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e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
e-business in
Manufacturing
and the Supply
Chain
Frank Jones
Vice President, Integrated Supply Chain
IBM Corporation
FJ-INFORMS -1-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
e-business: Changing the Rules of the Game
Defining an e-business
An e-business connects critical business systems
to critical constituencies via intranets, extranets
and the World Wide Web.
and
An e-business gains value from the Internet.
This includes:
e-commerce
e-care for Customers
e-procurement
e-care for Business Partners
e-care for Influencers
e-care for Employees
e-marketing
e-management of Intellectual Capital and Knowledge
FJ-INFORMS -2-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
e-business: Changing the Rules of the Game
e-business transformation addresses traditional challenges
by focusing on key business processes...
Lower
Costs
Enhance
Reduce Product Quality of Goods
Cycle Times Development & Services
Enable Global Build Customer
Collaboration Loyalty
Supply Customer Relationship
Chain Management
Broaden
Tighten Access to
Supply Chain Intellectual
Linkages Capital
Reach New
Markets
FJ-INFORMS -3-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
e-business: Changing the Rules of the Game
...causing a fundamental change in the nature of business!
From To
Customer
Transactional Relationship Lifetime
Customer
Dealers Access Multiple Channels
Value
Vertically Integrated Chain Networks
Production
Make to Stock Planning Make to Order
Manufacturing
Mass Production Capability Mass Customization
Basis of
Products Competition Solutions
Product Cycles Innovation Continuous
Experimentation
Key Product
Mechanical Technology Digital
FJ-INFORMS -4-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
e-business: Changing the Rules of the Game
Supply chain management must be considered within the
context of an overall e-business framework.
e-business Framework
Business Strategy
e-business Strategy
Integrated Product Dev.
Supply Management Customer
Chain Processes Relationship
Management & ERP Management
Knowledge Management
Information Management
FJ-INFORMS -5-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
Six Steps to Becoming
an Effective e-business
FJ-INFORMS -6-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
Six Steps
Accept that the world is changing
e-business is more than e-commerce
Take an end-to-end view
Walk before you run
Know what you don't know... and focus
on what you do know
Understand what it takes to
create/regain markets
FJ-INFORMS -7-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
Step 1:
Accept the Fact That the World is Changing
"82% of senior executives believe the Internet
will have a major impact or totally transform
supply chain performance over the next 3
years.”
"The three main obstacles to an effective
integrated supply chain are lack of
functional expertise (51%), lack of
management expertise (44%) and ineffective
change management (42%)."
March 20, 2000
Economist/Meritus Study
FJ-INFORMS -8-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
Step 1:
Accept the Fact That the World is Changing
Supply Chains are evolving to a virtual structure...
Isolated Connected Integrated SCM Community Marketplace
Today Near-Term Evolving Emerging End-State
Isolated Trading Supply Trading Global
Enterprise Partners Chain Virtual Communities Electronic
Enterprise Markets
...enabling strategic, tactical and
execution collaboration
FJ-INFORMS -9-
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
Step 2:
e-business is More Than e-Commerce
e-Commerce
Transactions:
Utilizing "e"
e-Care
Personalize "e"
Information and support
e-Collaboration
"e" Integration with partners
for end-to-end optimization
FJ-INFORMS - 10 -
Step 3:
Take an End-to-End View
The End-to-End Supply Chain is Chain is Getting Constricted
The End-to-End SupplyGetting Constricted
"Ask" "Answer"
Soln Submit Sched Order Relea Mfg Invoice/
Shop Design Price Ship Coll.
Order Order Exec. Order Exec.
Customer Cost/
Experience Oriented Flexibility Oriented
End-to-end Supply Chain
Enabled by e-business
FJ-INFORMS - 11 -
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
Step 4:
Walk Before You Run
High
Collaborative
Planning &
Decision
Making
Business Value
Synchronized
Execution
Data
Sharing
Low
Low Difficulty of Execution High
FJ-INFORMS - 12 -
Step 4:
Walk Before You Run
Example: eCDB e-Collaboration Database
Concept:
Push real time order event data from IBM to
Business Partners
Approach:
Pilot one of our Partners for Mid-Range products
Remaining mid-range partners one quarter later
Status:
First tier of US distributors deployed
Next tier completed Y/E 2000
Benefits:
Eliminate all the intermediaries
FJ-INFORMS - 13 -
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
Step 5: Know What You Don't Know...
Focus on What You Do Know
"Instantaneous" Order Response
Integrate internally . . .and extend to
supply network
Grab That "Low-Hanging Fruit"
EDI over the Internet
e-Care
e-Procurement
Trading Networks
Execute with Speed!!
FJ-INFORMS - 14 -
Step 5: Know What You Don't Know...
Focus on What You Do Know
Collaboration
Reporting,
Analysis & e-Procurement
Information Services
Connectivity to
Industry / Public Industry item
e-Marketplace Catalog
B2B /
e-Marketplace
Infrastructure
Auction
Financial Service Reverse Auction
& e-Payment Bid/Ask
Connectivity
to Private Supply Chain
e-Marketplace Execution
Logistics,
Fulfillment
Transportation
FJ-INFORMS - 15 -
Step 5: Know What You Don't Know...
Focus on What You Do Know
IBM's 3-Pronged Approach to Trading Networks
1 Alliance
IBM / i2 / Ariba
2 Committed to provide customer solutions
...and to use in IBM's supply chain
3 Pilots
Validate function and business processes
FJ-INFORMS - 16 -
Step 5: Know What You Don't Know...
Focus on What You Do Know
Trading Network Must Create Value
Businesses will use Trading Networks if they:
Provide efficient, many-to-many
communications
Open new supplier and customer channels
Protect private customer-supplier
partnerships
Provide competitive hosted app's
Establish connectivity and standards
between networks
FJ-INFORMS - 17 -
Step 6:
Understand What it Takes to Create Markets
There are five broad options for value creation in e-business
High
Create markets
Redefine business models
Business Value
Redefine processes The
"e-Zone"
Improve processes
Reduce Cost
Low
Low Difficulty of Execution High
FJ-INFORMS - 18 -
Step 6:
Understand What it Takes to Create Markets
Example: IBM's Asset Management Tool
A system for analyzing business processes and
policies, and evaluating the tradeoffs between
minimizing inventory in a supply chain network
and assuring on-time delivery in manufacturing
and distribution
Suppliers IBM WH QIC
Delay
Order
Delay
Winner of the 1999 Order Customers
Edelman Award
FJ-INFORMS - 19 -
Step 6:
Understand What it Takes to Create Markets
Using "e" doesn't make it an e-business
High
New
Landscapes
Business Value
Redefine
ize
Basics m
pti e"
& O an "
m
sfor ome
an bec
Tr to
Quick
Wins Using "e"
Low
Low Difficulty of Execution High
FJ-INFORMS - 20 -
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
Summary:
Developing a World-Class Supply Chain
IBM is at the center of one of the world's largest,
most complex supply chains
IBM invests billions of dollars a year on advanced
R&D
IBM has been awarded more patents than any
other company
IBM won three prestigious INFORMS awards
1999 Franz Edelman Award
1999 INFORMS Prize
1998 Daniel H. Wagner Prize
IBM established an extensive portfolio of
world-class supply chain services, solutions, and
e-business technologies
FJ-INFORMS - 21 -
e-business in Manufacturing and the Supply Chain, Frank Jones, VP, Integrated Supply Chain, IBM, INFORMS San Antonio, Nov, 2000
e-business in
Manufacturing
and the Supply
Chain
FJ-INFORMS - 22 -
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