© 2012 IBM Corporation
2012 IBM Technology Symposium Business Update
Bob Murphy V.P. – IBM Integrated Supply Chain, Global Supply Management
13 November 2012 Yorktown Heights , NY
© 2012 IBM Corporation2
© 2012 IBM Corporation
Innovation….
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“If you always do what you always did, you will always get what you always got.”
(A. Einstein).
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Our Values
IBMers Value:
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IBM’s Growth Initiatives
Opportunity:The emerging market GDP growth rate- expected to be 5 percent through2015 - is more than double that ofmajor markets.
Economic expansion in emerging markets (middle class growth & economies joining global marketplace)
IBM expanding branch locations in BRiC countries
Other growth markets (Africa) leveraging our clients
Opportunity:Cloud is a new, highly efficient model for consuming and delivering IT-basedservices. It is made possible by virtualizingresources, automating processes, and standardizing tasks so they can be offered as easy-to-use services.
Supporting diverse clients (banking, healthcare, & government) to build their own clouds or securely tap into IBM cloud-based business services
Clouds enable our clients to better service their clients and business partners
Opportunity:Global data volumes are predicted to increase by 29 times over the next 10 years to 35 zettabytes.* (A zettabyte is a 1 followed by 21 zeros)
Enable Enterprises to manage and mine the deluge of potentially valuable information
Opportunity:The infusion of digital intelligence intoindustries, infrastructures, processes and cities can make them more productive, efficient and responsive.
Smarter Cities initiative (integrating real-time information and processes across many city departments)
Instrumented, Interconnected, Intelligent
© 2012 IBM Corporation6
IBM 100th Anniversary as a Corporation of Innovation and Invention
Reinventing the modern corporation
Pioneering the science of innovation
1911 Progressive Hiring
1953 Equal Opportunity Policy
2006
2011 Centennial Day of Service
Making the world work better
1937 Social Security
IBM 077 Collator
1962 SABRE Airline
Reservation System
1969 Apollo on the Moon
In our second century, as in our first, IBM’s business model is based on continuous Innovation
2010 Smarter Cities - Stockholm
1956 Hard Disk Drives
1964 DRAM
1973 / 1986 / 1987 Nobel Prizes
2011 Watson Computing
System & Jeopardy !
© 2012 IBM Corporation
2011 US Patents Issued – 19th Year of Leadership
127282676
9181,2441,308
2,312
6,180
>4X >9X76% Software and Services
7Source: IFI Claims Patent Services
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Information & Communication Technologies R&D Expenditures
8 Source: Battelle/R&D Magazine and Company Information; (e) = estimated
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First Of A Kind• First-of-a-Kind (FOAK)
• Building new prototype solutions• “Cutting edge”
innovation
Research expertise to solve today’s critical business challenges
Application of advanced analytics,
mathematics, science and fresh thinking to
find innovative solutions
Research Services
Application
Inno
vatio
n
Vision and Invention
Bleeding Edge
Leading- edge
Innovation
Standard Solutions
Business As Usual
Tomorrow’s Technology
Today
On The Horizon
2-10 Years to Practical Application
Research• Science & basic
research• Supports IBM brands
or OEMs• Global Technology
Outlook (GTO)• Licensing & Joint
Development
(2 to 10 years)
(on the horizon)
(Tomorrow’s Technology today)
(Business as usual)
Research
Brands Standard Solutions
System Integration
Driving Innovation Into The Marketplace
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Best Use of Procurement Technology
2011Gene Richter, Inside
Supply Management (ISM)
Sustainable Excellence in Supply Chain Management
IBM (Sustainability award)
IBM Poughkeepsie: Assembly Plant
of the Year
By focusing on continuous improvement, the ISC has become an IBM Showcase recognized by the industry
Recognized as a Supply Chain leader every year
No. 1 in The Diversity Inc Top 10 Companies for Global Diversity
IBM ranked #1 on all categories of IDC’s BPO vendor perception study
“IBM leads by a huge margin” in vendor recognition for Procurement Outsourcing” – IDC, Feb. 2009
2009: Top BPO Provider
2011 Finalist
Industry recognition
2012 – European Community awards IBM for energy-efficient data
centres
No. 1 in The Diversity Inc Top 10 Companies for Global DiversityIBM, No.1
2011 Finalist
2 ML100 Awards Next Generation Leadership and Culture AwardManufacturing Entrepreneur Award
7 ML100 Awards Operational Excellence, Global Value Chain, Innovation, and Information Leadership
© 2012 IBM Corporation
Integrated Supply Chain’s transformation evolution is positioned to deliver value and contribute to IBM’s smarter supply chain
2000 2005
Global Sourcing Councilsestablished
Purchasing Medal of Excellence
Launch of IBMProcurementServices
Procurement Transformation (Centralization / Consolidation)
e-Business electronic collaboration
Integrated Supply Chain established 2003
2009
Global Procurement Centers established
Logistics / SPO & EngineeringIntegration
Hardware Product & Services Labor Management Transformation
GEODIS Divestiture
Static with unit / geographic ‘silos’
Smarter
Integrated ^ Supply Chain
20101990 2015
Cost Containment
Visibility
Risk Management
Customer Intimacy
Globalization
Assessed, integrated and balanced our competencies
Develop ment of better functiona l skills and increased inter- business unit communi cations (ongoing)
Outsourcing of Manufacturing
Customer Fulfillment Geographic Centers established
Customer Fulfillment initial globalization
Customer Fulfillment Strategic Building Blocks
Global Demand / Supply Planning Centralized
E2E Brand Advocate Role Established
Geography Forecasting & Field Inventory Centralized to Serve Globally
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© 2012 IBM Corporation12
What is a smarter supply chain?Building the smarter supply chain
The Top Five Supply Chain Challenges
Five trends define the Chief Supply Chain
Officer (CSCO) agenda
According to our extensive study of 400 Supply Chain Executives, we’ve found imperatives among visibility,
customer demands, cost containment, risk, and globalization.
The smarter supply chain has three new characteristics. Firms across the globe
are beginning to see the benefits of building a new vision of supply chain
excellence.
The Smarter Supply Chain
Instrumented
Interconnected
Intelligent
Instrumented, Interconnected, & Intelligent
Building the Supply Chain of the Future
Building the supply chain of the future will require the emergence of a new kind of CSCO and a comprehensive
set of new capabilities.
A new role for the CSCO and a map to the future
Visibility is vital
Risk must be managed systemically
Customer input should permeate the supply chain
Flexibility will counteract cost volatility
Global supply chains require integration & optimization
Visibility is vital
Risk must be managed systemically
Customer input should permeate the supply chain
Flexibility will counteract cost volatility
Global supply chains require integration & optimization
© 2012 IBM Corporation
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ISC evolution to the smarter supply chainBuilding the smarter supply chain
Smarter Supply Chain
FutureExternal Collaboration &
Integration
Instrumented
Interconnected
IntelligentHorizontal Process Integration
Functional Excellence
Divisional Excellence
CUSTOMER INTIMACY
knowourselves
GLOBALIZATION
capabilities &transform economies
VISIBILITYWe will see without being there
RISK MANAGEMENT
clientvalue
TALENTWewill lead with unmatched skills &experiences
CLIENT INTIMACY
GLOBALIZATION
VISIBILITY
RISK MANAGEMENT
EXPENSE & COST OPTIMIZATION
TALENTWewill lead with unmatched skills &experiences
TALENT –We will lead with unmatched skills and
experiences
© 2012 IBM Corporation
Supplier Partnership
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• Superior Quality• Top quality management system • Root Cause Failure Analysis
• Continuous efficiency and cost optimization
• Demand responsiveness based on a flexible and resilient supply chain.• Further collaboration with 2nd tier 3rd tier suppliers
• Social & Environmental Responsibility
• Higher assembly levels
• Differentiation thru innovation
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Questions & Answers
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BACK UPBusiness Update
© 2012 IBM Corporation
Supply chain visibility was identified by supply chain executives as the top challenge on their global agenda
RISK MANAGEMENT
GLOBALIZATIONINCREASING CUSTOMER DEMANDS
60%56%
43%
Customers have increased demand
for more: right product, right place,
right time, right price, sooner.
Process, data, & technology are identified as the
roadblocks to good risk management,
yet they are the key enablers.
Lead times, delivery, and quality are top challenges,
but overall globalization has been a positive
boon for the leaders.
SUPPLY CHAIN
VISIBILITY
70%
Supply chain visibility is
inhibited by a lack of timely data AND too much data to
digest
COST CONTAINMENT
55%
Fighting integral costs as such as might be futile,
but being flexible can identify cost
savings elsewhere
Source: IBM Institute for Business Value1717
© 2012 IBM Corporation
Integrated Supply Chain at IBM
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…to Predict & Act
Sense
& Respond
From Sense & Respond …
ActCut Costs
Reduce RiskIncrease Profit
Predict
Optimized Business
Competitive Advantage
Predictive AnalyticsAnalyzes patterns in data to predict potential future outcomes
Agility: pervasive visibility, networked synergy
Analytics: dynamic optimization, predictive
synchronization
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© 2012 IBM Corporation19
Supply Chain Risk Management
Build Smarter Processes– Integrated process controls in logistics and operations– Compliance programs with suppliers (Product Environmental Compliance)– Supplier Financial Risk Assessment
Become an optimized flexible Smarter Value Chain– Integrated risk strategies & mitigation policies in supply chain planning– Single / Dual sourcing plans– Pandemic Contingency Planning
Enable pervasive predictive analytics– IT enablement to monitor and act on disruptive events (Cognos Technology)– Impact Likelihood Model– IBM ILog based instantaneous alert functionality and process
Financial Risk
Regulatory Risk
Environmental Risk
Strategic Risk
Operational Risk