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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

Case Study: IBMe2open.com Page2

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


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.


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


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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