Managing Automation - January 2008 - (Page 17) opened our eyes in many cases where we thought, ‘Wow, we’re 98%, based on our measurement.’ In a customer’s eyes, maybe in a Sam’s or a Wal-Mart’s eyes, now all of a sudden, from their perspective, we’re maybe 60% or 70%. It’s really got us to focus a lot more on the quality of the product delivered rather than whether it was delivered or not delivered. We found ourselves changing shipment containers and packaging materials and the stack loads on trucks so that we had fewer slippages, or shifted pallet patterns and things like that, that normally don’t show up in our model because it’s not a cost issue. We have traditionally related that as a transportation issue, but whenever our customers look at it and find out they’ve got to hand-stack these things because something shifted wrong in transportation or maybe a case collapsed, or how many times they return a product — all of those things now have become more enlightened in our system, and we’re making sure that we’re focusing on those things. So, when a customer gets [a shipment], they handle it as easily and quickly as possible, and that makes their life that much more efficient. Carroll: One thing has flipped for me personally in the last, probably, three years. It used to be that I would go out with our client teams or sales teams, etc., and explain how the supply chain is not going to inhibit [IBM’s] doing business with them What started to happen now — they want to know, ‘We’re hearing a lot of what you do in the supply chain and we’ve seen what’s happened to the IBM business model results. Are there things that we could learn from you that we could apply to our own businesses?’ So we started working on things where we potentially are able to outsource or consult, and show that we actually execute on what we consult in terms of the value of what we put into our supply chain. We’ve done some great things now in terms of relationships we’ve developed with Unilever, Colgate, and others. We have added a new metric in the supply chain of how — through these types of [outsourcing or consulting] things — we can help to drive revenue growth for IBM in terms of sharing and using these practices to help our clients’ experience in their own business models. Q: Another issue for manufacturing companies is the need to develop, enhance, and enrich domain expertise around supply chain management issues. How do you address that? Carroll: When you talk about how the global functions are aligned in the supply chain, they are lined up in a standard hierarchy. We’re all used to it. The bigger challenge that we’ve had is understanding the power of the matrix that has to go across that hierarchy. The biggest challenge we’ve had is growing and developing leadership that can manage in a matrix with the understanding of the power they have and their access with full accountability, although all those organizations don’t report to them. I would say [that] over the last 12 to 18 months, we have developed a very core key skill set. What we need to do is figure out how to groom others as they’re coming through the organization. How do you exert your power across the matrix, which is really where the value comes in when you’re talking about an end-to-end solution enablement? Up to this point, it’s mainly been on-the-job experience for many of us, and that includes myself. Now we have enough expertise where we have developed training modules that we are launching to our management team, as we speak, over the next few weeks. We are at the point where we’re starting to institutionalize the training modules. Q: Of course, technology is a piece of the supply chain puzzle. What key technologies or trends do you see that might be important in supporting the supply chain initiatives that we’ve discussed? Upton: What we’re seeing is getting away from a more transactional focus and [toward] an analytical focus, and also early-warning-type systems are key. What we have found, and what has made a tremendous difference in our organization, is that when we get the people that are making the decisions on deliveries and the day-to-day stuff very much involved in the impact of what it means across the organization, that is key. Technologies that are going to allow us to predict more in the future of what’s going to happen and [to] see problems earlier are definitely going to be key. Carroll: I think one of the things we’ve learned — and this is kind of interesting to say, considering I’ve worked for IBM, a technology company — is that what has worked the best as we’ve matured our supply chain is that you really have to start with the processes and, as mentioned by Harold, the people and their talent. Have them establish what you need; have them establish the process; and then find the technology that best fits what you’ve established for the process that you believe is most effective for your company and your business strategy. I think, in the past, many of us have been more [likely to] start with the technology and make the processes fit the technology. I think we’ve gone to the inverse as we’ve matured in the IBM supply chain. 17 January 2008
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