E2open Case Study (IBM)

Case Study: IBMe2open.com

Company Profile

• Theworld’slargestproviderofcomputerproductsandservices,IBMmakesmainframesandservers,storagesystemsandperipherals

Challenge

• BuildasupplychainthatcansenseandrespondtochangesincustomerdemandandavailablesupplyandsupportIBM’son-demandbusinessmodel

Solution

• E2opensolutionsprovideIBManditsmultipletiersofsupplierswithaconsolidatedviewofdemandandavailablesupply.IBMisabletoproactivelymanagedemand-supplyexecution,inventory,andreplenishmentacrossitsglobalsupplychain

Case Study:

IBM

IBM Uses E2open to Support Its On-Demand Business Model

IBMaimstopracticewhatitpreaches.Thecompany’searlysupportoffullyautomatedprocesses—such as order management, service requests and OEM manufacturingworkorders—hasservedtoimprovecustomersatisfactionandoperationalefficiencies.Andovertheyearsthecompanyhasremainedcommittedtocontinuousimprovementthroughtheintelligentapplicationofnewtechnologies,becomingamodelforafullyautomatedenterpriseusingthemostadvancedsupplychainsolutionsandpractices.

IBMdefinesthenextlevelofbusinessprocessefficiencyasanon-demandmodel:“Anenterprisewhosebusinessprocessescanrespondwithspeedtoanycustomerdemand,market opportunity or external threat.” This model requires seamless end-to-endintegration of internal business systemswithin IBM and extending into the businesssystemsofkeypartners,suppliersandcustomers.

IBMalsorealizedthataunifiedon-demandsystem—oneabletosenseandrespondwithspeedandaccuracy to changes in customerdemand—wasanessential requirementforcreatingafaster,leanerandmoreefficiententerprise.Andthissystemwouldhavetosupportbothdemand/supplysynchronizationandfullvisibilityintocomplexsupply

IBM’S ON-DEMAND MODEL DRIVES FASTER, LEANER, MORE EFFICIENT SUPPLY CHAIN

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chainprocessesacrossmultipletiersofsuppliers.Therewardswereclearlythere.Low-touch or no-touch management would mean significantly lower administrative costs,potentialreductionincapitalexpendituresandanimprovementincustomersatisfaction.

ThebenefitsofrealizingIBM’son-demandbusinessmodelwouldbeto:

• Evolve IBM’ssupplychaintoanon-demandbusinessoperation,moving it fromanexpensetoamajorcompetitiveadvantage

• Focusonbuildingvalueacrosstheextendedsupplychain• Implementadaptivemarketingthatquicklyrespondstochange• Improveoperationsandspeedinnovation• Createafaster,leaner,moreefficiententerprise• Transformbothcustomersandinternalsupplychains

The Challenge

Withoneofthelargestandmostcomplexsupplychainsintheworld, IBMspends$41billionannuallyonordersformorethantwobillioncomponentpartsayear,workingwith33,000suppliersand45,000businesspartners.Itssupplychainspansleadmanagement,the creation of customer proposals, component sourcing/procurement, manufacturingfulfillment,customerservice,billing,accountsreceivableandaftermarketservices.

“IBMhaslongfocusedoncreatingandbuildinganintegrated,end-to-endsupplychain,”saysKevinO’Connell,IBM’sdirectorofmanufacturingandprocurementprocesses.“Nowwewantedtobumpituptonewlevelsofcollaboration.Toachieveouron-demandgoals,weneededtoextendintegrationofbusinessprocessesacrossamulti-tieredsupplychainandintocustomerandpartnersystemsaswell.”

O’Connellandhisteamrealizedthattheirin-housesupplychainsystemwasnotsustainable.Likemostlegacysystems,itwasahard-codedapplicationresistanttochange.Proprietaryarchitecture and point-to-point connections were becoming increasingly expensive tomaintainandhadlimitedscalability.Besides,thelegacysolutionlackedeasyconnectivityandvisibilityintocurrentsuppliersystems—aseriousroadblocktoextendedsupplychainmanagement.

Withtheirlegacysystem,IBMreliedonsuppliers’andpartners’reportsandmanagementsystems for visibility into its own supply chain. Sourcing compliance by ElectronicsManufacturingServices(EMS)providersforIBMcoresupplierswasnothingclosetorealtime. Instead, IBMoperated in a reactionarymode, relyingonEMS self-reportingandsupplierend-of-quarterinformation.

Afterextendedanalysis,IBMidentifiedspecificpainpointsintwokeyareas:synchronizationofdemand/supplyandvisibility intoTier2and3suppliersandcontractmanufacturers.Thecompanyneededanindustry-standardsolutiontosupportIBMglobalmanufacturingsitesanddivisions,andtoprovidevisibilityandcontrolacrossmultipletiersofsuppliers.Thesystemhadtobeflexibleandrobustenoughtosupportchangingcustomerdemandscenarioswithproactivesupply/demandplanning.

Theteamputtogetherawishlistoutliningthecharacteristicsforanewsolutionthatwouldhelp themwith their goal of ensuring supplywhile cutting costs and cycle times. IBMsethighstandards,insistingthatthesolutionmusthavetheabilitytosendoutforecastinformation, receive supplier commitments, monitor supplier inventory levels, triggerreplenishmentcyclesandensurecontinuityofsupply.

“With the E2open solution, IBM is laying the foundation for true end-to-end process integration across the entire supply ecosystem. This will move procurement to higher levels of efficiency through true multi-tier visibility, thanks to E2open’s any-to-any integration platform, which allows suppliers to connect to IBM electronically in the format of their choice.”

Ian Crawford, Vice President, Production Procurement, IBM

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Itwasatallorder,butachievable,O’Connellandhisteamdecided.Andifevenasmallportionofthewishlistcouldberealized,theeffortoftransformingtheirsupplychaintosupportanon-demandmodelwouldpayoffenormously.

The Solution

IBMturnedtoE2opentoprovidetwoproduction-provensolutions:

• E2openDemand/SupplySynchronizationSolution• E2openMulti-tierVisibilitySolution

ThesecomponentsdirectlysupportIBM’sprimarybusinessrequirements:gainingvisibilityand control of critical demand/supply chain processes across global manufacturingfacilities,replenishmentservicecentersandmultipletiersofsuppliers.Workingseamlesslytogether, theE2open solutionsprovide IBMand supplierswitha consolidatedviewofcustomer demand, available supply and any imbalances—representing 85 percent ofIBM’smanufacturingprocurementexpenditures.

In addition, the E2open Demand/Supply Synchronization Solution allows IBM toproactivelymanagedemand/supplyexecution,inventoryandreplenishmentacrossIBM’sglobalsupplychain—including37globalmanufacturingfacilities,10replenishment(VMI)servicecentersandTier1suppliersandcontractmanufacturers.Keybenefitsincludetheabilityto:

• Quickly sense demand and supply imbalances, provide timely alerts on potentialshortagesandautomaticallytriggerreplenishmentcycles

• Align forecasts with procurement activities while reducing excess inventory andliabilities

IBM’s initialdeployment focusedonprovidingmulti-tier inventoryandsupplyplanninginformation.ThisdataprovidesamoreaccurateviewofsupplypositionsandallowedIBMtoprovideimprovedplanninginformationtosuppliers.Overtime,thesolutionbecameevenmorepowerfulasIBManditssuppliersaddedtoaknowledgebaseofinformationaggregatedbytheE2openMulti-tierVisibilityapplication.Thissolutionensuredthateverysuppliertierhadthebusinessdatatheyneededtomakeeffectivesupplychaindecisions.

E2open Demand/Supply Synchronization SolutionThe E2open Demand/Supply Synchronization Solution helps IBM sense and respondto demand and supply changes—including forecast/commit cycles—quickly flaggingdemand/supplyimbalancesandpotentialshortages.Itsupportstraditionalforecastandcommit processes and multi-pass planning processes. Collectively, these capabilitiesensureIBM’sgoalofbuildingacomprehensivesupplychainthatrespondstodemandandsupplychangesrapidlyandaccurately.

PowerfulexceptionmanagementanddecisionsupportcapabilitiesallowalltiersofIBM’ssupplychaintotrackactualexecutionagainstforecasts,demandandinventorypositions.Andthesolutionautomaticallycalculatesinventorylevelsandtracksinventorycomplianceand target levels.As a result, IBM can respondquickly anddecisively to any changesin demand. The solution ensures supply, cuts costs by eliminating excess or obsoleteinventory, reduces liabilities, slashes cycle time and increases flexibilitywithin the IBMsupplychain.

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E2open Multi-tier Visibility SolutionTheE2openMulti-tierVisibilitySolutionprovidesTier1,2and3supplierswithconsolidatedvisibility into forecasts, commits, aggregate order quantities and inventory positions—so each tier of the supply chain can track execution and respondquickly to alerts onimbalances,errorsandshortages.Thescopeanddepthofthisvisibilityiscriticaltohighlevels of supply assurance. To ensure access to business-critical information, multiplepartner integration options, using an any-to-any integration platform, transfer contentbetweenIBManditspartnersusingpartner-preferreddataformats.

Rapid Configuration and Deployment, Ongoing Support and ManagementE2opensolutionsmakeiteasyforIBMandmultipletiersofsuppliersseekingtoparticipatein IBM’sdynamicbusinessecosystemtogetupandrunningquicklywithminimumup-frontinvestment.E2openprovidesallthesoftware,deploymentandoperationsservicesneededto implement,manageandsupport theseapplications.Thiscompletesolutioncanreducethetimeneededtointegrateasupplierinaserver-toservermodefromthreemonthsormoretoaslittleas10to15days.

To implement its solutions, E2open leverages a program management methodologydesignedspecificallyforthiskindofinter-companyprogramandtoolsforthesuccessfuldeliveryof the solution. “On-boarding” servicesensure rapidprovisioning, installation,configurationand testingof theE2open solution for contractmanufacturing, suppliersand other trading partners. These services include partner-readiness evaluations, userworkshops,training,B2Btechnicalspecificationsandintegrationwithback-endsystemsandexistingEAI/B2B infrastructure.AndtheE2opensolutionallowssuppliers toavoidmuchofthehardware,software,operations,servicesandhostingcostsassociatedwithatypicalintegrationproject.ThiscostsavingsmotivatesIBM’ssupplierstoactivelysupportthecompany’snewbusinessprocessinitiatives.

Results

Thesolutioncurrentlyextendsacross37manufacturingfacilitiesand10replenishment(VMI)servicecenters,representingmorethan85percentofannualmanufacturingprocurementexpenditures.ItprovidesbothIBMandTiers1,2and3suppliersaconsolidatedviewofdemandandavailablesupply.WiththeE2openDemand/SupplySynchronizationSolution,IBMisabletoproactivelymanagedemand/supplyexecution,inventoryandreplenishmentacrossitsglobalsupplychain.

IBMispoisedtoincrementallyscalethesolutionasmoresupplychainpartnerscomeonboardthroughacquisitionsandexpansions.

Thecompanyexperiencedaveryfasttimetovaluewithrapidintegrationanddeploymentacrossglobal sites and tiersof suppliers, lowered total costofownership, streamlinedoperations, and increased responsiveness and flexibility within their supply chain. Thesolutionshelp IBMin itsquest tobuildahighly responsivesupplychainthatcanmeetchangesincustomerdemandrapidlyandefficiently.

Specificimprovementsachieved:

• Reducedsupply/demandplanningtimefrom45+daysto10days• Increasedpullreplenishmentlevelsto85percent• Improvedoutboundon-timedeliveryratesto90to95percent• Improvedinventoryturnsmorethan42percent• Achievedtimetobenefitoflessthanninemonths

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About IBMIBMistheworld’slargestinformationtechnologycompany,with80yearsofleadershipinhelpingbusinessesinnovateandleveragenewtechnologies.DrawingonresourcesacrossIBMandkeybusinesspartners,thecompanyoffersawiderangeofservices,solutionsandtechnologies thatenable customersof all sizes to take full advantageof theneweraofe-business.Among the leaders inalmosteverymarket inwhich it competes, IBMmakesmainframesandservers,storagesystemsandperipherals.IBM’sservicearmisthelargestintheworld,andthecompanyisthesecond-largestproviderofsoftwareaswellasoneofthelargestsemiconductorproviders.Thecompanycontinuestouseacquisitionstoaugmentitssoftwareandservicebusinesses,whilestreamliningitshardwareoperationswithdivestituresandorganizationalshifts.

About E2openE2open is the leading provider of software and services to manage inter-companyprocesses such as inventory management, order management, demand/supply forecastsynchronization, outsourced manufacturing visibility and multi-tier visibility—integratingtradingpartnersacrossmultiple tiersofdistributedglobalsupplyanddemandnetworks.Formoreinformation,call1.650.645.6500orvisitwww.e2open.com.

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