| Global trade, excess capacity, rapid technological change and informed consumers have created an environment of intense and unremitting competition. To survive, let alone succeed, companies need to provide better products and services much faster and at a much lower cost.
The cost side of that imperative can be tricky since indiscriminate cost-cutting can hinder rather than improve operational efficiency. As IBM has learned from a wealth of client engagements and from its own decade-long transformation, the best way to reduce costs is through increased productivity and efficiency – in other words, doing more with what the company already has.
That is exactly how IBM helped El-Al Israel Airlines. As with many airlines, one of El-Al’s largest expenses was its flight crew. El-Al wanted to reduce the variable costs associated with these workers and allow them to be more effective. This meant that the airline has to account for which planes fly and when and where, equipment ratings, legal requirements for rest and duty, home base information, and overtime pay rates and regulations.
IBM Research developed a user-friendly, highly adjustable application that used all of the regulations and available data to create the best pairing sequences of duty and rest periods away from home, and assigned crew members to the pairings. The result was a 5-8 percent reduction in variable crew-related costs and a 4-7 percent increase in crew utilization. The full story.
IBM created a similar application for a major steel manufacturer. In the face of smaller orders with shorter fulfillment times, regional economic difficulties, production excesses and trade disputes, the manufacturer needed to be more efficient to remain competitive. IBM’s researchers and consultants helped optimize the four basic steel production areas – inventory application, slab design, cast design and finishing-line scheduling – to help this client meet its goal.
The IBM team defined the issues for each area – treating each as a separate project – and broke those issues into smaller problems. Then, using client guidelines, the team devised optimal solutions, inventing algorithms as needed. The manufacturer was able to cut the number of slab types by 40 percent, the unused weight in each slab by half and the number of scheduling experts by 10 percent. More information.
To meet its five-year growth and profitability targets, a national food wholesaler needed new strategies for pricing, account management and customer profitability. IBM combined industry experts from IBM Global Business Services with world-class analytic skills from IBM Research to identify the best initiatives. The IBM team studied the company’s current operations, reviewed industry practices, surveyed current and potential customers, and analyzed reams of present and historical sales data.
The initial recommendations included systems for improving customer service, building new market segments, making more effective pricing and account coverage decisions and are expected to yield a revenue gain of at least $100 million. More information.
These significant gains in operating efficiency are small compared to what will be possible a few years from now, thanks to greater business insight and improved technology. The fusion of the two realms is at the heart of what IBM calls an on demand business: focused, responsive, variable and resilient; integrated not only internally but with suppliers, partners and customers.
For more information about how IBM can help you attain unprecedented operational efficiencies – and so much more – by going on demand, contact On Demand Innovation Services.
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