through end processes that are consistent globally across all IBM LOBs integrated business and IT (Line of businesses) and brands. innovation Provide Industry leading solutions integration and delivery capability- ISC will invest in new governance to standardize and enforce solution supply chain (SSC) processes that help sales easily integrate and deliver multibrand solutions.

Role in achieving the strategic fitness between these two strategiesIBM uses various information technology tools to integrate the whole business with customers and vendors. It makes the processes more efficient, respoponsive, transperant, standardized and seamless. III. Inventory IBM cosiders its talent pool as SKUs of supply chain. It plans and execute the hiring and allocation of skilled employees as we do the SKUs planning and execution in SCM. Competitive strategy Supply chain strategy Extend supply chain principles to IBMs labour based businessesDeliver value to ISC will facilitate the IBM transition from an asset-intensive enterprise clients through product supply chain to skills-based supply chain- by helping integrated business and IT automate and optimize IBMs service processes. innovation; Become the premier globally integrated enterprise

Role in achieving the strategic fitness between these two strategiesThe inclusion of IBMs labour based business processes in ISC has enabled IBM to deploy right person with right skill at the right place and time.