Optimising supply chains and operations: News stories

China is quickly ramping up its radio frequency identification (RFID) capabilities to streamline its supply chain. China has begun to adopt and endorse the various global standards for RFID, and will likely establish a common national standard for RFID by 2006 at the latest.

IBM is reasserting itself and again setting the course in the IT market. The on demand vision has made the company more responsive to the needs of its customers. IBM executives make their case directly to CEOs of customer companies, emphasising the business benefits, not the technology specifics.

IBM CEO Sam Palmisano aims to make the 92-year-old IT giant great once again. He sees double-digit profit growth by taking on ancillary business processes such as human resources, finance, customer relations, and supply chains. He estimates there is about $500 billion of business in those areas.

Outgoing IBM Global Services group executive Doug Elix says growing the $40-billion organisation is a challenge that involves partnering with smaller integrators, a careful re-investment in the customer, and the creation of entirely new markets.

Marathon Oil has tapped IBM to take over some of its accounting functions in an effort to cut costs at the company. IBM will assume accounts payable, fixed assets accounting, production revenue accounting, and other tasks.

IBM Australia reported its financial results for the first time ever, after recently restructuring to become more aligned with its global parent. Analysts say that IBM has grown faster than the industry average in all three of its operations: hardware, software, and services.

IBM will grow faster than the industry average by expanding its market share and tackling new services opportunities, said CEO Sam Palmisano. IBM is specifically aiming to capture more large business process transformation deals with its large services arm.

Recent changes in IBM's executive structure emphasise its services and e-business on demand business strategy. IBM CFO John Joyce will take over as IBM Global Services (IGS) head, while Doug Elix, former leader of IGS, will now run IBM's sales and distribution operation.

Two new managed services for small- and medium-sized businesses (SMBs) that bring legitimacy to the market. The IBM Desktop Management Services and IBM Network Management Services are offered by IBM Global Services under the IBM Express portfolio.

A recent IBM Business Consulting Services global survey of 370 executives found more CRM success stories than in the past, as well as surprising attributes of successful CRM implementations. Employee concerns are actually the most important factor in CRM success.

IBM will take over procurement of indirect supplies for Goodyear Dunlop Tires Europe. While Goodyear Dunlop retains core purchasing capabilities and will source raw materials itself, IBM's procurement organisation will be responsible for negotiating with suppliers for indirect supplies.

IBM is taking its own on demand philosophy seriously and transforming its operations to become more flexible and responsive to customer demand. While IBM's No. 1 priority is helping its customers with that transformation, IBM needs to demonstrate change itself.

The U.S. Department of Defense has signed on IBM to provide business consulting advice as it manages the rollout of radio frequency identification (RFID) technology in its supply chain. Defense Department suppliers have been given until January 1, 2005, to start using RFID.

In a seven-year, $255 million outsourcing deal, Dutch life insurance company Delta Lloyd Group is outsourcing its IT infrastructure responsibilities to IBM, including the IT help desk, network operations, server administration, and desktop environment maintenance.

Merrill Lynch will hand over its human resources, accounting, marketing, and other administrative IT functions to IBM. Merrill Lynch expects to realise significant cost savings through the deal as well as provide better service and focus on core business activities.

IBM's supply-chain-services consulting group is guiding the deployment of Halliburton Energy Services' logistics, manufacturing and outsourcing strategy by recommending technologies and processes. IBM also helped Philips Consumer Electronics to analyse its supply chain processes.

While IBM CEO Sam Palmisano may have an understated style, he is making bold bets. Among his changes are the dramatic increase of IBM's business consulting and software resources, and more recently, the fundamental reorganisation of the company's business units.

As IBM shifts from making IT products to helping customers solve unique business problems, its research operation is moving its focus as well. Deploying its 3,000 researchers has helped IBM to win some major contracts that otherwise would be defined only by product and margin.

IBM's David Samuel says IBM helps gas and electric companies remain competitive in the face of increasing business problems. Samuel works with utilities to develop unique solutions. He says the utilities industry needs to focus on improving asset utilisation and reducing costs.

IBM CEO Sam Palmisano says the on demand concept is now a reality at IBM and customers. IBM expects to save $7 billion next year in its own on demand initiative. The on demand concept integrates company operations through shared infrastructure, enabling rapid response to business conditions.

IBM will consolidate data centre operations worldwide for cosmetics firm Elizabeth Arden. Through this transfer, Elizabeth Arden will be able to focus technology spending on other, more strategic areas, as well as provide the infrastructure necessary for anticipated business expansion.

Last year, IBM lopped off at least $3 billion in annual costs in its supply-chain operations. IBM's continuing work in transforming its operations helps IBM Business Consulting Services clients as well. The change has required the expertise of IBM Research and veteran IBM business consultants.