IBM’s Innovative Approach to Supply Chain Disruptions

IBM’s cognitive computing system, Watson, is a valued supply chain advisor to the company and others.

By Jim Harris

Disruptions are a fact of life for supply chain professionals. Inclement weather and natural disasters, mechanical breakdowns at manufacturing plants and other challenges can severely limit a company’s ability to produce and deliver goods to its customers.

As one of the world’s leading computing and information technology providers, IBM knows the reality of supply chain disruptions better than many companies. The Armonk, N.Y.-headquartered company serves customers in 170 countries from multiple manufacturing facilities it both owns and contracts with. The company also partners with logistics companies and service providers around the globe to deliver and install systems for clients.

Although IBM knows that many disruptions cannot be avoided entirely, the company is leveraging its existing technology to help both itself and others better predict and handle challenges.

“Disruptions come from things you both can and cannot control. For me, managing disruptions is all about being able to make more intelligent decisions,” Vice President of Supply Chain Joanne Wright says. “I see us as having a critical role to play in adding value to companies because of the ability we have to take business insights gained from data and turn that into action with speed and certainty.”

‘A Game Changer’

IBM’s technology plays a critical role in helping the company interpret and use the immense amounts of supply chain-related data it receives daily. This includes structured data such as information generated by and shared within the company’s internal business management and demand planning systems. IBM also receives unstructured data such as social media posts, news articles and weather reports. Weather-related information comes from The Weather Company, an IBM business that provides accurate, personalized and actionable weather data to millions of consumers.

“We always want to be aware of everything taking place in the world and ensure we are up to speed on the latest changes that could have an impact on our ability to be successful,” Wright says.

IBM two years ago started using its Watson cognitive computing system within its supply chain operations. “We went on a journey that focused on using the Watson technology to analyze our data,” Wright says. “That led us to the real game changer, which is the ability to gain real-time insights into the supply chain and make better decisions with greater accuracy and speed.”

Watson gives the company greater visibility into its data, particularly unstructured data, which represents roughly 80 percent of the information received by the company daily. “This is data that wasn’t being seen by us previously,” she adds. “Watson can read, analyze and understand this data with incredible speed, accuracy and intelligence and give recommendations to our subject matter experts.”

One example of Watson’s supply chain analysis capabilities occurred earlier this year, when IBM learned of a hurricane approaching one of its large manufacturing sites. The hurricane was set to hit the factory area on the last day of a quarterly financial period, which is a particularly busy shipping time for the company, Wright notes.

The company used information within Watson such as part and order numbers to accelerate its outbound freight. “Using Watson, we were able to quickly gather our perspective of what the hurricane would mean to us in terms of outbound and inbound products, and learned what alternative actions we could take,” she says. “Our analysis of what the impact of the disruption would be and the actions we would have to take was incredibly faster with Watson than if we did it using other systems.”

IBM has reduced its data retrieval times by more than 75 percent since using Watson within its supply chain operations. In addition, the company has saved more than $40 million thanks to efficiency improvements and reductions in inventory and freight costs.

“Our ability to make decisions with data has gone from weeks to within a day,” Wright says. “From our specific experience, we have improved our on-time delivery, and gained better end-to-end supply chain visibility.”

A Wide Reach

After pioneering Watson’s use as a supply chain advisor within its own operations, IBM later this year will make this capability available to its customers. “Supply chain officers want greater visibility into their data,” she adds. “Many supply chain professionals say they have a limited ability to see the data that allows them to mitigate disruptions, and they don’t have the ability to analyze that data to take fast action.”

Watson’s Supply Chain Insights offering will be the latest application for the cloud-based system, which is already in use in 45 countries. Watson’s artificial intelligence is being tapped in 20 industries including healthcare and insurance, and will be available to a billion consumers by the end of the year, she adds.

Watson Supply Chain Insights will give supply chain professionals greater visibility into their data and the ability to use that data to predict and resolve disruptions. The application will also greatly enhance communication between organizations and suppliers through its use of what IBM calls “resolution rooms.” These “digital collaboration rooms” are created within Watson to keep involved parties up to date on disruptions.

“When there’s a supply chain disruption that touches people across an entire organization as well as suppliers and business partners, you’d normally have people making a bunch of phone calls, sending e-mails and texting. Everyone would be running around trying to make a decision and communicate with suppliers, logistics organizations and others,” Wright says. “We wanted to create a place where you can see, in real time, who has taken what action, and where people can go to understand the latest and greatest update on a situation without tying people up in a conference call. And because the resolutions rooms are enabled with cognitive technology, Watson is there to act as a trusted advisor making recommendations that are based both on current data and learnings from past successes.”

Digital Leaders

Watson Supply Chain Insights is the culmination of much of Wright’s work as IBM’s vice president of supply chain. As vice president, Wright is responsible for strategy, execution and business results for IBM’s manufacturing, fulfillment and client solutions across all 170 countries it works in.

She has been in her current role for three years and has been with IBM for 20 years. Her previous experience includes holding senior leadership positions including procurement, client fulfillment and enterprise transformation.

Wright is a member of Women in Technology International, the executive sponsor of Global Women of IBM and a member of IBM’s Growth and Transformation Team. She serves as Executive for Supply Chain Leaders in Action and is one of Fortune’s Most Powerful Women Next Gen.

She is a graduate of Glasgow Caledonian University, Scotland, with a bachelor honors degree in business and marketing. She also holds a diploma in procurement management from Strathclyde University, Scotland.

Wright credits IBM’s recent successes with Watson to its supply chain and other staff. “Our goal is to use technology to manage disruptions in this fast-moving digital world, and I’m proud that we are really leaders in this area,” she says.