Bob Trebilcock

IBM opens a supply chain center in China

The other day, I talked about China with Sanjeev Nagrath, the global leader of supply chain management for IBM Global Business Services. The ostensible purpose behind the call was Big Blue’s recently-opened supply chain research center in Beijing.

The point behind the new facility, Nagrath told me, is to help companies “transform and extend their supply chains in a globally integrated economy.” IBM chose Beijing for obvious reasons: You can’t be in business today without a China strategy. “When we look at trends in the global supply chain arena, China is in the middle of it all and a key link in that supply chain,” he added.   

The center is going to focus on three key areas:

• End-to-end visibility: One of the biggest challenges to a disperse supply chain is simply knowing what’s going on with contract manufacturers and shippers. IBM’s virtual command center is designed to take data from the extended supply chain and monitor events in real time. 

• Supply chain optimization tools: These modeling tools allow companies to design and operate agile and adaptable supply chain processes and networks. 

• Carbon tradeoff modeler: This tool helps companies shipping into the EU or to Wal-Mart include carbon output (footprinting) as a key variable when optimizing the supply chain, allowing them to understand the outcome of critical tradeoffs. 

I think IBM’s attention on the global supply chain reflects something else going on. For a long time, when people talked to me about China, they talked about how the low cost of production (translation: dirt cheap wages and no benefits) more than compensated for the lack of automation in factories and DCs and the high cost of transportation. In fact, you could gain an advantage over your competitors just by moving your production or sourcing your products in China versus somewhere else.

But once everyone sets up shop in China, and everyone is using low cost producers, the competitive edge is gone and you have to look elsewhere to get more efficient. That’s why the best distributors adopted warehouse management systems and bar codes in the 80s and 90s, and slotting and labor management in more recent years. It’s why there’s so much interest in RFID today.

It’s also why providers tell us there’s a great deal of interest in supply chain software solutions and automated materials handling systems from Chinese companies. 

Most important of all, it’s a reminder that what all of us do in the supply chain counts.  

Tell us what your company is doing to become more efficient in your supply chain operations.

Posted by Bob Trebilcock on March 21, 2008 | Comments (0)