Challenges In IBMS Supply Chain Commerce Essay

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An internal analysis carried out by IBM across 400 supply chain executives across 25 countries reveals that IBM faces 5 strategic challenges. These 5 challenges are listed in order of importance to the executives;

ƒ˜ Supply Chain Visibility-Visibility both inside and outside the supply chain is key. This visibility include customers, transportation and logistics providers, suppliers,(considered inside) and financial institutions and Governments (considered outside).IBM executives were able to project lack of ability to make sense out of information despite available integrated operating systems like Enterprise Resource Planning (ERP)Systems, real-time data capture to mention a few. The executives saw there was lack of collaboration between suppliers, manufacturers, logistic providers as a result of organizational bottlenecks and the customer is always last in the list of preference

ƒ˜ Risk Management-Risk of disruption and interruptions manifested around the supply chain. This risk was outside financial control and financial risk. Process, data, & technology are identified as the roadblocks to good risk management, yet they are the key enablers.

ƒ˜ Customer Intimacy- IBM executives identified that they are failing to talk with customers as a result not including them or seeking their opinion in product design, risk mitigation strategy, and the demand driven policies to help them maneuver demand and supply. The executives realized customer interaction is vital to the success of IBMs supply chain in the form of demands for the right products. IMB customer's collaboration rate presently stands at 68%.

ƒ˜ Cost Contamination-increment in fuel prices around the world has its effects visible in the supply chain of most companies globally. Recent is also the financial crises. This cost contamination is of paramount interest to the IBM supply chain executives because it is difficult to manage and anticipate these cost effects.

ƒ˜ Globalisation- Results have shown by IBM's supply chain analyst that due to growth markets, one third of its supply chains experience an increase in operational cost, inconsistencies, longer lead days for deliveries as a result of sourcing materials globally and also as a result of the delivery structures used.

Sustainability and green supply chain programs

IBMs executives revealed their compliance to green supply chains in the following table below

Sustainability practices differ by region. Supplier selection based upon compliance is more prevalent in Asia Pacific. Sustainability practices in Europe focuses on carbon reduction in manufacturing & transportation. North America has lower sustainability practices around low carbon distribution network design and supplier selection is based on carbon capabilities


IBMs vision for the future which lies in the hands of supply chain executives is that of ensuring a SMARTER supply chain by transforming the current supply chains to smarter chain by INTERCONNECTION, INTELLIGENCE and INSTRUMENTATION.

1) INTERCONNECT. IBM needs to be integrated and collaborate with decision making with their customers. With Interdependency and interconnection with members of the supply chain, IBM will be able to establish SMART connections (instrumentation) and be less involved in the day to day functioning of the entire system

2) INTELLIGENCE. Being Intelligent in all their actions and using models and advanced simulations. In that way the supply chain is based on information delivered from customers, suppliers and inventory. In this light information gotten is accurate and not rely on "what if" hypothesis. Models will be developed to predict an outcome of a market through scenario planning to understand demand and supply maneuvers.

3) INSTRUMENTED-There is need for the supply chain to be instrumented by the use of sensors, SMART devices like (RFID) to automate the supply chain. This system is an automated process which counts inventories in the warehouses and articles purchased in shops. So there is a continuous monitor which brings information on visibility to real time.

Executives have to consider their role as being strategic, since they are engaged in pulling together all resources within the supply chain around the globe. They equally have to assume the role of optimization at every point in time. Doing this means they have to be in collaboration with all partners of the supply chain and its constituents since their commitment is to greening the environment and the supply chain.

There is need for supply chain executives to work with Chief Financial Officers (CFO) and C-Suit executives of governments in managing risks, developing mitigation strategies and policies as well as controlling them. Decrying that corporation need well defined strategies and policies across supply chains with its constituents

Flexibility is vital in containing costs and balancing costs. Reasons being that the more flexible and variable your supply chain is, you can turn on and off cost structures accordingly. IBM executives anticipate a "Ramp Up" in periods of high customer demands and "Ramp Down" during low customer demands. Effects of this action will be alleviating fluidity in various cost factors.


In the Wake of Globalisation, MNCs are seen as legitimate agents who are better placed to implement CSR compliance and implementation across their supply chains. This is advocated because of their diverse operations in economic, legal and social conditions. Emmelhainz & Adams (1999); Amaeshi et al (2008) argue that "shifts in global supply chains and competition comes from extended chains of responsibility on the part individual firms". With this regards IBM has a vast and increasing global supply chain evident from its 20.000 suppliers worldwide. IBM has an upper hand in its supply chain and therefore has continued to stand as a leader in its field. As the first company to have single handedly obtained an ISO 14001, IBM has over the years has tried to keep up standards and be a benchmark for other companies in the light of conserving and moving to green supply chain. IBM has schooled its suppliers to engage in a management system which calls for accountability and measure of performance as well as disclosure of their suppliers commitments to sustainable supply chains.

As a world leader in information technology, IBM supplier codes of conducts which the corporation has established, alongside ISO 14001 have been tested amongst its supplies and re-adapted to set up quantifiable standards which can be used as yardsticks to evaluate suppliers on their compliance to sustainability within their supply chain. It is therefore logical conclude that IBM considers its suppliers as part of its very own structure though not owned by them but due to its influence, is able to control the activities on this supplier companies. Which is a good example for other multinationals to benchmark?

IBM has proven that innovation and dedication to sustainability is part of the company's culture and the going concern for green supply chains is evident from the challenges being posed to Supply chain executives in IBM. These executives are already anticipating future challenges of green supply chain and how to address them. November 2011 IBM hosted a summit bringing together academia's, suppliers, leaders of Supply chain management with the aim of brainstorming and increasing awareness to green supply chain and how future green supply chains problems can be addressed.

We can therefore conclude that this research finding is limited to this focal company but its application and deep seated culture of CSR can be used as a benchmark for other companies