November 01, 2008

Operations Management Lesson 5 Exercise

The IT Sector has a distinctive pattern of levels of integration. For one section of IBM BCS, write about the advantages and disadvantages of having an integrated supply chain. Comment on your impression of the levels of market force that apply to your chosen section.

In IBM BCS most of its projects are focus in technology consulting and this kind of services are possible with own consultants as main raw material. In this kind of professional services the supply chain start searching the proper resources depending on cost constraints, type of skills and availability of resources.

To analyse the advantages and disadvantages I am going to describe the different sources of resources in IBM GBS, that are the following:

  • IBM local resources: This kind of source is the primary option because the main target of all delivery organization in IBM BCS is to hold high levels of utilisation rates in its employees.

  • IBM Global Delivery Resources: that is the second level of prioritisation in the resource allocation process. The GD has different models, but although at the beginning of use this source the priority was over the offshore, currently the prioritisation is in this order nearshore, offshore and in the last onsite. The offshore has sense when is need a big mass of skills consultant to support projects around the world. And the onsite is right when is needed a very specific skills.

  • Other IBM Locations:In cases where is needed a very specific skills the next source of resources are others IBM locations, first to all in the same country or region  and after GD onsite.

  • Subcontractors: This source has been one of the main sources but now the prioritisation is in GD always after the local resources. Only when there are not available locally and there are local limitations to use IBM Global Delivery, the source of resources is to subcontract.

As we can see with this kind of sources, the processes of get it are different and each one has its advantages or disadvantages. The main disadvantage is the prioritisation of locally resources because is difficult to apply the market force, the advantage, of the use of the local resources, is the speed, the commitment, and the skills because this chsaracteristic are complicate to find outside.

Currently the customers are not familiarising with the use of Global Delivery resources even with subcontracted resources, for this reason the company should hold a important number of local resources and with consequent high degree of integration supply chain. The strategy of IBM GBS is to increase the use of Global Delivery in order to apply the market force and get better services with its subcontractors. 



Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

IBM Global Services – Global Business Services

- One comment Not publicly viewable

  1. Desmond Yarham

    Hi Louis, your explanation of the resource allocation decisions making processes made by IBM BCS for its Global Business Systems section was interesting. The hierachy of allocation appears to be well understood and only uses external subcontractors as a last resort. The need to assess cost / skill types and resource availibility at each stage of the hierachy was understandable and the priority for BCS to gain high utilisation rates has to be key. Valid reasons for / against the outlined approach – the customers perception regarding speed / commitment of local resource is understandably understandably positive. A good outline of the resource decision making process – include references where appropriate.

    31 Oct 2008, 06:24

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  • Hi Luis, interesting to hear what happened in a real life situation – in your conclusion it would be… by Harminder Singh on this entry
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