SOURCE: IBM

July 12, 2005 13:44 ET

Leveraging Technology From IBM Research, IBM Announces New Service to Help Small and Mid-Sized Businesses Reduce Inventory Costs, Improve Customer Responsiveness

IBM Express Services for Inventory Management Increases Accuracy and Automates the Inventory Target Setting Process

WHITE PLAINS, NY -- (MARKET WIRE) -- July 12, 2005 -- IBM today unveiled its first inventory management offering for the small and mid-sized business (SMB) market, IBM Express Services for Inventory Management. Using IBM's Express Services, SMBs can reduce costs associated with inventory excesses or shortages by automatically predetermining how much inventory to stock at any given time.

These easy-to-use, easy-to-implement services are being offered as part of IBM's strategy to help SMBs improve flexibility throughout the supply chain. By creating a highly flexible, On Demand environment, SMBs can more quickly respond to changing customer demands. To help further optimize the value of IBM Express Services for Inventory Management, IBM offers an attractive monthly price through IBM Global Financing or a shared-risk/shared-gain approach.

One of the greatest challenges for SMB supply chain organizations is finding the balance between excess inventory and order fulfillment shortfalls. Most inventory targets are established by labor-intensive, rough estimates and do not take into account the dynamic nature of product lifecycles, market demand and customer preferences. When targets miss the mark, companies either bear the costs of excess inventory or face order fulfillment delays that could dissatisfy customers or partners.

To overcome this challenge, many SMBs are adopting enterprise resource planning (ERP) software to improve cross-enterprise synchronization, but lack necessary inventory-focused analytical tools and procedures to maximize the technology's potential. Delivered by IBM Business Consulting Services, IBM's Express Services combines SAP Netweaver Business Intelligence (BI) capabilities with inventory-control algorithms. The combination of these technologies provides SMBs with the analytical tools and processes to drive measurable inventory reduction while upholding or improving responsiveness to customers, partners and suppliers.

IBM Express Services for Inventory Management are currently being used by NIBCO, Inc., a mid-market manufacturer of flow-control products used in residential, commercial, industrial, fire protection and irrigation applications worldwide. IBM Business Consulting Services is currently working with NIBCO's existing SAP Netweaver BI system to improve inventory target accuracy and reduce overall supply chain costs. The company has already realized a significant reduction in corporate computing costs as well as a 13 percent decrease in inventory costs.

"Our supply chain consists of hundreds of customers and suppliers, as well as 12 manufacturing plants and distribution centers. If our inventory targets are inaccurate, or if our supply chain isn't flexible enough to accommodate last minute change orders, the costs can be devastating," said John D. Hall, director, supply chain systems, NIBCO. "IBM's Express Services for Inventory Management have allowed us to reduce our target inventory levels by 13 percent. This is the type of cost reduction that immediately impacts the bottom line."

The services can deliver cost savings to companies at any stage in the SAP adoption cycle -- from those who have already deployed SAP Netweaver BI to those companies who are still considering the adoption of SAP.

"Improved supply chain responsiveness, flexibility and efficiency are crucial to the success of those small and medium-sized businesses that move products. Nowhere can the benefits of a well-orchestrated supply chain be realized more immediately than in inventory management. IBM Express Services for Inventory Management is designed to help these businesses quickly capitalize on their existing technology investments, while reducing inventory costs from day one," said Charles Vianey, SMB supply chain leader, IBM Business Consulting Services.

Benefits provided by IBM Express Services for Inventory Management include:

--  Improved inventory control. Express Services for Inventory Management
    works with SAP Netweaver BI to implement inventory-control algorithms
    developed by IBM Research. The combination of these technologies and
    services drive measurable inventory reduction, while improving
    responsiveness to the changing demands of customers, partners and
    suppliers.
    
--  Increased inventory target accuracy versus rough estimates. This
    solution increases the accuracy rates of inventory targets to avoid costly
    overages or shortfalls. IBM's Express Services for Inventory Management
    makes it easier to monitor inventory performance and calculate appropriate
    targets that help companies avoid costly overages or shortfalls. Through
    tailored needs analysis, IBM consultants help companies establish formal,
    repeatable inventory management processes that enables synchronous, near
    real-time response to demand changes throughout the supply chain.
    Intelligent safety stock calculations also allow companies to stratify and
    prioritize service requirements by product class, so they can make heavier
    investments in critical-needs inventory.
    
--  Minimized costs by leveraging existing technology capabilities. Since
    IBM Business Consulting Services embeds inventory-control algorithms
    directly in SAP Netweaver BI, the solution is easy to install, requiring no
    additional software implementation or license costs. Unlike a standalone
    solution, IBM Express Services for Inventory Management integrates
    seamlessly with the SAP R/3 environment, allowing companies to leverage the
    existing Web interface, security infrastructure and network.
    
--  Fast, significant return on investment and SMB-friendly financing. IBM
    Express Services for Inventory Management offers significant cost savings
    for companies who have already deployed SAP, as well as for those who are
    considering the adoption of SAP. The IBM solution includes a Solution
    Toolkit that makes installation easy and expedites time to value with
    preconfigured algorithms, graphical user interfaces (GUIs), inventory
    management reports and data extractors. To help further maximize value IBM
    offers an attractive monthly price through IBM Global Financing or a shared-
    risk/shared-gain approach.
    

IBM's commitment to supply chain management has resulted in an unmatched solution for SAP clients that aim to further enhance their business performance. Incorporating the award-winning supply chain management work of IBM Research and the IBM Integrated Supply Chain team, IBM Express Services for Inventory Management provides SMBs with the technology, expertise and end-to-end services needed to optimize inventory in their organization.

About IBM

IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. IBM works with companies of all sizes around the world to deploy a full range of IBM technologies. For more information about IBM, visit www.ibm.com.

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