No crisis here: IBM fulfills Wall Street firm's server needs
By Roberto Michel, senior contributing editor (robertomichel@charter.net) -- Manufacturing Business Technology, 3/1/2008 12:00:00 AM
Last August, when the subprime mortgage lending crisis triggered the need for more computing power at a Wall Street brokerage, the firm was able get the servers it needed on short notice. IBM, its server supplier, fulfilled the order in three days without resorting to crisis tactics of its own.
According to Glenn Johnson, director of supply chain optimization for IBM's Integrated Supply Chain organization, the order shows the ability of enterprise software and a Web-based applications infrastructure to rapidly meet unexpected customer demand without holding vast quantities of finished goods, or bypassing processes such as financial approvals. Instead, says Johnson, the applications tap into the real-time capacity of a just-in-time (JIT) supply network to build exactly the servers needed.
“The customer called us, we keystroked in their requirements, and within 72 hours, we were delivering their order,” says Johnson. “We didn't cut any corners.”
The Wall Street firm—an existing client that can't be named—called IBM with a need for 300 Intel-based PC servers within IBM's Series x product line. These were mostly blade servers, with some special requirements such as extra memory.
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Glenn Johnson, director of supply chain optimization for IBM’s Integrated Supply Chain organization, says a new methodology for order fulfillment allowed IBM to supply a Wall Street investment firm with more computing power to support its overloaded trading systems during the subprime crisis. |
The old way of fulfilling such an order for IBM, even just six years ago, would be to use IBM's inventory systems to scour finished goods for servers that could be modified to meet the customer's needs. According to Johnson, this relied on IBM maintaining a “football field-size” warehouse. If the right models were in stock, special requirements such as extra memory often need to be added, which required inventory to be pulled, retrofitted, retested, repackaged, and readied for shipment. That could take 10 days, says Johnson.
The new way spans multiple sites globally, but starts with a single input to an integrated, Web-based system. In this case, an IBM account management team based in Raleigh, N.C., gave the order priority status while order entry was handled via a site in Phoenix. The priority code allowed IBM's plant in Guadalajara to instantly sort the material requirements for the order.
IBM's system has full visibility into materials at supplier hubs within a few miles of the Mexican plant. The priority code gives an order first crack at materials at these hubs so it can be allocated to the order, says Johnson. What's more, the same process kicks off all the necessary financial processes managed from an IBM site in Brazil.
Underpinning this new methodology, says Johnson, is an IT system that leverages supply chain planning software from i2 Technologies, ERP software from SAP, and IBM's WebSphere software as the Internet-based infrastructure to tie it all together. It's only within the last couple of years that they've been tied together using WebSphere to enable the new fulfillment process.
The IT system allowed diverse IBM sites to work simultaneously to fulfill the Wall Street firm's order, says Johnson, rather than sequentially.
“Once that order is entered, the entire configuration exists,” says Johnson. “The order is for the machines the customer wants, with the options already in the configuration as feature codes. There is no football field-size warehouse anymore.”
| OLD WAY | NEW WAY |
| Planned for and produced relatively large stocks of finished goods for its servers. | Taps inventory held by suppliers in hubs to quickly produce needed servers. |
| Finished goods typically needed to be refitted with correct options, tested, and repackaged. | Servers are configured with exact options when produced. |
| Required large, stadium-size warehouse to hold and realign goods to meet customer needs. | Much smaller DC is used since goods from plant already meet customer requirements, and only need to flow through to logistics partners. |
