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A pioneering use of XML technology saves an international computer manufacturer millions in supply chain costs
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Business impact Reduced staffing by 19%, decreased inventory storage time by 50% and shortened the procurement cycle from two weeks to less than one week.
Issue A cumbersome procurement system was costly and inefficient, which was hampering the manufacturer's ability to remain competitive in the PC market.
Executive summary To improve efficiency with small and medium suppliers, the company built one of the first procurement systems based on eXtensible Markup Language (XML).
What IBM did The manufacturer wanted to use the Internet to make it easier and more cost effective to do business with small and medium suppliers. The old system had required a large staff and numerous faxes and phone calls. IBM Research had previously developed an XML-based procurement system with an open architecture to integrate with legacy and Enterprise Resource Planning (ERP) systems. Taking this XML procurement framework, the IBM team of researchers and consultants was able to develop a customized procurement solution for the manufacturer in just five months. This solution was then integrated with the client's enterprise resource planning system so that information about orders and other supplier activity could be used by the finance department and other corporate functions.
Released in February 1998, XML 1.0 was designed to enable definition, transmission, validation and interpretation of data between applications and organizations. That same year, IBM used the capabilities of XML to develop complex automated processes for end-to-end procurement. For example, IBM developed an XML order document that would automatically complete an invoice when certain conditions were met.
Capabilities applied The history of XML at IBM can be traced back to 1969 and the invention of Generalized Markup Language (GML), a method that allowed subsystems to share documents. As a result of its experience producing millions of documents with GML, IBM was able to rapidly apply its deep understanding of markup language to the new application for the manufacturer.
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Related article | 
Managing the Supply Chain With its e-procurement system and on demand technology, IBM is positioned to continue being a leader in the field of supply chain management. |
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More on research | eSourcing IBM Research's latest advances in strategic sourcing, auctions and decision support systems. |
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