IBM Corp, hoping to increase its market share with corporate buyers, has introduced a two-pronged initiative to better manage its supply chain and services to reduce inventory and prices. Looking to stem growth by competitors Hewlett-Packard Co and Compaq Computer Corp who have already taken similar measures, the Advanced Fulfillment Initiative enhances the two-year-old just- in-time manufacturing program which allows channel partners to custom configure PCs at their locations. Currently 20% of IBM commercial desktop products are assembled by its 12 channel partners, as well as a growing portion of its US server business. The new AFI slims the channel assembly program by bringing a few (a spokesperson says one-to-three) of IBM’s major partners into its own manufacturing facilities in Raleigh, North Carolina to assemble PCs there for direct shipment to customers. IBM also plans to ship some components directly from suppliers to dealers. These moves would eliminate the time and cost of shipping partly-assembled computers to manufacturing partners. IBM has also begun designing its products more compactly and with snap-in simplicity as well as such basic things as reducing the number of screws. IBM’s goal is to increase reseller inventory turns to 24 annually, and it has offered 2.5% pricing rebates to any resellers who agree to carry just two weeks of inventory. The second part of IBM’s new look is the SystemXtra service plan, aimed at the Windows NT market, which encompasses leasing and maintenance, as well as remote network management, training courses and technical support. The plan also includes an option to upgrade hardware after 24 months at no extra cost to the customer. In addition, the expanded services are being made available to more customers, as the financing requirement for SystemXtra has been reduced from $250,000 to only $50,000 over a 12-month period.
