Article Review for Purchasing Mgmg

Cook, James “From Many, One: IBM’s Unified Supply Chain”

CSCMP’s Supply Chain Quarterly Quarter 4 2012

Review/Reaction

In an effort to restructure the supply chain at IBM, there was a need to reinvent the supply chain as a system that channeled its focus and direction toward self-improvement which was set forth as the organization’s mission. It was necessary for IBM to move toward global purchase processing and delivery.

Twenty years ago, IBM had a supply chain structure that supported regional sales across 150 countries and had other business units carry out logistics and delivery with many units having their own information system. In an effort to expand and move toward global opportunities, the effort to reorganize was a necessary force to be implemented starting with transforming it purchase and order fulfillment areas. Over subsequent years, procurement executives would exchange knowledge and work together on problems and coordinate functions.

In 2002, IBM was in a position to formally establish a single, global supply chain organization. Integration globally required all fulfillment centers to follow a standard for receiving orders, along with account receivables. This standardization also allowed IBM specialists around the world to support customers at any time of the day or night. Solutions were devised to meet the customized needs. Shareholder and customer value was increased by applying the expertise to a specific problem. Uniform practices for procurement, manufacturing and order fulfillment with consistency provided strength and stability to the company.

By 2011, IBM reported earnings of more than $106 billion from hardware, software, and services revenue. Its supply chain management currently deals with 23,000 suppliers in nearly 100 countries while operating out of 360 locations in 64 countries.

One key operational process performed by the supply chain sector is order-to-cash cycle, starting with customer...