IBM Supply Chain targets new areas to maximise future performance...

The IBM Service Parts Supply Chain is looking forward to future prosperity in spite of IBM’s strategy to focus on business analytics, mobile and cloud technology. The Service Parts supply chain will continue to provide a full service parts planning and delivery operation.

The IBM Service Parts Supply Chain business unit in the Europe Middle East and Africa (EMEA) region currently presides over more than 55 countries, controlling service parts supply chain from its central location in Europe and the wider group continues to be a truly global leader in IT with multi-billion dollar revenues. 

The International Business Machines Corporation (IBM) has a famous track record of innovations, with the likes of the Mainframe large computer systems and the Power Systems, a Power Architecture-based server line, and its storage brand to name three. 

Jaap Hazewinkel, who joined the group nearly 25 years ago, is currently the Manager of Planning and delivery in EMEA as well as the Worldwide Service Parts Operation Inventory Manager.

He said: “These brands are still strategic to IBM and the company is further innovating. For instance Watson, our intelligent machine, in 2011 beat human experts on the TV quiz “Jeopardy”, and its architecture is now further developed to build machines that excel in business analytics.

“We continue to play in the hardware area but it really is on the high value end. So moving out from that side of things is of course a challenging environment but IBM is investing in new technologies such as cloud, analytics, mobile, social and security and it is up to us to find solutions in smarter ways, that is a real challenge but it is one we relish and we are confident of continuously improving each year.”

IBM is still managing the Service Parts Supply Chain for the Intel based server brand that is being sold to Lenovo and for the Lenovo Think brands. These are important functions to the firm, but it is also open to managing and working with other clients who have a service supply chain.

The service parts operations transferred from Paris to the Netherlands in 1987 and the main warehouse now resides in Venlo, in the east of the country. The managing business unit remains in Amsterdam where it centrally oversees the entire EMEA region. In Hungary it has a country planning team and repair vendor management, and it has a buffer planning team in India. Reutilization of parts is one of IBM’s key strengths.

Shifting focus 

In the past decade IBM’s changing strategy has seen it sell its PC brand to Lenovo, printer editions to Ricoh and more recently its retail storage solutions to Toshiba last year. But the amount of countries it serves in regards to maintenance services has continued to increase, with Nigeria and Kenya being recent stock locations added to the EMEA portfolio.

The company has also completely consolidated the management of its warehousing and transportation by subcontracting this to Geodis. It is the sole lead logistics provider for IBM by managing logistics costs supporting the finished goods distribution, asset recovery services, as well as service parts logistics worldwide.

Laurens Neomagus, who is Global Parts & Logistics Process Owner for Multi-Vendor Support, said: “We have outsourced warehousing and transportation almost completely to third party suppliers through Geodis. We still have all the applications, they run them or we are integrated into their applications.

“We do also support non-IBM brands; if a company was having an IBM machine installed at their premises we would also offer to take up the support of the other machines as well. We are strong in support of networking Hardware, as connectivity is key to our clients business. On the maintenance side, a client wants a one-stop-shop.

“The support structure can be either in the way we support IBM machines via the IBM network but we are also looking for alternative support models using third parties to deliver the service on our behalf. In these models inventory can be either in the IBM network or in the third party network. The decision on how to support a specific brand is made in full conjunction with sales and offering, service planning and global parts procurement”

“Not only technology but also healthcare, automotive and mobile are areas we want to grow into. But we want to grow without the additional cost so we do our best to find the most cost effective solutions.”

Having a global organisation that is able to be globally accountable for performance is one of the key strengths IBM has. Maintenance revenue growth is largely in the non-IBM machine support today and that is where IBM really focuses right now. IBM supports complete infrastructures for clients that don’t want to manage the service parts themselves.

Neomagus added: “If you are looking for a player that can support customers on a global reach and understands the spare parts needs of customers in each of those countries, then IBM has a lot of expertise in that area.”

Technological future

The environment which companies such as IBM operate in will change dramatically because of the technological advancements that are currently afoot. Currently IBM knows all customers’ locations it may have to support 24/7 are spread over a country, this will change with the evolvement of cloud technology that will result in a concentration of hardware in a couple of big data centres.

“Customers won’t have their own infrastructure anymore and that may significantly affect how we are organised in five years’ time.” Hazewinkel said.

“For example, a mainframe may have a parts issue and to get it back to being fully fault tolerant, the client requires the part as soon as possible, but you are not allowed to bring the machine down until 2300 hrs Saturday evening as it will affect their business. So you can only take it down at that point, fix it and bring it back up to being operational again.

“The cloud is not creating a challenge, it makes life easier from a logistics viewpoint. We do have challenges in the international environment in terms of regulations, import/exports controls and so on. But having full tolerance cloud computing technology on our side is a definite benefit.”

In the near future IBM Supply Chain believes there will be a lot of focus on spare parts and in order to get a business up and running each company needs to invest for these kind of requirements. Hazewinkel and Neomagus agree the key is to collaborating and making partnerships.

New innovations for IBM include the commodity-based lifecycle forecasting which involves spare part usage and intelligent calculations. It determines where in the lifecycle a machine is and then plans how the demand of the part is likely to evolve over the next two years and in case of Last Time Buys over the remainder of the life cycle, possibly resulting in less inventory and a more proactive approach.

Now it seems IBM are well placed to imprint its synonymous brand into new realms, just as it has with more traditional components for more than a century.

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