Schooled in the art of the supply chain

27 Nov 2003

IBM claims it stripped US$5.6bn in cost from its global business in 2002 and expects to do the same this year thanks to a complete overhaul of its supply chain management (SCM) system. Not surprising then that SCM has been selected as one of the key areas to receive funding under IBM’s Shared University Research (SUR) programme, two Irish winners of which were announced this morning.

In the past year, IBM has funded three leading US universities to set up laboratories for the study of complex supply chain systems. A fourth has now been added to their number: the Smurfit School of Business at University College Dublin (UCD). Due to open in early 2004, this lab will work with those at Penn State University, the Arizona State University and Michigan State University to simulate the workings of a complex supply chain. IBM and the four universities will also work together to identify the skills needed for the supply chain of the future as demand grows for skilled professionals in this area. The four colleges will be linked via a high-powered computer network or grid for cross-university team working and knowledge transfer. IBM is providing the software, server and storage technology and consultancy services needed to build the facilities. At UCD, the core piece of equipment is a high-performance IBM P Series computer to be supplied as part of IBM’s overall funding of approximately €300k.

A second project has also secured funding under the programme. IBM is providing a Linux cluster (a batch of networked servers controlled by the Linux operating system) worth €100k to Professor Jim Sexton of the Trinity Centre for High-Performance Computing (TCHPC). The technology will support a joint research project with IBM called the Linux Open Source in Grid Computing Network. The TCHPC will work with seven other leading European universities on the project. According to Sexton, the funding will take his research into grid computing to a new level: “One of the challenges we face is to deliver computing to an individual researcher in a much more transparent way than before.

With grid computing you can actually be sitting on your desktop and without realising it be using computers in another country. The reward is very important to us because we will have access to some of IBM’s newest grid computing technology as a result.”

The two projects are among 50 to 60 worldwide that will have been funded this year under IBM’s multimillion-euro SUR programme. The programme has two aspects: as well as lending the weight of its technology to a project, IBM also makes senior technologists available to work with university researchers to share knowledge and data relating to a specific project. With the two projects announced today, it is also envisaged that there would be bi-annual meetings between the company and the university research teams to discuss the projects’ progress. “It’s very important that there is a follow through; it’s not just about making an equipment grant,” stresses James Flynn, head of education liaison for IBM Ireland, who added that if the projects make sound progress, IBM may be prepared to supplement its initial funding with further support.

“The programme is all about building relationships of mutual value with the university sector,” he explains. “We’re trying to develop collaborative research programmes in areas of interest to both IBM and the universities.”

Obviously IBM hopes to get a payback from both projects in the form of knowledge that it can profitably apply to the areas of supply chain management and Linux, but the benefits of the project run in both directions, argued Michael Daly, IBM Ireland general manager. “There is exceptional talent in our universities and the decision to make the €400k investment through the SUR programme is testimony to that. The programme will not only fund research and development but will enable students and researchers to work with other top-class universities across the world.”

Many of the areas that have received SUR funding to date have been about grappling with heavyweight technical challenges such as grid computing, autonomic computing and deep computing, albeit in the context of wider business applicability to IBM. The inclusion of SCM as a research area is unusual in that its focus is on a mainstream business process itself. Fernand Sanchez, vice-president of technology campus, IBM EMEA, explains why the supply chain is suddenly on IBM’s radar.

“In the past two years, we have regrouped all of our supply chain activities into a single organisation called the IBM Integrated Supply Chain. The goal for us is to make it as efficient as possible in terms of being able to respond to customer requirements and obviously being able to optimise IBM assets and funds, and so be cost-competitive. The two areas that we want to focus on to drive transformation are people, their skills and capabilities, and tools. By forging an association with leading universities we believe that it will help them and will also help us achieve that goal,” he says. Despite the billions that IBM has already saved through remodelling its supply chain, Sanchez believed there are still “tremendous savings” to be made in the area both by IBM and by the computer industry in general.

Dr Brian Fynes of the Department of Business Administration within the Smurfit School of Business, who is head of the SCM research team, agrees. “It’s no longer companies that compete; it’s supply chains that compete. That’s the way industry works now.”

He adds that the IBM funding would give his research an international dimension through the link with the three US universities and also allow his team to simulate and model a variety of supply chain processes. “Some of this modelling needs significant computing power which we wouldn’t have been able to do without the IBM computer grid,” he notes.

The partnership with IBM is of mutual benefit, he concludes: “I see it in terms of inter-organisation learning: we can learn from them and they can learn from us.”

By Brian Skelly