Supply-Chain Help -- IBM Unit Targets Solutions And Services For Smaller Companies
Natalie Engler
IBM last week introduced a new Supply Chain Services practice in an effort to provide more end-to-end global supply-chain solutions to small and midsize companies. Its goal is to help these companies integrate their business systems with those of their trading partners.
IBM says that in 1998, companies with fewer than 1,000 employees spent about $130 billion on supply-chain management, including enterprise resource planning. "It's no longer my company vs. your company. It's my supply chain vs. your supply chain, and the most efficient in the end will win," says Peter Rowley, IBM's general manager for small and midsize business.
Until now, the emerging enterprise market has been underserved by supply-chain programs, says Bruce Richardson, an analyst at AMR Research. "Everyone has been targeting Fortune 1000 companies and building sophisticated products for which they can charge millions of dollars," he says. "IBM realizes that no one else is trying to help small- to midsize retailers and manufacturers become as efficient as the big guys."
The Supply Chain Services practice is staffed by 80 consultants and will double in size this year, IBM says. The practice will focus on delivering consulting and rapid implementation services for applications from IBM, i2 Technologies, Manugistics, and other supply-chain software vendors. IBM also introduced a Supply Chain Management Consulting Methodology, which will let companies ensure consistent implementations through formalized practices, as well as via software tools, templates, and analytic techniques.
In addition, IBM created a Supply Chain Logistics Solutions Group to help retailers, wholesalers, and consumer-products companies lower inventory costs, reduce fulfillment errors, and improve customer service.
At its Supply Chain conference in Orlando, Fla., IBM also unveiled several marketing collaborations with software vendors. Oracle, for example, said it would offer its business applications bundled on IBM RS/6000 and Netfinity servers. These hardware and software solutions are designed to make it easier and more affordable for smaller companies to begin to manage their supply chains and thereby reduce inventory, improve product delivery, and enhance production capabilities.
Some early emerging-enterprise adopters of supply-chain management initiatives include high-tech companies. But these systems are also important for industrial and distribution businesses, IBM says. Mark Kramer, director of operations at Kramer Beverage Co. in Pleasantville, N.J., explains that with the Internet's ability to directly link manufacturers and purchasers, supply-chain management can help prevent distributors from getting squeezed out of the middle. "Anything that can be done by a company like IBM to help strengthen the wholesale distributor is good for us," he says.
With supply chains in place, wholesalers like Kramer can add value to their services, telling suppliers which products are selling best, where they're selling, and why, says AMR's Richardson. The suppliers can then use that information to plan promotions or pricing. Equally important, he adds, it helps distributors forecast sales, optimize transportation routes, and improve cash management. "It's rare that you find a customer that doesn't get a payback in less than a year," he says.
The hard part, he says, will be the execution. "The small and medium-sized market is tough," Richardson says. "They have small IT staffs." But, he adds, they may now find it helpful that IBM is arranging a bunch of supply-chain solutions that run on its hardware.
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IBM's Supply-Chain Initiatives
Supply Chain Services: 80-consultant practice focusing on consulting and rapid implementation services for supply-chain applications developed by IBM, i2, Manugistics, and others
Supply Chain Management
Consulting Methodology: Supported by Supply Chain Management Transformation Toolkit, which includes software tools, analytic techniques, and templates; ensures consistent supply-chain implementations
Supply Chain Logistics Group: Provides integrated logistic solutions to retail, wholesale, and consumer products marketplace. Services include warehouse operations consulting and analysis, application system design, workflow definitions, warehouse solution customization, facility design, and engineering.
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