Supply Chain Management Software-as-a-Service: IBM – A Leaner, Global Supply Chain

IBM aims to practice what it preaches. The company's early support of fully automated processes – such as order management, service requests and OEM manufacturing work orders – has served to improve customer satisfaction and operational efficiencies. And over the years the company has remained committed to continuous improvement through the intelligent application of new technologies, becoming a model for a fully automated enterprise using the most advanced supply chain solutions and practices.

IBM defines the next level of business process efficiency as an on-demand model: "An enterprise which business processes can respond with speed to any customer demand, market opportunity or external threat." This model requires seamless end-to-end business process integration of internal IBM systems while extending into key partners, suppliers and customers.


With one of the largest and most complex supply chains in the world, IBM spends $ 41 billion annually on orders for more than two billion component parts a year, working with 33,000 suppliers and 45,000 business partners.

"IBM has long focused on creating and building an integrated, end-to-end supply chain," says Kevin O'Connell, IBM's director of manufacturing and procurement processes. "Now we wanted to bump it up to new levels of collaboration. To achieve our on-demand goals, we needed to extend integration of business processes across a multi-tiered supply chain and into customer and partner systems as well."

IBM realized that their in-house supply chain system was not sustainable. With their legacy system, IBM relied on suppliers 'and partners' reports and management systems for visibility into its own supply chain. Sourcing compliance by Electronics Manufacturing Services (EMS) providers for IBM core suppliers was nothing close to real time. Instead, IBM operated in a reactionary mode, relying on EMS self-reporting and supplier end-of-quarter information.

After extended analysis, IBM determined that it needed an industry-standard supply chain management solution that allowed for synchronization of demand and supply and visibility into Tier 2 and 3 suppliers and contract manufacturers, for all IBM global manufacturing sites and divisions. The solution had to be flexible and robust enough to support changing customer demand scenarios with proactive supply / demand planning.


IBM turned to E2open to provide two customer-proven supply chain management solutions:

* E2open Demand / Supply Synchronization Solution: Enables IBM to sense and respond quickly to demand and supply changes – quickly flagging imbalances and potential shortages. These capabilities allow IBM to reach its goal of building an integrated end-to-end supply chain that responds to demand and supply changes rapidly and accurately.

* E2open Multi-tier Visibility Solution: Provided Tier 1, 2 and 3 suppliers with consolidated visibility into forecasts, commits, aggregate order quantities and inventory positions – so each tier of the supply chain can track supply chain execution and respond quickly to imbalances, errors and shortages. The scope and depth of this visibility is critical to high levels of supply assurance.

Working seamlessly together, the E2open supply chain management solutions provide IBM and suppliers with a consolidated view of customer demand, available supply and any imbalances. They allow IBM to proactively manage demand / supply execution, inventory and replenishment across IBM's global supply chain by providing a more accurate view of supply positions. Through use of the information aggregated by the E2open solution, every supplier tier has the business data that they need to make effective supply chain decisions.


The solution currently extends across 37 manufacturing facilities and 10 replenishment (VMI) service centers, representing more than 85 percent of IBM's annual manufacturing procurement expenses. It provides both IBM and Tiers 1, 2 and 3 suppliers a consolidated view of demand and available supply.

With the E2open solution, IBM is able to proactively manage demand / supply execution, inventory and replenishment across its global supply chain, and is able to incrementally scale the solution as more supply chain partners come on board through acquisitions and expansions.

IBM achieved very fast time-to-value with rapid integration and deployment across global sites and tiers of suppliers, reduced total cost of ownership, streamlined operations, and increased responsiveness and flexibility within their supply chain. IBM estimates a 50 percent savings on deployment and operations costs over its existing solution and alternative approaches. Business benefits include:

* Reduced supply / demand planning time from 45+ days to 10 days

* Increased pull replenishment levels to 85 percent

* Improved outbound on-time delivery rates to 90 to 95 percent

* Improved inventory turns more than 42 percent

* Achieved time to benefit of less than nine months

These solutions helped IBM in its quest to build a highly responsive supply chain that can meet changes in customer demand quickly and efficiently.

ABOUT E2open

E2open is the leading provider of supply chain management software-as-a-service for visibility and control over global supply networks. Industry leaders that power their supply chain with E2open include Agere, The Boeing Company, Hitachi, IBM, LG Electronics, Matsushita Electric Industrial (Panasonic), Motorola, Seagate Technology, Solectron and Wistron. E2open's software-as-a-service model offers faster payback, larger ROI and reduced risk while requiring less IT and business resources. Over 15,000 companies worldwide currently use E2open. Headquartered in Redwood City, Calif., E2open is a privately held company.

For additional information on how E2open can assist you in gaining visibility and control over your complex supply chain, please visit our website at or contact us at 650.381.3737.

Copyright 2007 E2open, Inc. All rights reserved.

Leave a Reply