Big Blue Goes Red

A fairly important bit of supply-chain related news went largely unnoticed the other week. Tucked away inside the business section of most newspapers was an article saying that IBM had opened a supply-chain research center (its first) in Beijing. IBM claims it selected Beijing because of China's central role in the global supply chain for manufactured goods. IBM's move, of course, comes on the heels of a major, widely-publicized supply-chain disruptions emanating in China over the past several months.

IBM expects to serve its global customer base by offering centralized knowledge and software tools from its hub in Beijing. This outpost of IBM's supply-chain practice will help its existing clients track supplier performance by integrating data about their products' supply, demand, logistics and, presumably, quality.

We're excited to see that leading service firms are taking the concept of supply-chain intelligence to the next level, combining on-the-ground experiential knowledge, company-specific data and more widely available information. Still, much of Big Blue's focus with its new practice appears to be securing local clients, helping them get up the "supply chain maturity curve" and adding them to its current roster of 7,500 larger global clients. Makes us wonder who's interests they're truly planning to serve.

When we first heard this news, we were hoping to read more about IBM's efforts to promote transparency and visibility into offshore supply chains - certainly, IBM has the minds and resources to do this. This is, after all, what many leading global manufacturing firms are crying out for. In the Wall Street Journal article about IBM's announcement, IBM's supply-chain management director said: "[Foreign companies] want to see into the supplier's supplier's supply chains." Bravo.

Still, before any company can even think of peering more than a layer or two deep into its supply-chain, it better have a good grasp on what's happening with its own primary suppliers, whether the suppliers are down the street or across the ocean. Procurement managers better be sure that the suppliers they've already selected (or will soon select) are capable of meeting basic performance criteria, serving sophisticated overseas buyers and complying with generally-accepted standards of corporate social responsibility (CSR).

IBM is definitely headed in the right direction with the opening of its Beijing supply-chain research center. But for most companies that are sourcing overseas, the best first step would be to simply leverage all of the knowledge they already possess internally.

Doing so would tell you a lot more about your supply-chain than any big name consulting firm ever could - and it would cost your company a whole heck of a lot less. You already know more than you know.