IBM: digitalisation in supply chain post-COVID-19
IBM is a global technology company with a leading cloud platform. Founded in 1911, it has become the largest technology and consulting employer globally, with more than 350,000 employees serving clients in 170 countries worldwide.
Bob Murphy is the Chief Procurement Officer at IBM. With over 40 years in the industry, Murphy is a highly experienced procurement executive and has overseen the rise of digital transformation first-hand in the industry. “For IBM, as well as for many other companies who have progressed on this journey, the transformation of procurement has been driven by innovation,” explains Murphy. “The innovation of technology has played a huge role in our transformation, as we initially moved from manual to electronic processes and systems. In recent years, the introduction of technologies like cloud, AI, advanced analytics, blockchain and RPA have enabled procurement to reach new levels of digitisation and automation — allowing us to offer faster and simpler solutions to our clients, higher cost savings and increased strategic value to our companies. The biggest innovation may be with regards to our people. Along with improving the procurement processes and harnessing these new technologies, we've transformed the procurement professional into someone who has the tools and skills to deliver increasingly higher value outcomes for their clients. They are armed with insights from data they couldn't previously access, and pro-actively offering strategic consulting to their stakeholders and clients — a big change from their role in the past.”
The COVID-19 pandemic has disrupted supply chains on a worldwide scale. Murphy explains that while it’s normal for IBM to monitor supplier status closely through its global management system, the firm did enhance its processes and communication further during the pandemic as it monitors changes in demand and assesses lines of supply, commitments, logistics and contingency plans. “This pandemic is unprecedented in scope and scale and has affected all geographies, sectors and industries,” he explains. “At IBM, we’re fortunate that we already had the technologies and processes in place to handle crises such as natural disasters and pandemics, which was a great help. We have also been working with suppliers across the globe to source new products and services from new suppliers that we couldn't have anticipated. For example, we have been sourcing masks and sanitizer for the last several months to get us through the various phases of returning to the office that are ahead of us. We also implemented dedicated freight carrier lanes to maintain delivery routes and have been pre-booking flight space to secure shipping capacity. On the payables side, we executed urgent accounts payable supplier setups and expedited payments for business-critical requirements.”
IBM’s strategy for managing the impact of the coronavirus was to prioritise its employees’ wellbeing and safety. “We enabled our workforce to work from home with secure tools and technology; and we work to continually ensure their safety and well-being with frequent contact, surveys, and employee assistance programs,” says Murphy. “While many of us are used to working from home now and then, over 80% of our procurement professionals have never done so on a regular basis. Yet our procurement outsourcing service delivery organisation, for example, was able to move 99% of the staff from working onsite to work-from home within 10 days back in mid-March, which was pretty remarkable. We were able to achieve that because most of our staff already had laptops and remote access to IBM systems so we just needed to get access to the client systems they supported. We already embrace collaborative tools because we are a geographically diverse organisation that values innovation and technology. But some of the changes we did need to make were to hold more frequent meetings and to have more one-one-one time with our employees to ensure they had what they needed to remain productive as well as to ensure their well-being.”
Murphy believes that in the aftermath of COVID-19, it’s important to reimagine supply chains and navigate disruption through risk mitigation, visibility and insights. “Instead of basing your supply chain design on the assumption that materials flow freely globally, enabling you to source, produce, and distribute products at the lowest-cost locations around the world, consider what we learned from COVID-19 — unforeseen events can trigger major disruption to entire supply chain networks,” says Murphy. “Opportunities for supply chain transformation exist across the value chain, from demand planning and manufacturing execution to order orchestration and fulfillment. Understanding supply chain risks requires gaining visibility into tier 2 and tier 3 suppliers that, despite their relatively small size, can quickly and significantly disrupt production. With smarter supply chain modeling and scenario analysis we can get an immediate assessment and continued evaluations for risk mitigation. Analytics, AI, and visualisation tools allow us to assess geopolitical risks, climate change risks, cyber security risks, and natural disasters. We can proactively identify alternate sources wherever possible, test and contract multiple logistics routes, and maintain the flexibility to reposition inventory across their supply chains.”
While Murphy recognises it’s impossible to predict exactly what the future will hold, work is already underway to build a smarter global supply chain. “Organisations can leverage artificial intelligence (AI) and other technologies – such as automation, blockchain, IoT, 5G, and edge computing – to help turn the unanticipated into the envisioned,” he says. “Systems based on these exponential technologies can help organisations build smarter supply chains and reduce vulnerabilities from unforeseen circumstances like this. Smarter supply chains that leverage the power of AI and other emerging technologies can help maintain business continuity during these times of disruption and uncertainty.”
Murphy remains optimistic for the future of IBM. “I get excited when I look to the future, as I know we're not done yet,” he affirms. “IBM's journey to becoming the Premier Cognitive Procurement Enterprise is about automating the end-to-end procurement workflow and deriving proactive alert-driven insights across the board. We're working towards deploying this automation and intelligent workflows throughout procurement, and then also integrating that with the rest of IBM and with our external ecosystem of suppliers and clients. I'm focused on driving that for the IBM enterprise, but also as we progress, I'm committed to sharing what we learn and develop with others who are interested.”