IBM to create supply chain research labs with Penn State, Arizona State and University College Dublin.

IBM has announced it will work with leading universities to conduct research on advanced supply chain practices that can be used to help businesses to respond on demand to changing market conditions.

Laboratories will be set up at The Smeal College of Business at Penn State University, the W. P. Carey School of Business at Arizona State University and Smurfit School of Business at University College Dublin. The laboratories, which will simulate the workings of a complex supply chain, will be linked via an advanced computing grid for cross-university research and learning.

Earlier this fall a similar laboratory opened at The Eli Broad College of Business at Michigan State University. Created by IBM, that facility will be the prototype for those that will follow. It will be linked to the three new laboratories, resulting in a grid that will span across the four universities. The first of the new centers will open at Penn State University later this fall. Laboratories at Arizona State University and University College Dublin will open early in 2004.

The grid of laboratories is being created through IBM's Shared University Research program, which is providing the software, server and storage technology and consulting services needed to build the facilities.

In addition to collaboration on new ways of building and managing an on demand supply chain, IBM and the four universities will work together to identify the skills needed for the supply chain of the future, as demand grows for skilled professionals in this area.

"Business leaders today are dealing with an environment that is more volatile than anything that has preceded it," said Stu Reed, vice president, systems group manufacturing, IBM. "Institutions of all kinds need to be able to respond far more quickly to whatever the world throws at them. The supply chain is central to a company's ability to respond to market fluctuations, and the companies that will thrive in the on demand era will be the ones that can use the supply chain to drive efficiency and make life easier for customers. Companies that succeed in transforming their supply chains can improve customer satisfaction and grow revenue while they wring a lot of unnecessary cost and expense out of the system."

At the laboratories, students and faculty at the four universities will study, simulate and test the key relationships in an end-to-end supply chain. When the grid is operational, the participating universities will conduct joint applied research and teaching. Their work is expected to help IBM and other companies build dynamic supply chains that can sense and rapidly respond to changing customer demands and market conditions.

In January 2002, IBM launched an initiative to reinvent its supply chain, pulling together all the pivotal functions of its supply chain, including front-end customer support teams and back-end manufacturing, procurement and logistics functions into one organization called the Integrated Supply Chain. Through better supply chain management, the company reduced its cost and expense by $5.6 billion in 2002.

Similar results are expected in 2003, but IBM's goals in supply chain management go beyond cost cutting. The company's goal is to create a supply chain that will enhance customer satisfaction while driving down costs.

The On-Demand Supply Chain Research Laboratory at Penn State will be supported by IBM software technologies, including WebSphere and AIX, which are made available to Penn State faculty and researchers via the IBM Scholars program.