LINKING THE GLOBAL SUPPLY CHAIN - Enterprise Business - AT&T

NetworkingViews® 

Solutions for a 24/7 World Issue 8 

LINKING 

THE GLOBAL 

SUPPLY CHAIN 

INSIDE 

Strengthening 

Collaboration with 

Partners 

Simplifying Complexity: 

The Role of IP 

General Motors’ IT 

Transformation 

PLUS 

The Purchasing Function 

of the Future

IN THIS ISSUE 

Increasingly, businesses are viewing convergence 

as critically important in achieving their strategic 

IT and business goals. According to an AT&T and 

Economist Intelligence Unit global survey, most 

expect that converged networks will enable 

better collaboration with customers, suppliers 

and partners. 

In this issue of Networking Views, we examine 

how robust IP networking delivers the 

responsiveness and flexibility needed for 

seamless collaboration across the supply chain. 

IP can streamline operations and foster shared 

responsibility among participants for managing 

supply and demand. The automotive industry is 

taking particular advantage of IP networks, as 

partners move toward increased integration and 

collaboration. Reliance on IP will grow as 

demand for global integration accelerates. 

If you have any comments about the articles 

presented or have suggestions for topics for 

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email them to networkingviews@att.com. 

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purpose are made by AT&T with respect to such information. 

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ON THE COVER 

Advanced IP applications 

enable closer collaboration 

with partners 

EXPERT PERSPECTIVE 

Simplifying Complexity: 

The Role of IP 

Includes five key action points 

TECHNOLOGY VIEW 

eBonding Bridges 

Customer Relationships 

Systems integration helps IBM 

improve its customers’ experience 

MARKET VIEW 

Synchronizing Across 

the Chain 

Insights on efficient and profitable 

supplier relationships 

CUSTOMER INSIGHT 

CIO Drives GM’s 

Global Charge 

How Ralph Szygenda transformed the 

company’s IT organization 

GLOBAL PULSE 

The Challenges of 

Rapid Acceleration 

Executive views on managing a global 

supply chain 

2 

Networking Views 

Issue 8

C OVER 

C S TORY 

OVER S TORY 

LINKING 

THE 

GLOBAL SUPPLY CHAIN 

Written in cooperation with the Economist Intelligence Unit 

Strengthening collaboration with supply chain 

partners can transform business competitiveness. 

By using technology to raise their level of communication 

with partners and extend their reach, 

companies can wield their global supply chains to 

become more responsive to customer needs. 

Supply chain relationships have evolved 

dramatically since the days of simple 

order fulfilment. Top-rated global 

companies, from aerospace to financial 

services, sustain competitive advantage 

by continuously innovating how they 

interact with their supply chain partners. 

To work, supply chain improvement must 

be three-dimensional, covering not only 

management’s acknowledgement of the 

benefits of close-knit collaboration with 

their suppliers, but also supply chain 

processes and the technologies 

underlying them. 

Achieving this is no easy task in 

today’s environment. As business 

models evolve, supply chains are 

extending to include multiple partners 

outside the immediate organizational 

model, making basic management of 

the supply chain tougher. This becomes 

all the more complex with global M&A, 

in which separate supply chains may 

have to be integrated on a regular basis. 

Large companies’ supplier networks can 

number literally tens of thousands of 

firms. Further pressure is added by 

expectations for delivery, which are 

shrinking from weeks to days, if not 

hours, in some instances. Last but not 

least, partners are increasingly becoming 

dispersed geographically. 

Yet, while supply chains grow more 

complex with globalization, competitive 

imperatives are demanding quicker 

speed to market, continuous innovation 

and the flexibility to react to change. 

Closer collaboration with partners, 

supported by advanced IP applications, 

is essential to meet the challenges 

head on. 

COMBINING STRENGTHS 

Procter & Gamble exemplifies today’s 

supply chain challenges. It has 100,000 

suppliers around the world since its 

acquisition of Gillette, and it now 

expects its supplier base to provide 

around a quarter of its innovations. The 

company has found that the key to such 

a collaborative network is its deep 

strategic relationships with suppliers, 

supported by portals on an IP network. 

Gone are the days of supply chain 

partners placing and taking orders, then 

hoping for the best. Linking the supply 

chain to the end customer is the way 

forward. “We start at the store shelf and 

work our way back,” says Rick Ciccone, 

Procter & Gamble’s global supply chain 

operations director. “Communication 

with the supplier network is critical. 

Having a demand-driven supply chain 

means that agility is becoming a basic 

requirement and no longer a ‘nice 

to have’.” 

Globalization also means that supply 

chains require visibility of operations 

across numerous and far-flung suppliers; 

the intensification of competition, 

meanwhile, requires that supply chain 

operations be managed on a real-time 

basis, with decisions affecting global 

deliveries often having to be made 

instantaneously. 

THE ROLE OF IP NETWORKING 

Robust IT and communications networks 

are central to achieving this level of 

visibility and responsiveness. For 

instance, marketing departments need 

to know swiftly how a change in product 

pricing will impact partners down the 

line. “IP helps with all-around 

continued on page 12 

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Issue 8

E XPERT 

P ERSPECTIVE 

SIMPLIFYING 

COMPLEXITY 

:The Role of IP 


Companies have come a long way in establishing global supply chains and improving 

their relationships with partners. But certain key planning issues still need to be 

addressed, according to Teresa Metty, chair of the Institute of Supply Management and 

former SVP and general manager of supply chain for Motorola Mobile Devices. 

For many companies, the supply chain will be their key 

competitive weapon in the future. Already, firms are 

tapping the skills of their supply partners and involving 

them closely in their processes for serving customers 

better. Good communication, supported by sound 

networking technology, is crucial in achieving this. 

However, the recipe for improving supply chain 

effectiveness in this way has proven elusive for 

most firms. 

“As I talk to different companies around the world, 

there’s one thing that plagues all of them,” says Metty. “It 

keeps coming back to complexity — in products and the 

product portfolio. It’s not something that’s easy to attack.” 

For example, two different vendors may produce a laptop 

PC with similar specifications, but one has three times the 

number of parts that the other has. That could mean that 

they deal with more than double the number of suppliers. 

Where tackled thoroughly, complexity is reduced, 

forging the way forward for the supply chain. At Motorola, 

Metty not only cut the number of cell phone models by 

half, but also reduced the number of suppliers by twothirds. 

A simplified, standards-based supply chain saves 

costs and affords greater “elasticity,” she says. It supports 

flexibility and innovation and reduces time to market. 

Reports suggest that during Metty’s tenure at Motorola, 

$2.4 billion was saved in supply chain costs. 

MEASURING COMPLEXITY 

To reduce complexity, organizations must gain a firm 

handle on metrics. “A constant focus on metrics in the 

product lifecycle should become a way of life for 

companies.” What Metty calls a “complexity index” can 

help keep tabs. This compares the complexity of the 

components in a firm’s products with those of 

a competitor in 10 specified areas. The product then is 

given a rating; for example, “best in class” or just 

the opposite. 

“Fundamental changes take place when companies 

introduce metrics and the discipline of standards,” says 

Metty. Where possible, she advocates reusing designs 

and components from product to product. This practice 

can shorten the time to market and also cut down 

on unused inventory by making further use of a product’s 

components when it reaches the end of its life. Metty 

advocates linking product information databases into a 

single, global data warehouse showing components and 

items in products. 

Efforts to reduce complexity could be made difficult by 

increasing customer demands for product customization. 

Here too, however, Metty believes that simplification of 

the manufacturing process will help. In a process termed 

“postponement,” the product remains as un-customized 

as possible, as close as possible to the point-of-sale. 

Products are designed so that unique features can be 

added shortly prior to sale. 

TECHNOLOGY TAKES IT FORWARD 

“Technology kicks in once you’ve got the elasticity in 

the supply chain,” she says. “The notion of real 

collaboration in the supply chain can only come about 

when organizations have their arms around complexity.” 

Only then does what Metty terms “collaboration on 

demand” become feasible. In this type of supply chain, 

“When someone buys a plasma TV in Detroit, Michigan, 

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Issue 8

the whole supply chain knows about it 

— including the semiconductor 

manufacturer in Taiwan.” The extended 

system then goes to work on the supply 

chain’s behalf. 

Today, there are too many hand-offs 

in the process, Metty believes. “Ondemand, 

global solutions to integrate 

the whole supply chain network from 

end users to suppliers will be winners,” 

she says. They will free up “thousands of 

hours of planning.” Ultimately, the role 

of the IP-enabled supply network is to 

move beyond manufacturing and 

sourcing to customer connectivity. 

DRAWING THE LINE 

Automated data sharing with partners is 

integral to supply chain elasticity, but 

companies must determine exactly what 

information is to be shared. Metty has 

found that companies frequently 

divulge sensitive price information that 

can harm them later. For example, 

through data sharing systems, outsourcers 

often pass on information to 

contract manufacturers about the 

discounts that they have received from 

suppliers. Once this happens, the 

contract manufacturer tends to lose the 

incentive to negotiate a better discount. 

Worse still, the pricing data may 

be leaked to competitors. “Many 

outsourcing relationships slowly unwind 

as a result,” Metty says. Collaboration 

may involve information sharing at 

certain levels — it does not mean 

“revealing all.” 

While focusing attention on the more 

obvious aspects of supply chain 

management, companies also may miss 

out on more subtle usage of 

applications that nevertheless can save 

significant overhead. For example, 

sophisticated applications are now 

available to advise employees on which 

supplier to use for anything from 

forwarding a package overnight to 

arranging a conference call. Taken 

in isolation, these categories of cost 

represent low expenditure, but collectively, 

they can have a big impact, 

since they affect the majority 

of employees. 

CLOSER TIES 

Metty believes that companies’ collaboration 

with supply chain partners 

will deepen and widen, but that to 

strengthen the value of communication 

between partners, accurate, actionable 

data must be available via the network. 

For dispersed global partnerships, Web 

and videoconferencing tools can be 

backed by online data models. But 

Metty points out that “not everybody 

needs to be involved all the time.” 

Companies will need to work out the 

level of collaboration required with 

different partners, which may vary 

according to not only their overall 

importance but the role that they play 

at particular times in the process. 

Once the activities are integrated 

satisfactorily, in a streamlined environment, 

the real measure of success will 

be how well they can be coordinated 

across the supply network to both 

create value for consumers and increase 

profitability. ❑ 

PREPARING the Supply Chain 

FOR THE FUTURE 

Theresa Metty, chair of the Institute of Supply Management, 

recommends these action points. 

■ 

■ 

■ 

■ 

■ 

Simplify & Standardize. A good place to start in enabling a 

smoother flow of goods is to tackle product complexity. 

Designs should be geared towards a reduction in components 

and usage of standardized parts. 

Measure Complexity. Implement metrics to check on levels of 

complexity, and benchmark against competitors. Aim for a 

single global warehouse of component data. 

Exploit the IP Network. The IP network is poised to support 

“collaboration on demand.” Consumer purchases are signaled 

down the supply chain, triggering a response from the furthest 

reaches. 

Apply the Full Range of Technology. Advanced modeling 

tools are available to allow sourcing managers to ask “What 

if?” for hundreds of variables. Applications can instruct the 

workforce about which current suppliers to use. 

Determine What Data is to Be Shared and What is Not. IT 

systems and the information sharing that they enable must be 

used with discretion to avoid giving away sensitive information 

to partners. 

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Issue 8

T ECHNOLOGY 

V IEW 

eBonding 

BRIDGES 

CUSTOMER 

RELATIONSHIPS 

IBM Global Services did not become a leading 

IT services company by leaving customer care 

to chance. Through close collaboration with 

AT&T, IBM is able to obtain detailed data to 

stay on the forefront of network performance 

and service quality. 

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Issue 8

IBM Global Services provides IT 

outsourcing, Web hosting, and consulting 

and systems integration services, with a 

team of nearly 200,000 professionals 

deployed in more than 160 countries. It 

takes focused effort to deliver customerpleasing 

service. Many of IBM’s Global 

Services customers are industry leaders 

and formidable competitors in their own 

markets who expect technology partners 

to deliver seamless service. 

To meet this need, IBM and AT&T 

have taken collaboration an important 

step further. The two companies 

have integrated their infrastructure 

management systems in ways that erase 

the distance between them. “The network 

management tools we offer customers are 

powerful, collaborative tools that simplify 

and improve our customer’s experience,” 

states Robert Sloan, AT&T vice president 

for eSales and Service. “They give 

companies like IBM visibility and control 

into their network.” 

Through IBM’s Manager of Managers 

integration and AT&T eBonding, IBM and 

AT&T have linked their event ticketing 

systems so tightly that IBM Global Services 

support staff see alerts and updates about 

the AT&T network at the very same 

moment when they are seen and input by 

the AT&T technical staff. “We are 

essentially bonding our systems together 

to share information — the key word is 

collaboration,” says IBM Program Manager 

Randall Wade. 

Both equipped with powerful systems 

for monitoring and managing IT system 

performance, IBM and AT&T decided three 

years ago that integrating information in 

the systems could pay off for AT&T and 

IBM customers. The target was what IBM 

Program Manager Larry Pincus calls 

“elimination of swivel chair” activity. 

Before systems integration, IBM helpdesk 

agents might enter data on a network 

issue into the IBM ticketing system, then 

“swivel” and contact AT&T about the issue. 

Or it might start with AT&T. Either way, 

there was duplicate effort. 

“We would go into our ticketing system, 

write up all the information, customer 

location data, what we perceive the 

problem to be,” says Wade, “then pick up 

the phone, call AT&T and transfer all that 

information back and forth.” 

BETTER SERVICE IN LESS TIME 

Determined to find a better way, the two 

companies created an interchange 

or integration that translates information 

between the AT&T and IBM 

ticketing systems. 

“We are 

essentially 

bonding our 

systems together 

to share 

information — 

the key word is 

collaboration.” 

- Randall Wade 

“You have two ticketing systems that are 

essentially different,” says Pincus. “We 

leveraged an IBM central hub to pull in the 

information that is required and retranslate 

it so that it makes sense within the 

partner’s system.” 

“We have created a joint virtual ticketing 

system,” adds Wade. “We now look into 

the IBM system and see what AT&T is 

doing, even their real-time updates, and 

vice versa. It is a great collaboration that 

saves us both time and improves the 

quality of service to our customers. It really 

speeds up our ability to perform to service 

level agreements (SLAs).” 

By eliminating duplicate data entry 

and automating updates, AT&T eBonding 

reduces the time that IBM and AT&T 

staffers spend handling those tasks 

by phone. 

While time is money, more importantly, 

service quality improves. AT&T eBonding 

helps the companies shorten the cycle 

time in finding and solving problems in 

complex systems. Speed makes it easier to 

meet SLAs and keep customers from 

feeling any impact. 

“If a router goes down, it can affect a 

number of servers across the business 

enterprise,” says Pincus. “The Holy Grail 

here is to understand the business impact 

and respond accordingly. With AT&T 

immediately giving feedback, we are able 

to identify the root cause quickly and 

eliminate time spent trying to troubleshoot 

a non-existing problem.” 

Automating data transfer also gives IBM 

a real-time, “line of sight” view of 

emerging situations that gives customers 

increased confidence. “This innovative 

technology allows both companies to be 

proactive and responsive in meeting 

customer needs,” states Sloan. 

“This is the edge that we have over 

other companies and services — this close 

relationship,” says Wade. “We react faster 

in managing problems.” 

“I think it's a place where everyone 

sooner or later has to go,” says Pincus. 

“Both AT&T and IBM are proud of the fact 

that we are blazing trails here.” 

It’s a perfect example of what IBM 

Chairman of the Board and CEO 

Samuel Palmisano terms “innovation 

that matters.” ❑ 

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Issue 8

M ARKET 

V IEW 

SYNCHRONIZING 

ACROSS THE CHAIN 


Suppliers operating lower down the 

chain usually have to adapt their 

systems and processes to integrate 

better with their business customers 

and provide a high level of service. 

With the right framework in place, 

they then are able to grow with their 

customers. Large customers can 

improve collaboration by linking suppliers 

with their own real-time data. 

Both sides win when the supplier is fully 

in the picture. 

ACCELERATING INTERCHANGE 

Supply chains in the automotive 

industry not only have extremely long 

histories, but they also boast highly 

developed systems of information 

exchange between partners. Correct 

order fulfilment typically runs today at 

more than 95%, and research 

repeatedly has shown that the best 

suppliers are those who are focused on 

integration with partners and sharing 

data across the supply chain. 

Car makers (original equipment 

manufacturers, or OEMs) and their tier 1 

suppliers increasingly are adopting 

collaborative product development 

practices and getting suppliers to share 

in the design process, partly with the 

use of product lifecycle management 

applications on IP networks. 

One such supplier, the French firm 

Faurecia, has 60,000 employees and 

supplies each of the largest car makers, 

including General Motors, BMW and 

Toyota. Half of its 160 sites operate in 

just-in-time mode. Faurecia designs, 

develops and manufactures six types of 

components: seats, doors, cockpits 

(including dashboards and steering 

columns), acoustic trim (sound reduction), 

front ends (including bumpers 

and headlights) and exhaust systems. 

Faurecia has used its experience in 

interacting with car makers to respond 

rapidly to new customer requirements, 

lately by expanding into the U.S. market. 

Historically, 80% of its sales have been 

in Europe. But recently, Faurecia began 

supplying parts for DaimlerChrysler’s 

Sebring model to its U.S. plant 

in Michigan. 

OPENING CHANNELS OF 

COMMUNICATION 

According to Phillippe Lallemande, 

director of the firm’s front-end division 

in the U.S., when striking up a new 

customer relationship, Faurecia reviews 

the full range of hardware and software 

equipment that will be needed, 

including applications and their 

customization, and the human 

resources that will be required. The IT 

teams of the two companies work 

closely together, starting from how 

Faurecia will receive an order on the IP 

network. “Much of the system is our 

own choice,” he says. “We carry over 

existing solutions to new customers,” 

especially the company’s 

environmental, planning and regulatory 

(EPR) compliance systems. When it 

comes to establishing the electronic 

data interface (EDI), however, the 

customer sets out the requirements, as 

in the case of DaimlerChrysler. 

Additionally, processes for securing 

information and contingencies for 

business continuity and recovery have 

to be made watertight. “Every single 

communication is secured,” says 

Lallemande. “We do a risk assessment 

on every new operation.” Everything is 

tested before launch, and all aspects 

are checked once every two months, 

he adds. 

For day-to-day operations, industrystandard 

EDI communications are used, 

although Lallemande says that “details 

vary from time to time.” Likewise, EDI is 

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Issue 8

Often, the supply chain is viewed from the perspective of the large 

customer downwards. But what are the issues and requirements for other 

partners in the chain — regardless of their size? What are the ingredients 

for efficient operation and synchronization in today’s environment? 

used for communicating with Faurecia’s 

own suppliers, who may number up to 50 

for some components, such as the 

cockpit unit. “The objective is to keep 

stocks to the minimum,” he explains. 

That’s no small task when a cockpit may 

have more than 1,000 different 

combinations and must be built and 

delivered within five hours. The module 

must be at the Chrysler factory, four 

miles away, before the main car body 

arrives. Five hundred modules, including 

cockpits and front ends, are made every 

day, 240 days per year, at the just-in-time 

plant in Michigan. “There is no margin of 

error,” says Lallemande. 

Bar coding is fundamental to getting 

the right part to the right place on time. 

So far, there have been no quality defects 

in deliveries to Chrysler from the plant. 

“IT is key — so is an excellent labor force,” 

says Lallemande. 

TOOLS FOR A BETTER RIDE 

The automotive industry has a range of 

software tools at its disposal to link up 

processes with those of large customers 

or suppliers. For example, the packaged 

application Epicor for Automotive lets 

users assign business rules that define 

how the system handles transactions in 

response to various parameters and 

conditions. These include procedures to 

map process flows to transactions to 

reduce steps that do not add value. XML, 

EDI and database translation engines, 

coupled with flexible data integration, 

aid collaboration between trading 

partners in the supply chain. Furthermore, 

the system inputs requirements 

into delivery schedules, which then can 

be adjusted to conform to the specific 

requirements of suppliers. 

First, however, the rules of engagement 

must be established. Like most 

industries, the automotive world has 

specialist niche areas. These are likely to 

be less developed when it comes to 

automated supply chain connections for 

collaboration. The California-based 

Specialty Equipment Market Association 

(SEMA), which represents 5,700 members 

of the specialty car parts industry, 

presently is working on techniques for 

improving data sharing processes among 

members. Standards are crucial. 

“There’s a dramatic improvement if 

suppliers can reduce the unique data 

relationships with their partners,” says 

Alise Miner, VP of information technology 

at SEMA. “If you have 20 channel 

partners, you waste a lot of time having 

to make 20 separate data files. That time 

can be spent on customers.” SEMA thus is 

spearheading a program to improve 

the data sharing process by providing 

standards-compliant guidelines 

to manufacturers and others for 

gathering and exchanging data. 

STRIKING THE RIGHT BALANCE 

A question sometimes raised in the 

supply chain is “Who benefits from 

collaboration?” Like all relationships, 

supply chain partnerships can be onesided. 

There is a trade-off between 

how much suppliers invest in adapting 

the business to large customers’ requirements 

and keeping the relationship 

profitable. Some indeed feel that the 

automotive supply chain needs to be reengineered 

so that the pull comes from 

the end user, as opposed to “push” from 

the OEM. But those working closely with 

supply chain communication issues, such 

as SEMA’s Miner, agree that all industry 

partners — suppliers, dealers, logistics 

firms, OEMs and others — benefit from 

the closer alignment of processes, based 

ultimately on end user needs. ❑ 

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Issue 8

C USTOMER 

I NSIGHT 

CIO DRIVES GM’S 

GLOBAL CHARGE 

Rarely in business do the statistics tell such a striking story. 

But in Ralph Szygenda’s case, the numbers don’t lie. 

For the past decade, the 58-year-old CIO 

has helped take on one of the most 

formidable technology challenges of this 

generation: helping transform General 

Motors from a loose confederation of 

scattered and nearly autonomous 

companies into a tight and seamlessly 

integrated global corporation bound 

together by a sophisticated enterprise 

IT network. 

To drive this promethean project, 

Szygenda has built a global IT department 

focused on delivering bottom-line 

business results. He is the largest 

corporate buyer of technology and 

services and spends about $3 billion a 

year, which includes hundreds of millions 

of dollars of new IT systems. 

And Szygenda has delivered. 

Under his leadership, GM’s IT 

organization today operates with a singleminded 

focus: to drive global collaboration 

to foster innovation at General Motors. 

10 


Issue 8 

And the most fiercely competitive IT 

vendors in the world now are working 

together using GM’s standardized IT 

processes to generate huge global 

efficiencies and drive collaboration around 

the world. 

Here are a few examples of the 

efficiencies Szygenda’s vision has realized: 

■ GM used to take 48 months to develop 

a new car, for example; but by changing 

its design processes and using a more 

collaborative infrastructure and 3-D 

virtual-reality modeling software, the 

product cycle has been greatly reduced. 

■ CAD/CAM files deployed by 30,000 

global engineers designing in the same 

real-time computing environment used 

to take 45 minutes to upload; now, they 

take two minutes, thanks in part to a 

new high-speed network. 

■ Improved automation has reduced the 

time required to deliver customer- and 

dealer-ordered vehicles by more than 

50% — a major milestone, considering 

that GM moves $85 billion in materials 

around the world and distributes more 

than 9 million finished vehicles to over 

200 countries each year. 

■ Business process re-engineering has 

enabled GM to successfully tackle its 

most basic IT operating problems, such 

as installing a common PC desktop 

system eliminating more than 3,500 IT 

systems, and consolidating its 23 

computer-aided design systems into a 

single system. 

When you look at these results, along 

with many others, you may draw the 

conclusion that GM may be the most costeffective 

automaker when it comes to IT 

today. In fact, today, GM spends $1 billion 

a year less on technology than it did when 

Szygenda arrived in 1996. 

What a difference a decade makes. Ralph 

Szygenda was hired in 1996 as GM’s first 

CIO. Prior to this, EDS, which was pur-

chased by GM in 1984, handled all of the 

company’s IT needs. Tens of thousands of 

employees at GM were moved to EDS over 

the years, but GM’s IT costs rose, year after 

year. In fact, GM was spending more on IT 

as a percentage of sales than any other 

auto manufacturer in 1996. 

To their credit, GM executives recognized 

this problem and, in addition to hiring 

Szygenda, they thought it better to spin off 

EDS to address its business independently. 

Upon his arrival in Detroit, Szygenda 

started to rebuild the IT organization at 

GM. He combined 1,000 of the best IT 

people in the industry from outside the 

company with 1,000 of the best 

automotive process people from inside the 

company to form the Information Systems 

and Services (IS&S) organization. Then, he 

started down the long road to 

globalization by establishing regional 

commonality for GM in the four regions of 

the world. As he supported globalization 

over the last 10 years, he took out $12 

billion in IT costs, reinvested $7 billion of 

this back into the company for systems, 

services, telecommunications, etc. and 

returned $5 billion to the corporation. 

Szygenda also changed GM’s IT model. 

The 2,000 people in IS&S assumed the 

responsibility for and ownership of GM’s IT 

strategy, which included managing GM’s IT 

vendors. Also, during this time, the 

Internet boom took place, which allowed 

GM to move even faster as Szygenda 

digitized the company by linking the automaker’s 

suppliers, dealers, employees and 

customers. For Szygenda, it was the right 

technology at the right time. 

Given the complexity of the global 

environment and the atomized nature of 

the IT industry, it’s not surprising that 

Szygenda, even after he diversified his 

supply base at GM, needed to refine his 

technology model to create more 

standardization and collaboration. So in 

2003, he began this journey, and today, 

there is one systems integration supplier 

for each of the automaker’s key business 

functions and processes. The result: no 

geographical boundaries and a sense that 

GM’s technology suppliers are working as one. 

Szygenda knows that IT can be a huge 

differentiator for GM as it remakes itself in 

an increasingly competitive global market; 

but he also knows that technology is not 

a corporate panacea, because GM’s legacy 

issues remain daunting, despite the fact 

that the company cut $9 billion in related 

costs in just one year. The most significant 

legacy issue is the pension and health care 

liability. GM has 2.5 retired employees for 

every one that is active. No other 

automotive company is shouldering that 

kind of burden. 

Ever the realist, Szygenda continues to 

focus on his core domain of information 

technology excellence. And, with an eye 

on the future, he’ll be spending 

significantly more in 2007 to develop IT 

systems that will foster innovation and 

improve the efficiency in the company. 

“All I’m trying to do,” explains the CIO, “is 

to help make GM more successful.” ❑ 

A Career Based on Making the Impossible Possible 

Ralph Szygenda got his first dose of confidence and 

competence from his father, a civil engineer who was 

responsible for overseeing many of the bridges, highway 

systems, etc. built in the Pittsburgh area during the 1930’s and 

40’s; a second infusion of intellectual inspiration came from 

his older brother, who worked on digital 

simulation at Bell Laboratories. 

After graduating from the University of 

Missouri’s engineering school with a 

degree in computer sciences, Szygenda 

began a 21-year career with Texas 

Instruments. He initially helped develop 

one of the world’s largest computers; 

then, he built military computers for 

fighter jets; and he ultimately 

became TI’s CIO. Along the way, he 

focused on business process reengineering. 

That brought him to the attention of Bell 

Atlantic CEO Raymond Smith, who recruited 

Szygenda as his CIO in 1993. During his three years at Bell 

Atlantic, Szygenda played a key role as Smith attempted to 

bring next-generation information services to the newly 

deregulated telecommunications market. 

Re-inventing the telecommunications industry — a challenge 

fully embraced by Szygenda — was dwarfed by the prospect 

of reviving General Motors, then the world’s largest corporation, 

and one in need of serious IT acumen. 

GM recruited Szygenda hard in 1996 because, as one of the 

automaker’s executives said, the CIO “was known for doing the 

impossible thing.” Szygenda is now 10 years into the radical 

restructuring of GM’s global IT operations, and he’s certainly 

made his mark at the company. 

“Ralph is one of the most courageous CIOs I've worked with,” 

says GM’s Information Systems and Services’ Chief Strategy 

Officer Daniel McNicholl. "When he knows something's right, 

he'll do whatever it takes to make it a reality. His sheer 

willpower wins out.” 

For his part, Szygenda gives credit to the people he’s hired. “I 

define problems,” explains the CIO, “and then find the right 

people who have the intellect and knowledge needed to solve 

them.” 

But Szygenda clearly relishes the mega-challenges. And 

throughout his career — whether it was inventing new guidance 

systems for missiles at TI, trying to transform Bell Atlantic from 

a telephone company to an information company, or bringing 

state-of-the-art IT to a 100-year-old legacy auto manufacturer 

— the CIO has taken it all on full force and full frontal. 

checklist on next page 

“I don’t think there’s anything I’ve done in my career that 

wasn’t considered impossible at some point in time,” recalls 

Szygenda. “If I listened to everybody who said it was impossible, 

I would still probably be back in Pittsburgh.” 

11 


Issue 8

C OVER 

S TORY 

continued from page 3 

responsiveness and in taking uncertainty 

out of the supply chain,” says Jeffrey 

Russell, supply chain management 

executive partner with Accenture. “With 

IP, it is easier to bring in technology 

for a given need and collaborate 

more seamlessly.” 

“Procter & Gamble uses both public 

and private IP networks to give suppliers 

visibility for demand levels,” says Ciccone. 

“We’ve developed portals with suppliers 

so everyone can see what's happening.” 

The portals are used for such things as 

planning schedules for groups of 

suppliers; for example, a single bottle of 

Pantene Pro-V shampoo requires a 

cluster of contributors, including 

the makers of labels and tops. “The 

network has to be intelligent,” 

observes Ciccone. “We’ve moved to 

a standard IT infrastructure so that 

everyone can speak to each other.” 

With IP, applications can be 

deployed, scaled and integrated 

more easily. What’s more, customer 

reactions can be brought into 

the chain. Quality engineers at 

Gerber, a global baby food supplier 

owned by Switzerland-based 

Novartis, have developed a system 

that extracts daily complaint 

records from the corporate 

warehouse and links that data 

with manufacturing and processrelated 

information. The consumer 

response system informs executives 

of product quality levels and alerts 

plant supervisors of possible concerns in 

the manufacturing process. 

The “plug and play” aspect of IP can be 

especially useful for involving new types 

of players in the chain. Today, for those 

organizations with more advanced supply 

chain strategies, sales and marketing 

teams are likely to be woven into the 

collaborative effort. “The sales and 

marketing community in high-performing 

companies is joined at the hip with the 

supply chain community,” Russell finds. 

The supply chain engages in promotion 

and positioning activities for a given 

proposition and becomes responsible for 

delivery. 

APPLICATION DEVELOPMENTS 

While providing the basis for greater 

flexibility, IP is by no means the only 

technology driver of better supply chain 

communications. Just as important is the 

integration of the applications running on 

the network. According to Alan Smart of 

Cranfield University’s Center for Logistics 

and Supply Chain Management in the U.K., 

applications vendors such as SAP are 

working to make integration of their 

applications easier between partners 

“using the Web as a thoroughfare.” 

Meanwhile, the supply chain application 

vendor i2 has built a suite of IP-based 

“Collaboration 

through IP 

networks is 

helping to create 

more shared 

responsibility 

between partners 

in delivering 

the goods.” 

products that includes visibility, planning, 

control and collaboration aimed at 

“enabling an extended supply chain to 

compete as a single system.” 

“We find now that companies want to 

collaborate at the process level,” says Jim 

Caudill, marketing VP of i2’s strategic 

solutions team. “Collaboration used to be 

document-centric; now it’s a process and 

data sharing initiative.” To that end, 

companies are moving from packaged 

supply chain applications to flexible 

collaborative tools so that they can work 

together, for example, on merchandise 

finance planning and supply execution. 

THE SHIFT TO SHARED OWNERSHIP 

Collaboration through IP networks is 

helping to create more shared 

responsibility between partners in 

delivering the goods. Relationships are 

becoming less passive, where suppliers 

simply receive orders and forecasts. Large 

suppliers are getting linked to point-ofsale 

data and are expected to respond 

proactively without receiving retailer 

forecasts. Or when they do have forecasts, 

the suppliers often build up excess 

product inventory when demand, in fact, 

turns out to be lower. Cranfield 

University’s Smart sees excess inventory 

as the biggest single problem in the 

supply chain. On the other hand, 

demand forecasts that are too low 

can disappoint customers with 

under-supply. 

When linked over the IP network 

to point-of-sale information, however, 

suppliers can avoid both 

extremes, as they know what is 

actually happening. “Replacing 

inventory with information” is the 

catchphrase. In some cases, analysts 

from retailers and manufacturers 

now work shoulder to shoulder 

to improve supply. With the 

electronic linkage in place across 

the entire supply chain, large 

business customers benefit by 

getting the right deliveries when 

they want them. 

Excellent in theory, but how does 

this work in practice? Asked whether 

linking point-of-sale information with 

supply chain partners really has 

succeeded in cutting inventory, Procter & 

Gamble’s Ciccone replies, “Absolutely.” 

MAKING THE RELATIONSHIP WORK 

IP-based supply chain technology is not 

just about smoothing communications 

with suppliers: Maximizing relationships 

means continual, hard-nosed evaluation 

of partners’ performance. For instance, 

Kingfisher, a European home improvement 

retailer based in the U.K., uses supply 

chain intelligence to keep appointed 

vendors in China accountable to all of 

their service level agreements. “Eighty-five 

12 


Issue 8

percent of our product sources are now in 

China; service levels for us are crucial,” 

says Anthony Sutcliffe, Kingfisher’s director 

of global sourcing. “With our Web-enabled 

system, we can access information in 

seconds via the intranet.” Armed with 

factual data, Kingfisher is able to 

determine who its best suppliers are and 

then use its purchasing power to get 

the best products at the lowest wholesale 

prices. 

Procter & Gamble has gone further: 

Using electronic product code (EPC) 

technology, the company is now able to 

gauge the success of individual product 

promotions in different stores. In the case 

of its Braun razors, by tracking on its 

network where the razors were placed in a 

sample of 21 stores, the company 

discovered that the promotion was in front 

of the customers (where sell-through was 

shown to be significantly higher) in time in 

only one-third of the cases; in a further 

third, it arrived late; and for the remainder, 

it did not appear at all. 

AVERTING DANGEROUS LIAISONS 

As the benefits of closer collaboration with 

supply chain partners are nurtured and 

evaluation of the effectiveness of 

relationships advances, equal attention 

must be paid to data security and 

intellectual property protection. Risks 

abound in this shared, networked 

environment, which can cross international 

borders. Many companies have made the 

mistake of passing too much data on to 

partners, to the point of endangering 

competitiveness. In a global survey of 395 

executives, conducted by the Economist 

Intelligence Unit and AT&T, one-quarter 

stated that giving partners and suppliers 

access to real-time supply chain data 

made their company very vulnerable to 

security breaches. It is advised that before 

setting up a collaborative venture, security 

staff should be engaged to determine who 

will have access to what information — 

something easy to overlook in the rush to 

sign up an important new partner. 

Business continuity and recovery plans — 

covering both IT and non-IT issues — should 

be developed, implemented and regularly 

reviewed. In the highly interlinked supply 

network, how will various business 

interruption scenarios impact operations? 

Equally as important, intellectual property 

issues need to be thought through: How 

will the shared information, technical 

specs, for example, be used not only 

during the partnership but also when 

it ends? Can the partner leverage 

the information for other means? The 

risks must be assessed not only at the 

start of the partnership but also on an 

ongoing basis. 

THE IMPORTANCE OF CULTURAL FACTORS 

Excessive focus on the technology aspects 

of the links also can endanger supply 

chain partnerships. Personal trust must be 

established even in a highly automated 

relationship. The softer “cultural” factors 

affecting employees also must not be 

ignored. Successful IT is not enough on its 

own. “Research has shown that the 

cultural factors are more likely to be a 

barrier than the technology,” says Cranfield 

University’s Smart. Employees in two 

partner companies may have differing 

targets and objectives, and a new liaison 

may alter the way in which employees are 

measured. “Companies can forget the key 

point: You have to get the people to do it.” 

As discussed in Expert Perspective, 

companies first have to concentrate on 

reducing complexity in their supply chains, 

starting with the products themselves. IP 

networks help to streamline operations, 

while increasing flexibility. The automotive 

industry is taking particular advantage of 

IP networks as partners move toward 

increased integration and collaboration 

(see Market View). Reliance on IP will grow 

as demand steps up for global integration, 

as shown later in Global Pulse. ❑ 

THE PURCHASING 

FUNCTION TO 2015 * 

The coming decade promises to be a transformative one for 

purchasing. The purchasing function now aims to harness the 

entire supply chain not only by increasing the amount of spend 

control but also by linking purchasing with order management, 

getting involved early in new product development and taking 

lean initiatives to suppliers. As companies begin to emphasize 

performance over price, proactive monitoring of the critical 

development path of new products will be “the next big thing.” 

Purchasing executives will apply new rules of engagement, 

including non-binding, long-term agreements and cost standards, 

in order to grow their relationships with master suppliers. 

Technology will be central to change. With an ever-widening 

arsenal of technologies, fully integrated networks of suppliers and 

a voice in the boardroom, the future chief purchasing officer (CPO) 

will be charged with establishing the company’s supply chain as a 

competitive differentiator that is visible to its customers and its 

customers’ customers. 

The CPO will oversee the fundamental shift from individual 

supplier relationships to interwoven supply networks that share a 

common information infrastructure. He or she will have ultimate 

responsibility for assuring the timeliness and accuracy of planning 

and transactional data. CPOs must fully exploit opportunities to 

establish innovative methods of supplier collaboration at every 

stage of the supply chain. 

*Source: The new face of purchasing, Economist Intelligence Unit, sponsored by SAP, 2005 

13 


Issue 8

G LOBAL 

P ULSE 

THE 

OF 

CHALLENGES 

RAPID 

ACCELERATION 

Globalization will do more to drive supply chain 

change in the coming years than any other factor. 


According to a global survey of 358 C-level executives and supply chain managers conducted by the Economist 

Intelligence Unit, globalization ranks ahead of such factors as innovation, outsourcing and the search for cost 

leadership in driving the development of supplier management strategies. 

The globalization of supply chains is accelerating rapidly. This is certainly the case in Europe: Two-thirds of 

European firms in another Economist Intelligence Unit survey of 205 executives are already heavily reliant on 

global supply chains, with at least 30% of their supply chain located outside of their home country. More than half 

of surveyed firms will have more than 60% of their supply chains located abroad in three years’ time. 

For some companies, the global expansion of their supply networks is outpacing their ability to plan efficiently. 

Of the European executives surveyed, only 16% say that their firms had plans in place from the start to deal with 

complexity. Such lack of planning is risky, because global supply chain management is proving extremely complex 

for companies, with uncertainties like supply and demand, rising transportation and energy costs, inventory costs 

and planning for long transportation times. The inability to deal with these challenges can reduce the intended 

gains in cost savings, speed and flexibility that globalization promises. ❑ 

14 


Issue 8

Global Executives’ Views on the Drivers Most Likely to Influence their Firm’s 

Purchasing and Supplier Management Strategy over the Next Ten Years 

Globalization 

Cost leadership 

Outsourcing 

Innovation 

Customer intimacy 

Regulatory compliance 

Service focus 

Industry consolidation 

46% 

39% 

25% 

19% 

18% 

17% 

17% 

14% 

Source: The new face of purchasing, Economist Intelligence Unit, sponsored by SAP, 2005 

How European Firms with Partly or Heavily Globalized 

Supply Chains Say these Networks Have Developed 

30% 

16% 5% 

11% 

14% 

24% 

We made a conscious strategic decision to keep our 

supply chain local 

Our supply chain has developed organically, but has 

remained largely local 

Our supply chain has grown organically across multiple 

regions, and we have addressed the complexity ad hoc 

We made a conscious strategic decision in favor of a 

global supply chain but have addressed the complexity 

ad hoc 

We made a conscious strategic decision in favor of a 

global supply chain and had plans and structures to 

deal with the complexities 

Don’t know/Not applicable 

Source: Europe’s supply chain challenge, Economist Intelligence Unit, sponsored by SAP, 2006 

15 


Issue 8

THE WORLD ACCORDING TO 

MAX 

The world is where we work. We can land in 

any location. We are comfortable on any street. 

Remote is just another place we call home. 

Network solutions from the new AT&T, now with Cingular, provide secure 

mobile access. So Max can safely incorporate remote workers within his company’s 

network, creating an enterprise that’s as effective on the go as it is at home. 

Learn how the new AT&T can enable your business. 

© 2007 AT&T Knowledge Ventures. All rights reserved. AT&T, AT&T logo, Cingular and Cingular logos 

are trademarks of AT&T Knowledge Ventures and/or AT&T affiliated companies. 

is now the new AT&T 

att.com/yourworld 

04/07 AB-0955

LINKING THE GLOBAL SUPPLY CHAIN - Enterprise Business - AT&T

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