In this customer-centric world full of tweets and online product reviews, manufacturers can learn something from the retail sector. Roberto Priolo reports from Las Vegas on IBM’s newest solutions, designed to help companies adjust to new market conditions.
“For once, let’s hope that what happens in Vegas doesn’t stay in Vegas,” Marie Wieck, IBM’s general manager of application and integration middleware, told the crowd of 8,000 delegates in the opening session of Impact 2011, the company’s global IT conference, in Las Vegas in April.
Judging by the case studies provided at the event, IBM is doing a pretty good job in taking its solutions to the four corners of the world. Government bodies, manufacturers – such as the Irish Dairy Board, see box – retailers, even hospitals, from the US to Spain and Australia, use IBM’s IT products for tasks ranging from supply chain optimisation to e-invoicing.
In many cases, these are inspiring stories of resilience and the smart application of technology.
Like that of the Madrid city council, which after the 2004 terrorist train bombings decided to deploy technology to coordinate the response of firefighters, police and ambulances in emergency situations. The most interesting story is, however, that of footwear manufacturer Crocs, which years ago saw its stock price plunge to nearly zero and managed to reinvent itself by using solutions developed by Sterling Commerce, a company that IBM acquired last year, to solve its inventory problem and manage orders.
Impact, a five-day event held from April 10 to 15, was an occasion for IBM to showcase its best work but also to launch new products, the most important of which were the Business Process Manager platform and the Smarter Commerce solution.
The customer-centric mantra IBM repeated throughout the conference was that we are living in a world where customers are more empowered and demanding than ever before. They want to be able, for example, to place an order using their smartphones and then track it online in real time.
Craig Hayman, general manager, industry solutions at IBM, explained: “Customers use social networks, mobile devices, websites and influencers to make buying decisions today. These businesses must connect to these customers where, and how, they prefer to buy to be successful. At the same time, they need to make sure they have the means of managing their supplier and trading partner network effectively to ensure they have the products at the right time and place to meet this new customer demand.”
Irish Dairy Board Case Study
The Irish Dairy Board (IDB), a manufacturer of dairy products with annual revenues of £1.8bn, exports to over 90 countries. It had experienced challenges with invoicing and, simultaneously, adhering to different national regulations. Already using Sterling Commerce’s enterprise integration solution, IDB started implementing the company’s e-invoicing system after a client required that it send a signed e-invoice (now an EU requirement). “In our business, delaying a million dollar invoice for a week represents significant money,” commented John Nugent, IDB’s systems development manager. “We have outsourced the complexity by implementing the Sterling solution.” Digitally signed invoices in PDF format are sent to customers and sent back to the company, which archives them. The IDB doesn’t own warehouses or transport infrastructure. Its supply chain is therefore very complicated. Sterling Commerce’s integrator feeds the company’s ERP system, linking all the partners. “The day you stop investing in IT is when you start going backwards,” Nugent concluded.
The power of re-invention
This new world order where customers are empowered to rule as never before presents global businesses with new challenges. Manufacturers are no exception.
Asked what lessons can manufacturing learn from retail, a sector with direct access to customers, Richard Douglass, global manufacturing executive, said: “Manufacturers should look at the way retailers interact with their customers and think of the buyer as a person, and not simply an entity or more business.
Even if you are a business buying from another business, you expect that kind of interface with suppliers. It is not about gift cards, but about how you customise your response to the single customer.” Smarter Commerce represents a market that IBM expects will grow to a value of $20bn in software alone by 2015. It is a solution designed to help companies adapt to the complexity of business and to customer demands in today’s digitally transformed B2B and B2C marketplace. According to Douglass, IBM’s products can also help manufacturers tackle traditional challenges such as price volatility and changing markets.
“There are two ways to respond to these problems. At a strategic level, in these changed market patterns, manufacturers need to make important decisions on postponement, optimising their inventory, changing the flow of products and where to place their assets. On a more tactical level, we have fulfilment applications like that for transportation management, which can contribute to cutting out inefficiencies and lead times,” he said.
If manufacturers want to survive in the new environment where information is abundant and constantly updated, where a bad review transmitted virally via social media can spoil months of work and where the customer has a new attitude to the buying experience, they will need to re-invent themselves and the way they do business.
Hayman added: “Smarter Commerce can help manufacturers orientate themselves around customers rather than products and understand where customers place value – which is not where manufacturers place value. It’s like the joke: when you buy a drill, what you actually need is not a drill but a hole in the wall.” IBM, which celebrates its centennial this year, knows a thing or two about re-invention. Over the past century the company has invented the bar code, helped create the standard airline ticketing system, contributed to the US space programme, and designed and built PCs. Now, it develops IT solutions for companies that want to stay competitive in an increasingly complex marketplace.
Crocs Case Study
Crocs is a manufacturer, distributor and retailer of footwear with its production split between operations in Mexico and Italy and through third-party manufacturing. Three years ago, the company faced business challenges due to inventory problems and an inability to respond to demand efficiently. It implemented IBM Sterling Order Management and is now thriving. Full ROI will be seen when global rollout of order capture is complete. “We needed to focus on the core deliverables, which were having a single supply chain feed across the three channels,” said Brian Horsman, senior director of IT at Crocs. “If a product is available online, customers will get it. Since we implemented the IBM Sterling solution, the retail channel can carve out, through reservations, inventory within that supply chain that becomes unavailable to all other channels and orders.
The two main solutions unveiled at Impact 2011 are good examples of IBM’s ability to create a comprehensive portfolio of solutions able to suit different business needs.
Smarter Commerce offers advanced analytics, cloud computing, cross-channel commerce, social business and supply chain optimisation and execution. Business Process Manager is focused on giving both large and small companies visibility into their business operations so they can model, automate, monitor and adjust plans instantly.
The time needed to develop IBM products goes from days or weeks for mobile or device applications to months for more complex solutions. Joel Reed, executive director, product line management, B2B and commerce, industry solutions, said: “This is the complexity we take away from our customers.
Another difficulty is to make tailor-made solutions: for instance, do they want to deploy them on premise, or use it though the Cloud?” According to Reed, the often strained partnership between business and IT is becoming stronger. “In many companies, IT people and supply chain people finish each others’ sentences,” he concluded.