"One on One: An Interview with Kathleen R. Fuller" By Jill Schildhouse, Spring 2005, Vol. 41, No. 2, p. 2
Journal of Supply Chain Management Copyright © May 2005, by the Institute for Supply Management, Inc.
Interview by Jill Schildhouse, writer for Inside Supply Management®
Kathleen R. Fuller is vice president, Global Procurement Services and Operations, Integrated Supply Chain, for IBM Corporation. During her 20-year career with IBM, which began with earning her MBA from Syracuse University, she has held various supply chain assignments. Fuller began with an electronic component procurement team in a planning/forecasting role and held various positions in electronic component buying, planning, inventory control and distribution. In 1994, she joined the procurement corporate staff where she handled the procurement training program and became part of the ombudsperson team. Since 2000, Fuller has held the vice president positions of General Procurement Strategic Sourcing; Integrated Supply Chain, SystemsProduction Procurement; and Business Consulting Services Procurement. In 2004, she earned her current title and became responsible for the planning and execution support for IBM's services and software clients. Fuller is on the Board of Trustees for CAPS Research.
The Journal of Supply Chain Management: In October 2002, IBM underwent a supply chain transformation. Describe IBM's supply chain prior to the transformation.
Kathleen R. Fuller: Although we had a "supply chain" prior to our transformation, we were very brand-, unit and site-specific. We were not integrated, not one IBM working together. For example, we might have had our PC and server businesses, two different types of hardware, and those teams would never really even talk to each other. They kept their heads down, working at their site, and they would be supporting whatever role they played in the supply chain. But they never thought about supply chain as a business model and a thinking process. It wasn't a proactive way of determining how we could better support our end client, how we could be more efficient, faster, and deliver more of a quality solution in the end.
The Journal: Why was there a need for IBM to transform its supply chain activities?
Fuller: To remain competitive and be in line with IBM's overall business strategy, we decided that we needed to drive some very dramatic change and form an integrated global supply chain. Our CEO and chairman, Sam Palmisano, laid out a strategy for IBM several years ago called On Demand. It's a strategy not only as to the solutions that we sell in the marketplace but also how we transformed ourselves within IBM to be an on-demand company that is flexible and resilient to meet the dynamic demands of the marketplace. One of the very first areas we focused on was supply chain. We looked at all those very functionally competent silos that made up the pieces of the supply chain and we said we needed to think horizontally about integrating in a smooth, seamless transition across that supply chain, and as one supply chain that covers all brands, including services, software and hardware.
The Journal: What was the first step taken to make the transformation?
Fuller: The first step was communication. We did a lot to get buy-in from management and employees at all levels. The Integrated Supply Chain (ISC) held a meeting where we assembled the senior leaders from around the world and had a very focused session where we talked about the supply chain and the changes we were going to drive. And then operationally, we discussed how we will ensure that we are delivering to IBM day-in and day-out all of the key objectives that we need. We held sessions around the world and talked about what the supply chain meant, its key objectives, and how to communicate downwards and upwards. We did a lot face-to-face so they could understand how we could work together and how to solicit their ideas for improvement. It was a senior executive-driven message, but at a grassroots level to get it out.
The Journal: After the initial communication, what were some of the action steps?
Fuller: We put together some specific objectives that the ISC had to meet. These would dramatically improve how we operated and what we delivered to IBM, making the supply chain truly accountable to the business. It wasn't just about saving money. It was about delivering other key objectives that took us a step higher in terms of the benefits that we would deliver to IBM, its external clients, its sales force, the products and services that IBM delivers, and to the shareholders.
The Journal: How does IBM ensure that this program is running correctly and efficiently?
Fuller: We set up several key teams that measure us against specific objectives. One ISC team meets on an ongoing basis to make sure that the imperatives are still relevant, to measure how we are doing against the imperatives, how they need to be modified, and what else we need to do from a strategic point of view to stay ahead of the game. A second team focuses on looking at the talent that we have in the organization and building a group of people who are not just functional, but who are competent at thinking horizontally and have a broadbased set of ISC experience, skills and capabilities. The team is focused on education and training, job rotations and career roadmaps.
The Journal: How has this transformation changed the supply manager's role?
Fuller: Rather than me just thinking of myself as a procurement professional responsible for delivering the procurement objective, this new organization enables me to look to the left and right and realize that I am also part of the Integrated Supply Chain. And in a much more broad-based way, I have to think about my actions and my team's actions on the rest of the supply chain, on the rest of our ability to deliver against the ISC-wide objectives. Also, we now experience a sharing of the talent pool. We take some key talent and move them into various roles and encourage them to have a career roadmap that gives them multiple opportunities. It is common and expected to see people cross functional lines. It has to do with a broad-based way of thinking that says we are going to "think ISC," not within the functions that we have within the ISC. The team now thinks in terms of their career roadmap: I'm a professional in supply chain and will gain multiple experiences so I can be very knowledgeable about what it means to be an across-the-board ISC professional.
The Journal: How has this transformation improved IBM?
Fuller: Our ISC is made up of 19,000 employees around the world, in 100 locations in 61 countries. We have 13 factories in nine countries and are accountable for $40 billion, or 50 percent of IBM's cost and expense. In 2003, we reduced IBM's cost by $7 billion, which averaged $27 million every business day in cost reduction. At the end of 2003, the ISC had reduced IBM's inventory to its lowest level in 30 years. By speeding up inventory turns, and improving client collection and supplier payment terms, IBM's supply chain generated more than $700 million of cash in 2003. We support 45,000 business partners worldwide in the supply chain, and 33,000 suppliers are connected to IBM.
When we announced the formation of the On Demand supply chain two years ago, none of us really knew what it meant or how it would be different for us. Now it's a very different paradigm that we're in today. Sometimes when you're in the thick of it, you don't realize how extensive it really is. And we're not done — we still have a lot more that we want to do to continue our level of integration. We are helping to deliver that competitive advantage to IBM, not only by making us more efficient, but by sharing everything we have learned with our clients through our consulting practice. How many consulting companies can say they implemented a supply chain responsible for 78,000 products, with over 3 million configurations? None.