IBM launches first outsourced supply chain offering

Von Sandra Rossi

IBM Corp. has introduced the world"s first supply-chain business transformation outsourcing (BTO) capability.

The new offering will tap into IBM"s consulting expertise as well as new IBM analytics technologies.

IBM"s vice president for global supply chain BTO solutions Bill Ciemny said each year, roughly A$3 trillion (US$2.3 trillion) is spent globally on supply chains, and most CEO"s recognize that a responsive, on demand supply chain is key to optimizing business performance.

Ciemny said supply chain optimization and management represents an approximate A$23.5 billion market, larger than any traditional business process outsourcing market opportunity. As such, it represents a major component of the Business Performance Transformation Services market, above and beyond the traditional IT market.

"Supply chain is anything but a commoditized, non-core competency," Ciemny added. "Building a responsive supply chain that is integrated in real time with the rest of the enterprise, is a complex proposition that requires a range of consulting, technology and services skills. Our clients understand that while running a world-class supply chain may not be their core competency, building that kind of capability is fundamental to their success. This is a completely new growth opportunity for IBM, bringing with it a different kind of competitive landscape."

IBM are specifically targeting the Asia Pacific as research shows most CEOs in the region believe their companies are not agile enough to identify and chase new market opportunities with speed.

IBM"s Asia Pacific BTO general manager Randy Walker said organizations in mature markets such as Japan, Australia and Singapore, are seeking to inject innovation into their supply chains to increase their ability to compete and operate globally, grow locally and expand into new markets.

"Companies in India and China, on the other hand, are seeking to build "fit for purpose" supply chains tailored to particular products, channels and retail customers to maximize responsiveness," he said.

The company will also utilize logistics expertise it acquired from the purchase of Maersk Data in 2004.

The new service will offer outsourcing services in logistics, direct materials sourcing and supply chain optimization.

IBM tackled its own supply chain in 2004 and reduced their own inventories to the lowest level in 30 years, generated A$285 million dollars in cash.and improved sales force productivity by 25 percent.