KPIs for measuring IBM service logistics supply chain

Abstract

IBM’s hardware portfolio involves a wide variety of products including laptops, memory chips, processors, servers and other computing equipment. Each of these products is comprised of many components. Typically, a warranty covers these products and its components and provides for replacement in case of any defects. Management of spare parts in IBM is done in large volumes. When a customer informs of a defective component, IBM will use its efficient supply chain to obtain it from Singapore (central warehouse for AP region) and deliver it to the customers’ location for replacement. Service level agreements cover the nuances of the customers’ contract with IBM. Details of the time within which the parts should reach the destination once the customer raises the issue are specified. Since the company works within tight guidelines of delivery and repair, measurement of performance becomes very critical. It is done at regular intervals and at various levels of the company to ensure that deviations are recognized and immediately resolved. Data is collected at various points in the supply chain and monitored to identify problem areas. Using these inputs, the managers can determine the cause of the error and take corrective actions. Information can be provided to the outsourced vendors on the improvements possible in the supply chain to improve its effectiveness. The purpose of this project is to answer a few fundamental questions in performance measurement: 1. Is IBM focusing on the right measurements for identification of problems in its service part supply chain? 2. What is the optimal amount of data required for analysis so that a balance is achieved between volume and comprehensiveness? 3. How can decision?making be made more effective for the managers who monitor the supply chain?