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Supply Chain Management

Supply Chain Management. Theo Fletcher Vice President, Global Procurement Operations February 27, 2003. Sectional slide. Today’s Economy. Revenue generating opportunities are limited Increasing profit expectations from stockholders and Wall Street Customer satisfaction is key to success.

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Supply Chain Management

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  1. Supply Chain Management Theo Fletcher Vice President, Global Procurement Operations February 27, 2003 Sectional slide

  2. Today’s Economy • Revenue generating opportunities are limited • Increasing profit expectations from stockholders and Wall Street • Customer satisfaction is key to success How do businesses respond to these challenges?

  3. What is Supply Chain Management? Supply Chain Management is the oversight ofmaterials, information, and financesas theymove in a processfrom supplier to manufacturer to distributor to retailer to customer. Supply Chain Management involvescoordinating and integrating these flows within and among companies to satisfy customer requirements.

  4. Key points of Supply Chain Management • Elements of Operational Excellence • Efficient and effective processes • Vertical functions turned on their sides • Elements of Customer Experience • Customer knowledge • Problem-free customer experience

  5. Why is Supply Chain Management Important? • Broad view of the supply chain allows companies to sense (signals) and respond to changing market conditions • Opportunity for efficiencies and economies of scale • Presents “one company” image to the marketplace • Improve customer satisfaction and stockholder value

  6. Supply Chain Management What are the analysts saying? • Wall Street continues to assign premium valuations to companies with superior SCM execution and believes these companies exhibit: • Increased or maintenance of profitability despite decreasing industry prices • Efficiency • Strong competitive position within an industry • Superior execution capability • Strong balance sheet and cash management priorities • Lehman Brothers, January 2003

  7. Supply Chain Management Financial Example

  8. IBM’s Integrated Supply Chain • Build the world’s first on demand supply chain • Bring end-to-end integration of all pivotal functions of a supply chain from opportunity to cash Understand Market & Customers Product/ Solution Development Procurement Customer Fulfillment Order Mgmt Manufacturing Supply Distribution After Market (Service & Support) • Success – Value Delivered in 2002 • Delivered $5 billion of cost savings to IBM • Delivered improvement in our customer’s experience - 14% improvement in Server ‘order to delivery’ cycle time Agenda slide

  9. IBM’s Integrated Supply Chain • Integrated Supply Chain formed in January 2002; expanded in January 2003 • More than 19,000 employees in more than 160 countries • ISC is responsible for managing approximately $40 billion of IBM’s costs & expenses Agenda slide

  10. Supply Chain Management… Your Customers: • Desire suppliers who “get it” You: • Supply chain management integration positions you to differentiate your business to current and potential customers • Sustain or enhance your competitive advantage Operational Efficiency & Customer Experience are keys to your success

  11. Superior Design International Inc. • 10 Years in the information technology services arena • IBM Supplier since 1993 • Supply Chain Management: • Customer > SDI Intl < Supplier • Provides shorter response times, improved accuracy and • quality of services • Partnership with 2nd tier suppliers is critical to satisfying customer requirements • Differentiated by: Customer focus as a core competency Supplier partnership as integral to their success Use of technology to facilitate management of the supply chain

  12. Apex Computer Systems Inc. • 20 Years in the information technology services arena • IBM Business Partner since 1995 • Supply Chain Management: • Manage your customer’s customer and your supplier’s supplier • Provides high customer satisfaction, ease of doing business and timely communications • Differentiated by: Broad view of the supply chain driving customer satisfaction and controlling costs Electronic linkage to customer to enhance responsiveness

  13. IBM’s Commitment to Supplier Diversity Vision To be recognized by our suppliers, partners and customers as being the corporate leader in Supplier Diversity. • Minority Supplier Development Program initiated in 1968 • Diversity spend exceeds $1.5B / year • Integrated as part of overall Integrated Supply Chain Strategy • Dedicated resource / funding • Procurement Commodity Council focus • Metrics

  14. Are you ready for Supply Chain Management? How responsive? How flexible? How efficient? Customer facing processes?

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