Every year, when AMR Research Inc. (Boston) releases its Supply Chain Top 25 report, IBM Corp. (Armonk, NY) is one of the companies that’s consistently ranked near the top of the list. In fact, Big Blue pioneered the field of supply chain management.

“Our supply chain processes and logistics operations have been recognized as being world-class,” says Jim King, plant manager at IBM’s High-End Server Plant in Poughkeepsie, NY. By applying lean manufacturing principles and supply chain efficiency, the 2008 Assembly Plant of the Year has been able to minimize product complexity. Design for supply chain techniques have been used to create more common parts, resulting in cycle time improvements and cost reduction.

That philosophy has helped IBM Poughkeepsie streamline and fine-tune its use of parts and components. As a result, there are fewer chassis and fewer power supplies on the plant floor than in the past. For instance, assemblers now build computers using seven basic types of chassis rather than the 10 designs that were previously used. In addition, the number of power supplies has been reduced from nine to six.

Engineers are constantly looking at the commonality, modularity and universality of the thousands of parts that are used to assemble complex products such as the System z10 mainframe, the Power 575 supercomputer and the Power 595 UNIX enterprise server. The goal is to reduce complexity and optimize the entire product life cycle, including end-to-end cost.

To minimize the differences between various products, engineers carefully examine things such as the number of different sockets, heat sinks and backplane configurations that are used. They are encouraged to ask questions such as “How can I minimize manufacturing cycle time?” and “How can I use existing inventory in new systems?”

The IBM Poughkeepsie engineering team also uses state-of-art tools to constantly tune its supply chain. “Enterprise resource planning (ERP) systems are tightly integrated with sophisticated and robust floor control function, combining to compliment the streamlined manufacturing processes,” says King.

“The technicians on the line have direct access to determine the appropriate priorities in build direction, and they can drill down to access detailed routings, and furthermore drill to specific operational procedures (integrated on a single desktop) directly at point of build,” explains King. “The engineering specifications, diagrams, and visual JPEG and animated GIF files are initiated right off the routing at time of build.”

That allows King’s team to break in complex engineering changes and incorporate them into the component level of the manufacturing routing. All information is provided in a real-time state, and is essentially on-demand. “It also accommodates processes focused on reverse logistics, and allows reworking and reapply techniques, which result in huge efficiencies and cost savings,” King points out.

“Another unique requirement that the facility is accountable for, which is integrated into our design points, addresses part number serialization,” says King. “Serialization is required for two major reasons: High-dollar part asset tracking and quality-related traceability. Our systems and procedures are architected in such a manner to accurately satisfy these requirements—while the inventory is in factory, as well as it’s genealogy into higher level assemblies, in addition to when the machine-model-serial number of the parent eventually is installed at the customer location.”

To further improve supply chain efficiency, IBM Poughkeepsie recently outsourced its warehouse operations to Geodis Group (Clichy, France). The third-party company has provided similar services for several years at IBM’s production sites in Europe. The agreement involves activities such as shipping, receiving, stocking and logistical management, including assembly line replenishment.