Front coverIBM Supply Chain TransformationGalen SmithIn partnership withIBM Academy of TechnologyRedpaper

IBM Supply Chain TransformationIn the midst of global disruptions, every element of IBM Supply Chain has been affected. theIBM cognitive supply chain is positioned to win the future by using the exponentialtechnologies that are inherent to our supply chains, and with flexibility, resiliency, andend-to-end visibility. The constant commitment of IBM to building smarter supply chains overthe past decade has primed IBM to quickly and effectively navigate these disruptions andcourse-correct by using cognitive innovation. As a result, IBM Supply Chain teams were ableto deliver exceptional outcomes without client disruption. In addition, this widespread impactinspired numerous new solutions that include exponential technologies that better prepareIBM for future disruptions in constantly changing markets.Impact of the IBM journeyThe IBM cognitive supply chain transformation made IBM an industry leader in supply chainsand has given IBM a competitive advantage, especially during the recent pandemic thatfueled global supply shortages. IBM concentrates on providing business value toorganizations with augmented intelligence that allows IBM Supply Chain professionals tofocus on higher value events and enables them to make smarter decisions. IBM embracesagile transformation and enterprise design to develop cognitive applications with purpose,and consistently promote advocacy throughout IBM Supply Chain.The IBM journey to becoming the first cognitive supply chain has yielded significant benefits.Key indicators such as inventory, cost and cash management, supplier management, clientsatisfaction, employee engagement, and overall capability to enable revenue have allimproved.As a result of this transformation, IBM experienced significant inventory and structural costreductions while maintaining top industry serviceability levels. IBM collaborates with andmanages the supply base much more effectively, which increases data retrieval and ability toderive meaningful insights with speed. From an overall cost standpoint, there is reducedworking capital that drives significant reductions in freight logistics costs. Additionally, IBMimplements new capabilities to protect its clients and revenue from supply chain disruptions.Issues are now understood and solved in minutes instead of hours or days, and IBM is 95%more efficient at tackling reoccurring supply chain challenges.IBM Supply Chain is recognized for this transformation by many resources: Frost & Sullivan: Manufacturer of the year 2018, Large Enterprises Manufacturing Leadership Journal: “Artificial Intelligence (AI) in Supply Chain, Threat orthe Game Changer?” April 2019 Copyright IBM Corp.

Gartner: High Tech Supply Chain Innovator Award 2019 Manufacturing Leadership Council Awards:– Engineering and Production Technology 2019– Supply Chain Leadership 2019– Visionary Leadership 2019– Talent Management Leadership 2020– Artificial Intelligence and Analytics Leadership 2019, 2021– Collaborative Innovation Leadership 2020, 2021– Digital Transformation Leadership 2020, 2021– Enterprise Integration and Technology Leadership 2020, 2021– Next Generation Leadership 2020, 2021IBM Supply Chain transformation journeyIBM runs a complex and global supply chain with strategic manufacturing facilities worldwidethat supports hundreds of thousands of customer deliveries and provides servicemaintenance in over 170 countries. IBM has supply chain workers across more than 40countries. To meet the high configurable product demand, the IBM supply chain operates in ahybrid model of build-to-plan and build-to-order. IBM also collaborates with hundreds ofsuppliers across its global, multitier supplier network.The IBM Supply Chain transformation journey is focused on building a cognitive supply chainthat embraces an agile culture of innovation; invests in our team members' growth andengagement; focuses on clients' needs and successes; and leverages exponentialtechnologies to deliver greater value. We believe in the integration of technologies toenlighten people with actionable insights for quick decision making.The IBM transformation also involves IBM passionate and committed supply chainprofessionals to apply these emerging technologies to operations with both speed and agilityto achieve the goal of relentless reinvention. From piloting new technologies; becoming amore cognitive supply chain; automating core processes; and leveraging a multi-source,resilient supply chain, IBM is committed to the idea of innovate anywhere and use everywheredata insights to improve processes, people, and technology.The first step to building a resilient and cognitive supply chain was to listen, learn, andunderstand key challenges. IBM accomplished this task by using design thinkingmethodologies and analysis of workflows, and also numerous feedback channels to IBMSupply Chain professionals. Leveraging the experience of the practitioners who workconstantly with supply chains was critical to the success in understanding the issuesholistically.2IBM Supply Chain Transformation

Digital transformationThe best supply chains are ones with the highest resiliency; have new ways of working; focuson the right talent; and continually demonstrate the agility to adapt and overcome any kind ofdisruption with quick reaction times. IBM Supply Chain focuses on delivering a better humanexperience by adopting exponential technologies, reimagining how work gets done tooptimize the value change, and driving the best course of action with speed. Traditionalsupply chains are built with structured and defined processes. When you think of resiliency,your workflows must be fluid and flexible, and adjust to changing dynamics.Data platformThe IBM digital supply chain transformation focused on three parallel workstreams thatmoved IBM from harmonized to transparent to the current cognitive supply chain. IBM startedwith integration and harmonization of global processes and data in global IT transactionalsystems (enterprise resource planning (ERP), order management, shop floor control, andothers), which IBM normalized and transformed for its users' needs. Transparency ofinformation with a single point of truth across the supply chain was a vital step in preparingfor analytics and cognitive growth. The IBM platform is based on an IBM Hybrid Cloud usingRed Hat OpenShift to build the Enterprise Container Orchestration Platform. This approachimproved the availability and scalability of the IBM solutions to support flexible migrationwithout impacting mission-critical applications and the time-to-value. Then, IBM extendedbeyond internal data into supply chain networks by using blockchain and Track and TraceInternet of Things (IoT) smart sensors.BlockchainVisibility beyond IBM data is critical to managing end-to-end operations, but security is often abarrier to sharing data. Blockchain enables trust across your network with security andtraceability by delivering transparency to suppliers and logistics providers for key logisticsdata. Customs Declaration, which is powered by IBM Blockchain, shares customs andshipping documents and in-transit information across the network with suppliers, carriers, andbrokers to digitize the data and improve compliance and cycle time through customs, andprovide insights to logistics tracking and estimated time of arrival.Track and Trace IoTTrack and Trace IoT smart sensors are used to monitor shipments and potential in-transitdelays or incidents. These sensors are attached to outbound and inbound shipments toprovide real-time data on GPS location, temperature, tilt, and humidity, and alerts whenconditions are out of tolerance. These insights provide near-real-time updates on customerdeliveries and reduce risk of loss and damage.Augmented intelligenceBeing able to access forecast, order, supply, inventory, and engineering data in real timeacross all manufacturing geographies and functions is critical to the supply chain'sdecision-making process. Using platforms that are powered by IBM Watson and cognitive AIcapabilities, IBM Supply Chain advisors provide instant data insights that IBM global supplychain professionals can use to monitor and assess global and local supply and demandinformation, and part number and component detail.3

There are three main advisor systems: Cognitive Supply Chain Advisor 360 (CSCA360),IBM Test Advisor, and IBM Quality Advisor, which enable IBM Supply Chain to mitigatepotential issues before they impact operations and to adjust workflows as needed.Dynamic supply chain control towerA control tower, which is known as CSCA360, provides a real-time assistant and advisor tosupply chain professionals that gives recommendations about supply in-house, and multitiersuppliers received recommendations about order improvements, inventory levels, and more.Drawing from a data platform of structured and unstructured data within the supply chain andbeyond to multitier suppliers, logistics providers, carriers, and IoT Smart sensors, CSCA360integrates data and insights across all supply chain domains.With a natural language interface, even less experienced users can easily ask questionsacross all supply chain areas, such as engineering, planning, inventory, supply assurance,order management, and global logistics. Worried about a part number? Ask “Show me the part number detail for P/N 1234567" toget complete information about orders, inventory, forecasts, commits, alternates, buyers,and suppliers. Short on a part? Click Supply Advisor for recommendations about how to address thisissue. You can find details about a specific customer order by asking “Where is order numberxyz?” The ability to identify changes is key in a constantly changing world, so you can ask “Howdid the day-to-day order load change for Poughkeepsie site” or “Which orders aredelayed?”Automatic alerts are also generated for delays in transit or out-of-tolerance health indicatorson specific shipments.With the global parts shortage, CSCA360 can quickly assess location disruptions withinminutes by asking “Show me all tier 1 suppliers with MFG locations in Japan” or “Show me allthe MFG locations for component P/N 1234567." Clicking suppliers or part numbers can showthe supply and demand posture to assess for potential shortages, recommendations toaddress shortages, associated impacts to customer orders, where the components are used,and demand for the future. We can even investigate alternative sources of supply acrossavailable distributors.This unique supply chain advisor is available to sales, procurement, and global logistics, andtransparency has replaced information requests with collaborative problem solving. Built onthe expertise of experienced professionals, digitization has democratized the supply chainknowledge for fall, which broadens the skills and view of the end-to-end supply chain.IBM Test AdvisorIBM Test Advisor is a cognitive application that provides repair recommendations withconfidence levels that are derived from historical test data. Using machine learningtechnologies, structured and non-structured data is transformed into insightful solutionsuggestions to help engineers and technicians. IBM Test Advisor improves repair time,reduces misdiagnoses, and improves manufacturing efficiency with shorter test times. Byusing system-assisted training and capturing feedback, it improves both the skills learningcurve and overall product quality.4IBM Supply Chain Transformation

IBM Quality AdvisorIBM Quality Advisor uses business analytics to control intelligently the end-to-end supplychain quality data and predict failure rates, and it provides recommended actions to mitigateor improve the impact of failure rates. IBM Quality Advisor uses IBM Watson HumanComputer Interaction (HCI) learning capabilities to learn continually with inputs from domainexperts. Designed for both data scientists and non-data scientists, IBM Quality Advisorenables the management of the growing complexity of the supply chain while optimizing costand delivering extraordinary productivity improvements.Intelligent workflowsIntelligent workflows capitalize on data platform and AI-driven advisors to enable largertransformation plays with bold process changes. They prompt more cultural andorganizational changes, crossing domains without manual hand-offs. Collaboration is key, butmore importantly it must be digitized to be leveraged effectively across the organization. Withintelligent workflows, processes do not run left to right, but are fluid, and they react to thesituation. They are supported by key data elements to enable rapid decision making. We areenabling supply chain professionals to transform from performing repeatable tasks bydelegating them to “digital workers”, and transforming them into workflow managers with thesupport of AI-driven workflows. The combination of supply chain expertise to drive theorchestration with a digital worker helping with automation speeds up the time to value byenabling faster decisions. In a resilient and flexible supply chain, the workflows must be fluidand adaptable to changes rather than rigid defined processes.IBM Continuous Intelligent Planning is the perfect framework for intelligent workflows.Building continuous collaborative workflows by integrating supply and demand planning withfulfillment allows for quicker responses to the supply position. Intelligent workflows digitizeexisting relationships within the supply chain to provide a new view for demand sensing andconditioning. The electronics industry is experiencing increases in lead times and moresupply constraints than in the past. Intelligent workflows enable you to bring the “ends” of asupply chain together much more quickly through the rapid flow of information.Quantum computingAs the era of quantum advantage approaches, there are already opportunities today forquantum computing to combine with existing advanced technologies to impact dramaticallyhow science and business evolve. IBM Supply Chain has partnered with IBM Quantum in twouse cases to demonstrate the value to supply chain. In both use cases (logistics optimizationand service parts demand forecasting), combining classical models with quantum algorithmsclearly shows the tremendous potential advantages that quantum computing brings to supplychains.5

Industry 4.0 and Digital Twins in manufacturingIndustry 4.0 takes manufacturing beyond using IoT, process automation, productivity, andquality improvements by introducing AI to produce analytics and insights for greater businessvalue. Digital Twins deliver the ability to visually model, simulate, and optimize real-worldassets, operations, and processes to predict behaviors and simulate execution successbefore implementation. By integrating AI, IoT, analytics, and other technologies into factoryoperations, companies can move quickly and adjust to an ever-changing supply chainlandscape.IBM Maximo Visual InspectionAs the complexity of electronic components increases and technology becomes denser,manual inspection of these components might no longer a viable option, and automatedequipment runs the risk of becoming outdated. IBM Maximo Visual Inspection (MVI) is anAI-powered computer vision solution that applies deep learning models to detect qualitydefects in manufacturing. MVI is integrated into each of the IBM manufacturing locations torecognize defects at scale with high accuracy. When using MVI, IBM operations realized up to5x efficiency gains and a 20% reduction in false positives for specific applications.MVI is deployed on assembly lines at the network edge in IBM plants in Canada, Hungary,Mexico, and the United States, and it is being managed by using IBM Hybrid Cloud andIBM Edge Application Manager. This approach allows AI models and edge devices to bemanaged from a central location through the cloud by using an automated process thatreduces software maintenance costs by 20%. AI models are deployed to the edge devices forinferencing to overcome problems that are associated with bandwidth and latency fromrunning inferencing in a data center.IBM Maximo Worker InsightsIBM Maximo Worker Insights (MWI) combines advanced analytics and near-real-time accessto data from cameras, Bluetooth beacons, mobile phones, IoT wearable devices, andenvironmental sensors to manage holistically both facilities and workers. In Poughkeepsie,New York, IBM protects essential workers by using IBM Maximo Visual Insights and 44cameras around the manufacturing and common areas to monitor, detect, and reportadherence to COVID-19 protocols for face masks, social distancing, and entry screening ofan individual's temperature.This solution leans heavily on AI and edge technology, which demonstrates the power of anIBM Hybrid Cloud solution. During our implementation, we learned that a robust data privacyplan and security network architecture are required to protect personal information. Bydesigning the solution on the edge by using MVI to process and analyze images, immediatelydiscard them, and send out alerts to the MWI platform, we were able to drive value withouthuman interaction and without saving personal data. This solution made adherence to privacypolicy much easier and more secure.6IBM Supply Chain Transformation

IBM Augmented Reality - Remote Assist (Poughkeepsie, New York;Guadalajara, Mexico; Vac, Hungary)As part of Digital Twins in manufacturing, IBM Augmented Reality (AR) is used to supportmaintenance and troubleshooting in manufacturing, which reduces employees' time tocomplete tasks, and reduces errors and the need for service calls. When a manufacturingtechnician needs expert assistance, they communicate by using a mobile app with a remoteexpert through live audio and video streams from any geography or time zone. When thetechnician directs their mobile device at the physical hardware, the expert can evaluate theproblem and give step by step visual instructions to the technicians by overlaying real-timeannotations of types of actions and text. The annotations maintain their 3D positions while thetechnicians move around the scene, comprehensively conveying the expert's instructions.Remote Assist powered by AR results in faster response times and resolution times for issuesthat are encountered in manufacturing.IBM Acoustic InsightsCompetition continues to drive the need for improved quality and throughput. Someconditions are more challenging than others, which creates opportunities. At IBM wafer dicingoperations in Bromont, Canada, we use a 1 mm diamond dicing blade rotating at 45,000RPM. The blade dices the 300 mm wafer in a wet environment, and this water prevents theusage of optics to check the blade condition. By using a microphone, we can train AI torecognize sounds for indicative or imminent failure. So, we can monitor the blade condition inreal time and stop the machine before a failure occurs. This control maximizes the lifespan ofthe blade and prevents damage to the expensive wafer.Collaborative robotsRobotics are commonly used to automate manual tasks. Integrating artificial intelligence (AI)with a collaborative robot (cobot) takes robotics a step further. In the server assembly processat the IBM location in Guadalajara, Mexico, processor sockets are inspected for any physicaldamage before they are installed in the server, which requires high precision andrepeatability. We elevated the automation capability by integrating cobots with MVI. Theserver is first inspected by MVI before the robotics automation starts in the physical assemblyprocess. This integration of AI with robotics automation amplifies the benefits by maintainingconsistency in the quality inspection process and precision in the assembly process. Bydelegating the repetitive and precise movements to the robotic arm, employees canconcentrate on complex and higher value tasks. Cobots are also used in D-DIMM assemblyautomation and Nearstack Connectors assembly automation.IoTWith operation technology (OT) and information technology (IT) converging, IoT is emergingas a new, innovative concept for smart manufacturing. Integration of IoT with AI-basedtechnologies, including analytics, big data, and cognitive manufacturing, help save time, labor,costs, maintenance, and upkeep. At the IBM location in Vac, Hungary, IoT sensors are builtinto storage racks, which enable real-time information about the machines' storage andretrieval to be captured. The IoT data and machine configuration are analyzed for occupancytrends. Derived insights are used to augment technicians' decision-making about the optimalstorage arrangement.7

People transformationOur supply chain professionals are our most important resource, and we are dedicated toembracing a growth mindset and a culture that empowers employees to be creative risktakers, allowing them to innovate anywhere and use everywhere. Leveraging our currenttalent through upskilling is a key success factor to meet the needs of a digital future. The rolesof data scientist, citizen developer and automator, and workflow manager enable our team tomaster new technologies, design and train AI and automation, and create intelligentworkflows.The rapid change of technology and business challenges demands that IBM Supply Chainroles evolve, and so has our management approach. We are committed to agile thinking andservant leadership and supporting our multi-disciplinary teams with a culture that is based oncollaboration, innovation, diversity, inclusion, and trust. We instilled IBM Enterprise DesignThinking into our new ways of working, focusing on user experience and needs, andsupporting bottom-up transformation with executive governance for guidance and priorities.Our teams use AI for faster insights into the end-to-end supply chain data for rapidcollaboration and decision-making. With intelligent workflows, our supply chain professionalscan transform from performing tasks to orchestrating the integration of data, events, andcollaboration to optimize the supply chain.Global supply chain challenges gave us the incentive to digitize and democratize our supplychain expertise, capturing the tribal knowledge of our experienced professionals, and makingit easier for new talent to learn and for others to broaden their knowledge. Continualcommunication and emphasis on recommended learning through role-based skill paths, skillsand engagement teams, and joint learning offerings with universities provide ourprofessionals with opportunities to fulfill their growth roadmap. The ways in which our teameffectively handle the daily challenges, and how they adapt to new ways of working greatlyenhance our resiliency and agility.IBM Supply Chain support with external clientsWe also support client engagements with our subject matter experts (SMEs) by using skillsthat we obtained during our transformation. This action has benefited IBM clients, IBMproducts, sales, and employee growth. These benefits were not obvious during our initialengagements, but over time they became a part of our strategy and business plan.IBM Systems Supply Chain uses our offerings in our supply chain, often as IBM first client. Indoing so, we can provide real-time feedback to the developers, bring value to our supplychain, provide a reference for IBM Sales, and build skills for client engagements. Our SMEsare excited to accept these new challenges and assignments where they can improve theirskills and technical vitality. Our strategic direction uses intelligent workflows, supply chainthought leaders, and an “innovate anywhere” approach (Figure 1 on page 9).Through client engagements, our team develops new concepts, digitized workflows, andadvocates for the client for product enhancements. We can apply these same enhancementsin our own supply chain solutions.Considering all these factors, our clients see a faster time to value in working with ourexperienced practitioners, whose primary responsibilities support the operations of a globalsupply chain.8IBM Supply Chain Transformation

Figure 1 Supply Chain North-Star to guide the team toward strategic directionWhat is nextOne of the greatest opportunities we have is to leverage new technologies, data, and ourpeople to reimagine the future of supply chain, where end-to-end visibility and intelligentworkloads power agility, adaptability, and resiliency.Managing through a pandemic and global shortages has been a test, and IBM is emergingwith the proof that IBM Supply Chain is on the right transformation journey. Exponentialtechnologies are inherent to building supply chains with flexibility, resiliency, and end-to-endvisibility. Resilient supply chains must be equipped to adjust quickly and efficiently operationsin response to rapid changes. IBM further defines intelligent workflows within IBM SupplyChain and reimagines supply chain processes to be end-to-end and cross-functional,underpinned by a flexible and resilient supply chain. IBM continues to serve as a leader in thesupply chain space by providing essential supply chain services both internally and in themarket.AuthorsThis paper was produced by a team of specialists from around the world working at IBMRedbooks, Poughkeepsie Center.Galen Smith is a Supply Chain Transformation Leader working in IBM Supply Chain. Galen isan accelerator of transformation in the IBM AI-enabled supply chain, where he uses designthinking, agile, and cutting-edge technology.Thanks to the following people for their contributions to this project:Giovanna Beneti, TS Goh, Matthias Graefe, Bill Green, Charisse Lu, Paul Poh, DebbiePowell, Christine Ouyang, Julian Tan, Dan Thomas, Feng Xue, Susan Zichittella9

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IBM Quality Advisor uses business analytics to control intelligently the end-to-end supply chain quality data and predict failure rates, and it provides recommended actions to mitigate or improve the impact of failure rates. IBM Qualit