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Becoming On-Demand
Integration helps IBM become an adaptive organization
By Design News Staff -- Design News, June 27, 2005
IBM is morphing into a global on-demand supply chain organization in which engineering is seamlessly integrated with demand management, manufacturing, logistics, and other functional groups. In charge of engineering integration is Jim Dickerson, a veteran engineer who earlier managed parts of IBM's ASICs development, microprocessor design, and system-level hardware design.
Why did IBM begin this integration push? We used to manage business units separately, creating a silo effect. When you have such a complex environment, you have problems such as overlap and holes where projects don't link up well. Also, design engineers always want to add their own twists. Our revenues were climbing but our profits were going in the wrong direction. We decided to centralize all of the decision-making, starting with design.
What's the first step in changing the culture? We created development councils in areas such as memory chips that generate the strategy and the road map of when and how we go from generation A of a product to generation B. They determine the functional requirements of the products that will be used. These development councils then get functional groups from all the business units to align to that road map, which includes the technology and the procurement. We would then look at what suppliers have those capabilities and which offer the best commercial options in areas such as terms and conditions, supply pipeline, and cost.
And how do you enforce the strategy? As we are generating our initial bills of materials we look at all parts to make sure that we are using the preferred parts that incorporate the early learning. By having this cross-functional nature from the start of the project, you eliminate what you would traditionally run into—the problem of throwing a new design over the wall to the supply chain even if it's not manufacturable. There's also a stage-gated review of decision-making processes to make sure we're not heading down the wrong path. We also use common centralized technology systems. We previously had multiple in-house solutions. There was a lot of manual work and not a lot of discipline. We have now aligned and developed a systematic IT structure.
How long does the transformation take? Many years. I made a decision two years ago to move our IPD group into IBM's Integrated Supply Chain organization. You can most influence change through being part of the inner circle.
What's next? Further efforts in making IBM an on-demand company is the next big play. On-demand means that we are a more adaptive organization that can profitably respond to customer requirements.
As a result of these changes, does IBM look for different skills in design engineers? We clearly look for much more in the way of business knowledge and general skills on the way we manage our business. Ten years ago we would have had the technical guru leading the project. General business skills were not his forte. We make sure our project managers are not purely designers. They must have a broader cross-functional expertise.
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Jim Dickerson, Director of Integrated Product Development (IPD), IBM
Jim Dickerson can be reached at dickerso@us.ibm.com. |
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