March 31, 2009

Operations Management Lesson 5 Exercise

In this lesson exercise I would like to review the integrated supply chain of IBM Global Financing (IBM Credit Corp.) on the world wide level.

IBM Global Financing (IGF) proivdes different types of financing for IBM customers. Among IGF products there are different type of leases and loans, innovative credit line schemes and other. In most of the countries IGF is a part of IBM Corporation local subsidiary, but as far as IGF acts as a bank I would prefer to look at it as an separate finanicng entity.

Taking into consideration all mentioned above I can describe the IGF supply chain as the following:

IntegrateÒ Supply Chain

This chain perfectly shows the flow of the IGF product from "raw material" stage (money in the bank) to complicated financial product with number of additional services, options etc.

This chain is well developed and pretty mature so main focus should be on the issues of price of financing, speed and quality of made decisions, additional benefits to standard products.


  1. Partners in the supply chain splits the risks Banks do not accept the credit risk of the end customer which is deifnitely much lower than IBM Corporation credit risk.
  2. IBM reduces its costs using cheaper lended money than using own capital.
  3. IBM has a pool of banks and able to get the best offer on the market at each point of time.
  4. Banks receives the consolidated pool of IGF deals (not deal by deal). This helps them to deacrese their SG&A expenses portion.
  5. IBM Global Financing injects specialized IT knowledge into pure financial business.


  1. Dependability of IBM on the Banks refinancing.
  2. Vulnarability of the chain (chain is open to external negative impact like financial crisis).
  3. Respectively longer decision-making time due to the involvement of global treasury.

March 30, 2009

Operations Management Lesson 4 Exercise

For this exercise I took a portable audio-player as an example of product.

What are the main customer requirements for the portable players:

    • Usually customer is looking for small and light device to make it easier to use it during the trip.
    • It is important for the customer to be able to have all your media data in one device.
    • Modern customers require the possibility to play videos and view pictures as well as listening the music.
    • Ability to use the device in long trips without recharging the battery..
    • Attractive modern design of the device to make it not only functional but also a part of personal image.

    Design characteristics:

    • Size/weight
    • Volume of memory
    • Number of data formats
    • Long-life Battery
    • Design


    The matrix above provides my estimation of the dependancies of "whats" and "hows".

    The result is the following:

    1. The most important in the portable media player high portability of the device which is very dependant on the size and weight of the device and the battery life-time.
    2. Second important is possibility to have all media data on one device. This led to the dependacy not only on data format compatability, but also size of the screen and memory volume.
    3. Appearance of the device is also very omportant as it is part of the personal image of the owner.

    March 03, 2009

    Operations Management Lesson 3 Exercise


    At this picture I described the IBM Global Financing "Business-as-usual" process. As IBM Global Finanicng interacts directly with the customer I used blueprint method of analysis.

    Sub-process: Credit check:

    Credit department receives the financial documents from the sales organization. Then credit analytic perform the analysis of creditworthiness of the potential customer based on its financials and IBM credit procedures. This check is done on two levels: A/R check and Credit check. After the check the deal should be approved by the relevant level of credit department management based on their clip levels.

    Output: Credit rating of the potential customer.


    Performance objectives:


    High: Credit analysis should be performed by high skilled analytic as this is critical for the corporation risk management.


    Medium: Speed should not be the target but due to the business requirements credit check should be performed in competitive time frame.


    High: The overall sales process depends on the result of credit check.


    Medium: capacity can be increased by additional highly skilled analytics


    Medium: IBM uses the information provided by different rating agencies.

    Process flow objectives:

    As I know there is no throughput rate, work in progress or resource utilization.

    The throughput time should be not more than 5 working days for the request.

    February 23, 2009

    Operations Management Lesson 2 Exercise

    I decided to review two different processes: ordinary credit card production (high volume vs. low variety) and exclusive gold and diamonds credit card creation (low volume vs. high variety).

    Normal credit card is a very standardized product. It has predefined size, name font and is created from standard plastic. The process of its production can be characterized as a “Mass process”. This production is performed by the assembly line. This brings high capital costs. But direct labor costs are low due to the high volumes. Most proper Layout type for this process will be Product layout type.

    Exclusive gold and diamonds credit card is absolutely opposite product and its production process is different. Here we are talking about very low volumes of production as the jeweler can spend weeks while creating this masterpiece. From the other point of view this brings high variety of the product as different materials and design can be used. The production process can be characterized as a “Project process”. This process involves unique, complex activities. The layout type for this process is “Fixed position layout” as recourses are moved to the product.


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