Friday, May 12, 2006

What's better a centralized or decentralized supply chain?

This week I traveled out to Las Vegas for i2 Planet at the Wynn Hotel. I've been to Vegas several times and the Wynn is hands down the place to be. I highly recommend it, though the roulette wheel put a huge dent in my wallet. i2 Planet was well attended with about 1000 attendees, which was a positive sign for both i2 and the industry.

In speaking with several users, reporters, analysts and vendors one of the common themes debated was a centralized or decentralized global supply chain and which is better. My knee jerk reaction was immediately to say a centralized supply chain since its been so successful at IBM and a critical factor in our turnaround. But we are a solutions company, meaning we offer clients a package of hardware, software and services that are all pulled together to solve a problem. So it makes sense for us to streamline our supply chain across all of our divisions and brands. But if I am a company like General Electric for example (just an example, I didn't speak with them), which owns a TV station (NBC) and medical imaging technology, it may not make as much sense since its clients are typically not buying a 30 second commercial and a MRI machine. Maybe indirect procurement could be centralized, since travel and office supplies can be leveraged across the brands, but NBC doesn't have any manufacturing that the medical division relies on, so why pull them into a common supply chain.

After having this conversation several times it just boiled down to the fact that it's not a one size fits all answer, which also fit well into what i2's CEO Michael McGrath was saying about i2's specific industry capabilities and solutions that are tailored to the needs of a company.

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