The presentation given by Donnie Haye, Vice President – Analytics, Solutions and Acquisitions ISC at IBM, at the Supply Chain Insights Global Summit in Scottsdale, AZ on September 11, 2014 Imagining Supply Chain Processes Outside-in. Building Value Networks at IBM to Improve Channel Effectiveness. As inventory sits in the channel in high-tech and electronics, it loses value. Join this session to understand how IBM automated the channel outside-in through the creation of a value-added network termed iBAT to drive channel effectiveness.
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1. Donnie Haye IBM Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit
#ImagineSC September 2014, p.1
2. Agenda IBM Analytics-led Transformation, Lesson Learned IBM
Buy Analysis Tool (iBAT) Overview Collaborating for the Future
Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September
2014, p.2
3. ISC transformation: analytics-led, technology-enabled
Globally Integrated Enterprise Smarter Supply Chain New Era Supply
Chain Reinvention Enterprise efficiencies Streamlined Global
processes Information sharing Advanced Analytics, Optimization, Big
Data Mgt Supply Chain Visibility Multi-enterprise supply chain
transformation Watson-enabled cognitive analytics Supply Chain
Transparency Data Driven /Digitally Executed Cloud, Mobile, Social
Evolving Supply Chain Management from cost center to value center
Business Impact 2013 Cash Collected : $99B 2013 Managed Spend :
$53B >20K Employees in 70 countries $7B in procurement saving
annually 18K+ suppliers connected online >96% of invoices are
electronic 32 Smarter Analytics projects Over 3.9M visits to eTools
Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September
2014, p.3
4. We rely on different types of analytics to leverage Big Data
How do we optimize a dynamic, Big Data environment? Deeply
analytical computing systems that learn & interact naturally
with people What should we do about it? Prescriptive Cognitive
Collaborate for maximum business value, informed by advanced
analytics What will happen? Understand the most likely future
scenario, What happened? Descriptive Predictive and its business
implications Get in touch with reality, a single source of the
truth, visibility Watson Analytics Velocity (data in motion)
Variety (many forms of data) Volume (data at rest) Veracity (data
in doubt) Big Data = All Data (structured, unstructured, internal,
partner, public) Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit
#ImagineSC September 2014, p.4
5. We have over 30 analytics solutions working across our
extended enterprise IBM supply chain Enterprise Process Framework
with Analytics Solutions Portfolio of analytics driving significant
top- and bottom-line value Focus on iBAT Sup9p/ly1 C5ha/2in
0In1sig4hts Global Summit #ImagineSC September 2014, p.5
6. Lessons learned establishing momentum, success with
analytics Project deployment & readiness to change Iterative
approach Incentive alignment Start with a business pain point Have
a visualization and user interface strategy As critical as the math
and analytics expertise are, transformation leadership and
execution/ operations expertise is even more important
(3-in-the-box management system) It is OK to start modestly and
build towards major impact Iterative approach allows you to improve
your capabilities along the way and build progressively stronger
stakeholder support Incorporate cycles of learning into the
analytics solution Design Compelling business benefits for each
supply chain participant (win/win/win) Reflect benefits in terms
and conditions Encourage utilization with incentive alignment
Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September
2014, p.6
7. Agenda IBM Analytics-led Transformation, Lesson Learned IBM
Buy Analysis Tool (iBAT) Overview Collaborating for the Future
Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September
2014, p.7
8. IBM struggled to manage its channel demand & inventory
planning to control channel stockouts & overages Case
Background: IBM Systems and Technology Group Manufacturing Channels
End Customers Industrial OEM Contract Manufacturer Overage Shortage
Challenges Tier 1 Distribution DeXmand SalXes out SalXes out Lack
of channel demand visibility Non optimized channel inventory Tier 2
Distribution Value Added Reseller [VAR] Lack of visibility to
demand factors and sales-out by partners inhibited IBM from making
accurate buy recommendations to the channels IBM inventory was not
optimized in the channel leading to overages (with price protection
exposure) and underages (with lost sales and customer service
issues) Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC
September 2014, p.8
9. IBM Buy Analysis Tool (iBAT) is a visibility &
analytical platform to enable better channel management &
optimization Manufacturing Tier(s) Distribution Tier(s) End
Customers Value Added Reseller (VAR) Tier 2 Distribution Scope of
iBAT Collaboration platform & data model Channel collaboration
& support processes Incentive alignment Demand Signal
Repository iBAT is recognized by multiple awards: Tech Data 2010
Inventory Optimization Partner of the year CRN Channel Champion
award IBM Research Outstanding Accomplishment 2011 Industrial OEM
Contract Manufacturer Tier 1 Distribu-tion The Solution Channel
collaboration solution with advanced analytical modeling of daily
demand signals to supply pipeline Optimized replenishment decisions
under price protection constraints. Automated terms &
conditions, payment/reconciliation Key Benefits (accrue to both IBM
& channel) Predictive analytics Price protection expense reduce
by 80% Inventory reduced by 30%, aged inventory by 25% Returns
reduced by over 50% Serviceability increase by 10% Significant
enhancement of visibility to channel inventory, sales, other
metrics optimization opportunity Sup9p/ly1 C5ha/2in 0In1sig4hts
Global Summit #ImagineSC September 2014, p.9
10. Data & collaborative decision making with channels is
key to producing viable buy recommendations Utilizing iBAT to
collaborate with channels to drive better buy recommendations 1.
Receive daily channel partner information [sales out, inventory
positions] 2. Receive internal manufacturing data [product
lifecycle, backlog] 3. Transform data into channel forecast 4.
Generate optimized min-max buy recommendations with alerts 5.
Channel partners and channel reps collaborate on weekly buy
decisions 6. Place purchase orders based on iBAT generated buy
quantities iBAT calculates Qualified Price Protection Qtys and
Summary Report Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit
#ImagineSC September 2014, p.10
11. iBAT handles IBMs diverse channel partner landscape
Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September
2014, p.11
12. Channel incentive linkage: iBAT enables channel price
protection and automated business processes for ease of doing
business Price protection is a financial incentive offered to
distributors via contractual terms & conditions Protects a
distributor against price reductions within a specified time, e.g.
45-60 days from invoice date Qualified Price Protection (QPP)
offers distributors enhanced price protection based on compliance
to iBAT Not all part numbers are in QPP; we select those part
numbers which represent 70-80% of revenue Qualification occurs
weekly, part number by part number If the distributor maintains
their actual supply within the iBAT range of the recommended
supply, their inventory will be price protected up to the maximum
recommended supply line quantity, regardless of the age of the
inventory iBAT automatically summarizes QPP status and results
weekly in the tool iBAT is interlocked with the price protection
rebate process; QPP results transmitted weekly Regular use of iBAT
& QPP is proven to be financially beneficial to IBM and
Business Partners Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit
#ImagineSC September 2014, p.12
13. iBAT: Web-based, collaborative dashboard to track market
demand changes, inventory visibility & to provide buy/sell
alerts Rich analytics capabilities Descriptive Predictive
Prescriptive Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit
#ImagineSC September 2014, p.13
14. What do our channel partners say about iBAT? iBAT provides
a stable and consistent platform to manage my business I no longer
have to refer to 20 different bookmarks for product data US
Distributor, VP Materials, Operations its more than inventory
management iBAT is integrated into our strategic mgt. and sales
cadence Netherlands Distributor Weve been struggling for months to
develop something similar, iBAT is amazing! Multi-country European
Distributor French Distributor Sup9p/ly1 C5ha/2in 0In1sig4hts
Global Summit #ImagineSC September 2014, p.14
15. Agenda IBM Analytics-led Transformation, Lesson Learned IBM
Buy Analysis Tool (iBAT) Overview Collaborating for the Future
Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC September
2014, p.15
16. Extensive collaboration inside & outside of IBM
Representative Clients Global Business Services (GBS) Software
Group (SWG) Systems & Tech Group (STG) IBM Channel Partners IBM
Suppliers Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit #ImagineSC
September 2014, p.16
17. IBM supply chain capabilities future vision Cloud Mega
trends influence the development of key strategic SC capabilities
Attain Supply Chain Transparency Analytics Leverage Big Data &
Advanced Analytics Extend Multi-enterprise Supply Chain
Transformation End-to-End Social Mobile Mega trends in Computing
Critical 2020 SC Capability Sup9p/ly1 C5ha/2in 0In1sig4hts Global
Summit #ImagineSC September 2014, p.17
18. Thank you Sup9p/ly1 C5ha/2in 0In1sig4hts Global Summit
#ImagineSC September 2014, p.18