IBM Vice President, Business Growth Initiatives, Linda Cantwell discusses how Big Blue is helping members of its Integrated Supply Chain organization develop the expertise and attitudes they will need to ensure the success of the company's next-generation supply and demand chain.
[From Supply & Demand Chain Executive, April/May 2004] IBM debuted its "e-Business on Demand" strategy with much fanfare in late 2002, highlighting on demand as a way of making supply chains more agile and adaptable to changing market conditions. But behind the scenes, IBM itself has been going through a significant supply chain revolution: The company set up an Integrated Supply Chain (ISC) group in 2002, consolidating dozens of different supply chains into a single organization that now runs most of Big Blue's supply operations. The goal: become more flexible, more responsive to customers' evolving needs, in short, more "on demand."
As in any major corporate re-engineering effort, IBM's move to its new supply chain model has involved more than just realigning boxes on an org chart. The company is finding that the on demand supply chain requires new skills and a new mindset for members of the ISC group. Recently Supply & Demand Chain Executive spoke with Linda Cantwell, vice president, business growth initiatives, Integrated Supply Chain, about the skills that the company is targeting for development as part of its latest transformation.
Cantwell joined IBM in 1982 and has served in a variety of roles in IBM's procurement, software manufacturing and Global Services organizations. In procurement, she specialized in business transformation to ensure that the purchasing function both understood and fully supported IBM's sales and marketing teams, and she created client-dedicated procurement teams and multiple business process changes in order to provide increasing support to the Global Services division. In June 2000 IBM appointed Cantwell to the position of vice president, global customer solutions procurement for IBM Global Services. She came to the position of IBM's vice president of strategic sourcing in January 2003 and was promoted to her current position in March 2004.
We began by asking Cantwell about her work at IBM.
Cantwell: I was responsible for strategic sourcing in the part of procurement that most companies refer to as the indirect side. Of the $39 billion or so that IBM spends with external suppliers every year, the piece that I represented, which we call services and general procurement, is about $20 billion. The driver behind that spend profile is really our services business, IBM Global Services, which is approximately $12 billion of that $20 billion in spend. Services is the large, growing, strategic part of IBM's business, and it's the future as far as the customer solutions that we're selling in the marketplace.
S&DCE: How has IBM's "on demand" vision affected that part of the supply chain where you worked?
Cantwell: The on demand vision and the on demand transformation that is being driven across the company has been key for the ISC. The vision is for the ISC organization to be the world's first "on demand" supply chain so that IBM can sense and respond to the needs of our customers, interface with our suppliers in that same way, and drive the end-to-end efficiencies and quick responsiveness that [IBM CEO] Sam Palmisano talks about.
Bob Moffat, who runs the Integrated Supply Chain, wants to make sure that all 19,000 employees of the ISC organization understand the strategy and the vision, and that they're all marching as one to get us to the end game. He has been very aggressive about making sure that the ISC strategy is communicated to all our employees around the world so that they understand what we mean when we say we intend to become an "on demand supply chain."
Right now each functional unit within the Integrated Supply Chain, including procurement, is drawing up a translation of the on demand vision for its team members. Within procurement, the members are saying specifically how they interpret what on demand will mean in their organization and how they will link their initiatives to the rest of the ISC. They're trying to paint a picture of what on demand will look like. For example, imagine how it will feel when a customer is able to interface with a sales rep, ask a question about availability, and instantaneously the sales rep has that information at his fingertips. He doesn't have to go out and ask a half-dozen people or wait until someone gets back to him, because we'll have the tools and the data and the processes in place to enable that kind of fast ask-answer interface with our customers.
From a procurement standpoint, the members must think about how they are going to enable the supplier piece of this, particularly in a world where services are such an important component and where many of the solutions that the company is selling to customers have third-party content. How is the procurement organization going to get the company's suppliers ready for this? How are they going to enable the IT so they're not looking just at purchase orders and invoices but at real business information? Certainly in manufacturing they've dealt with some of these issues for a long time, but it's fairly new to those on the services side.
S&DCE: What are the new skills, or new ways of thinking, that are going to be necessary within your supply chain organization in order for the on demand supply chain to be successful?
Cantwell: I should mention that previously, when we were more siloed organizations, we looked at this skills question independently. Now, as we have become an integrated global operation, we are very much combining our efforts, and we have singled out five core capabilities that are going to be critical regardless of where in the Integrated Supply Chain one resides.
First of all, there has got to be a core capability in understanding and demonstrating a passion for the customer. Because, as I said before, what the company is trying to do is make sure that, from an Integrated Supply Chain standpoint, we're focused on improving the customer experience in addition to the cost-management aspects that are typically associated with supply chain. There are a lot of people in the ISC today who have been more focused on the operational aspects of the supply chain and haven't been as tied to the customer-facing processes. What Bob Moffat has done is to link the customer-facing processes all the way back through the supply chain to the folks that support manufacturing — like those who deal with suppliers. So what we're saying now is that we all have to have strong skills around what it means to properly serve IBM's customers.
Second, because of the relative newness of the ISC organization, and the newness of the on demand strategy, the company has identified a core capability that will be developed across the team in terms of how they will support and properly execute against the ISC strategy.
Next, the company is already dealing with the fact that we're multi-functional in nature because the Integrated Supply Chain is made up of a number of the different business operations, but we're also operating in 59 countries, so the third core capability that we've identified is that our people must be able to perform in a global, multi-functional environment.
The fourth capability sounds pretty generic, but the ISC teams have to be able to demonstrate supply chain concepts. They've got to be able to understand, first of all, the basics of supply chain principles, but importantly — and this is where the skill development comes in — they also need to be able to adapt that knowledge to an ever-changing business situation. That's specifically a challenge for my former team members because supply chain concepts have very traditionally been tied to manufacturing, whereas today we are in a services-oriented environment, and supply chain principles don't necessarily resonate with those folks yet. The ISC is very aggressively working with the team members to develop the skills necessary to apply supply chain techniques in an environment where the company is selling services or an integrated business solution to a customer. They are applying supply chain practices to consulting, IT services and businesses where nobody has ever used supply chain principles. That's essential for a company like IBM when one-half of our revenue is service related.
And then the last of the core capabilities that we are applying universally across the ISC is "apply on demand principles." IBM wants its people to be able to understand the on demand strategy, the attributes of being an on demand organization, and to be able to demonstrate in their specific business areas that they can be that responsive to customer needs or market conditions, and that they can be adaptive and fast-moving, as is required in an on-demand environment.
S&DCE: Some of these core skills could perhaps be taught in a classroom, but some of them sound more like a change in attitude. Is that what you're finding?
Cantwell: I'm glad that you picked up on that. One of things that Bob Moffat says all the time is that one of the greatest challenges in working with the people is going to be the ability to change the culture, not just the people skills. The people have shown over the years that they're pretty adaptable when it comes to learning new skills, applying new processes or learning new systems. But the culture change aspects [of the on demand supply chain] are going to involve getting people to break down the barriers between their business operation and the next business operation, and to work as an integrated team instead of just the silo organizations that we're so used to.
S&DCE: What is the practical impact going to be on people within the strategic sourcing organization? How is it going to affect their normal workday as they come in thinking "on demand" as opposed to how they used to operate?
Cantwell: It's funny, because we had been asking ourselves that very question as we thought about how to get the ISC strategy to really resonate with the individual.
In some cases, some jobs are so necessarily functionally oriented — if you're a procurement professional, for example, and your business is to develop the best strategy for buying software — that maybe the deep functional experts in that process aren't going to see as dramatic a day-to-day change in their own work as they will in the organization as a whole and in the process around them, because their functional expertise is going to remain very important.
But others in the organization are going to need to come out of their functional discipline way of thinking to really understand how they link up with other processes in the supply chain. Traditionally we, as IBMers, have grown up in our silo organizations. You start out in procurement, you get more and more proficient at that, and you move around in procurement — but it's always procurement. We haven't been as adept at moving people between functional organizations, moving people from procurement into customer fulfillment, or from manufacturing into IT and process transformation, for example. So, one thing we're doing, just as an example, is building a process around what we call talent exchange. We're trying to create some movement, some opportunity for our people to move across the various functions to develop a broader understanding of what the other pieces of the Integrated Supply Chain do as organizations. We want these folks to be able to figure out more quickly how the integration will work, how we will synch up the customer-facing processes with the supplier-facing processes so we can get that quick ask-answer that I was talking about earlier.
S&DCE: What other educational efforts are being undertaken to get people up and running with the on demand supply chain concepts?
Cantwell: We have in IBM a business process around identifying individuals' skill gaps. This is part of people's individual development plans for where they're taking their careers. As part of that process, employees participate in a skills assessment: They essentially self-assess where they are in any number of core skills that are critical to their function, and then the manager validates the assessment. That creates the opportunity for a manager-employee discussion around what the employee's strengths and weaknesses are, what skills they have, what skills they need for where they want to take their career and, once those gaps are known, how to close the gaps.
Now, the ISC is adding [to the self-assessment process] the core skills that are most critical for the Integrated Supply Chain professional. Right now those involved are working across the ISC to identify the areas of the most significant skills gaps, and where those are identified, they become the highest priority for work to fill those gaps, whether through traditional training with an instructor or — more and more — education and training on the Web.
S&DCE: What do you see as the biggest challenges to making sure that everyone has the right skills that they need?
Cantwell: This is just my personal opinion, but I think that the challenge is going to be establishing this kind of skill development as a regular part of how the company operates, and not just confined to just when we're looking at an employee's development plan. Traditionally, for us IBMers, we'll forgo that if there's a fire brewing. But we have to figure out a way to help our people not do that, to make sure that it is as high a priority as anything else that they've got going on. Because there is a temptation to have a lofty goal for how much training you're going to get, but then the normal hectic nature of the business gets in the way of those things. So our biggest challenge is going to be making this part of the manager's and the employee's normal business. And I'm starting to see that happen.
S&DCE: How long a process do you see this as being, and is there an "end state" at which everyone will have all the skills that they need?
Cantwell: As the company is moving into the on demand phase, we have recognized that it's a journey and that it's never done. I think that this will be the case with the skill development as well; as we get our people more proficient in the skills that we've identified today, the business environment will change and that won't be good enough anymore. We'll have to keep the headlights on as to where the business is heading and what that implies about our priorities.
S&DCE: IBM has been working with several universities on curriculum development around supply chain skills. Could you talk a little about that initiative?
Cantwell: IBM has been developing strong relationships with a number of universities over the years, and in the past couple years we have very specifically narrowed our focus to a few key schools — namely Penn State, Arizona State, Michigan State and University College Dublin — where we've built deeper partnerships. We've got executives on the university side and the IBM side who regularly meet and foster these partnerships, and we've got very specific, win-win objectives here for the universities and for IBM as it relates to some strategic research projects and curriculum development.
Very specifically, one of my hot buttons when I worked with the universities is that the curriculum in supply chain is still largely focused on manufacturing and logistics, you know, parts and products. But we're in a solutions and services world now. So some of IBM's emphasis in the partnership is on how can we help the universities steer the curriculum into areas that we feel are strategically important. We want those great students coming better equipped to work in a world that's services and solutions based.