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IBM US revamps PC supply chain

IBM US revamps PC supply chain

NEW YORK - IBM in the US has updated a program designed to streamline its supply chain management, reducing inventory and speeding delivery of PC products to customers.

The Advanced Fulfilment Initiative (AFI), effective immediately, replaces the IBM Authorised Assembler Program (AAP), announced two years ago and designed to simplify how IBM PCs are built, customised and delivered. (IBM Australia told ARN these changes do not apply in Australia.)The enhancements, plus incentives to resellers in the form of discounts and more flexible leasing terms, are incremental, according to industry analysts. But they are considered necessary if IBM is to compete with its leading PC rivals, including Compaq, Dell, and Hewlett-Packard, they said. These companies all have some form of build-to-order programs in the US.

AFI seeks to improve the supply and fulfilment chain - from product design and parts procurement to forecasting, inventory management, assembly, shipping and delivery, according to IBM. The goal is to permanently reduce both piece-part and finished product inventories at IBM and reseller locations, lowering costs and enabling the savings to be passed on to customers.

New focus

IBM's new goal in the US is to increase reseller inventory turns to 24 annually, and, beginning with the recently announced IBM PC 300PL, it is offering resellers that agree to carry just two weeks of inventory a 2.5 per cent pricing rebate.

In addition, in order to streamline channel assembly, IBM has begun designing modular products with "snap-in" simplicity - for example, the NLX-style motherboard - as well as fewer screws and a more compact design. These new design features will be included in every new PC, IBM said.

IBM is also working with many of its parts suppliers to ship directly to its reseller partners - cutting out an extra step in the process, reducing costs and accelerating the pace at which products can be made available.

Meanwhile, in Germany, IBM has signed Munich-based PC Macrotron to custom assemble IBM PCs. The goal is to reduce inventories at both IBM and at reseller locations to lower costs. Macrotron will receive minimum configuration PCs from IBM's facility in Greenock, Scotland. By the end of next year IBM aims to sell up to 35 per cent of the PCs it ships in Germany, Switzerland and Austria through the program.


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