Operations management is “the management of systems or processes that create goods and/or provide services” (Stevenson, 2017, p. 4). It is the administration of business practices to create the highest level of efficiency possible within an organization. Quite simply, it is the process or set of processes used by an organization, to convert materials and labor into goods and services with the goal of maximizing profit. As one author stated in a 2015 Harvard Business Review article “operations is and has always been what gives an organization the power to act: to create value for its customers; to capture value for its shareholders; and to share value with its ecosystem” (Iansiti, 2015). As with any process, comes change – the ever-revolving door of adjusting to needs of society. The most significant changes to shape operations management is the evolution of technology and the speed in which it has advanced. IBM is perhaps the best known ‘computer company’ in the world, with its infamous ‘Big Blue’ moniker and logo. IBM is an integral part of the industrial revolution and partly responsible for the forces that caused the shifts in operations for the organization and global community.
Within the age of inescapable advanced innovations, operations permit an expanding assortment of organizations, ever more coordinates, associated, and disseminated, ever more centered on software and information. Usually particularly critical for IBM as they are a worldwide computer innovation and IT counseling firm. IBM's character has been shaped over about 100 years, a long time of doing commerce within the field of information-handling. Nearly all the company's items were planned and created to record, handle, communicate, store and recover data. Drives in innovation is at the root of how operations administration has advanced, and IBM has been at the cutting edge of worldwide innovative development. The mantra of ‘be the change you need to see’ initiated the development and formed IBM into the organization it is present-day.
Looking more closely at how the trade in which IBM works made a difference in molding the way the organization itself works, the measured framework of generation utilizing “interchangeable parts” created at the turn of the final century was coordinates into IBM’s generation system. In creating the primary IBM individual computer in 1981, acting lab chief Don Estridge chose early on that to be fruitful and to meet deadlines, the bunch gathered to form this transformed item must adhere to the arrangement of utilizing tried merchant innovation, a standardized, -one-model item, open design, and an outside sales channel for fast customer showcase immersion. Fast-forward, IBM created a no-hands assembly line with a spearheading completely computerized computer plant (Saporito & Madden, 1986). This calculated move permitted IBM to be the primary to create tablet computers totally by robots. This unused ‘flexible automation’ mechanized the generation of printers, other pc’s, machines.
Amid the 1980s and early 1990s, IBM was tossed into chaos by back-to-back insurgencies. The PC transformation set computers straightforwardly within the hands of millions of individuals. Both insurgencies changed the way clients seen, applied and accepted innovation, generally shaking how IBM conducted business. This shift took a toll on organizational administration driving streamlining to become the central focus. And IBM considered separating its business units into partitioned free businesses. Louis V. Gerstner, Jr. became IBM’s chairman and CEO in 1993 and set up a ‘customer-oriented’ sensibility and strategic-tank. In spite of the increasing pressure to fragment IBM into autonomous companies, Gerstner took steps to stabilize the company by revamping the item line, lessening the workforce and noteworthy taken a toll decreases through gigantic cutbacks and offering resources (DiCarlo, 2002). He accepted that separating the company up would have annihilated the company’s ‘one of a kind’ advantage which was giving coordinated arrangements for its clients. Once more, clients were centered on coordinated commerce arrangements - a key IBM quality that combined the company's ability in arrangements, administrations, items and innovations. Towards the end of 1995, Gerstner unveiled IBM's newly minted vision that organized computing would drive the next stage of technology development and would be the company's overarching technique. Before the start of the new millennium, IBM stood on the limit of the unused century having reestablished itself as a driving data innovation trailblazer.
Any organization within the trade of advertising inventive items and arrangements are destined to confront regulation, compliance and policy problems in their processes to discover opportunities in which their market-leadership drives opportunities for global expansion. Policy and regulation have such a huge effect on a business' operations and development prospects, and it would be advantageous of IBM to remain proactive instead of reactive, so they can spot potential dangers or openings early within the advancement of UniPay in South Korea. Numerous of the foremost globally successful organizations have created key arrangements with policy makers and regulators with the purpose of making connections where government, controllers and industry can work together to attain superior results. Creating a methodology for engaging with individuals who are in control of regulations and creating policy, admittedly can be overwhelming without the know-how or the capability of a devoted in-house work. IBM has their preverbal ‘ears to the street’ when it comes to monitoring trends in the global market, while maintaining full awareness of any potential implications to their partnership with Samsung. At minimum, IBM must have a handle to methodically and proactively screen advancements in government, parliament, controllers and the ranges of the open division that are significant to the mobile payment division. Wherever there’s a component of disturbance, IBM must already know or easily recognize, who the controllers are, their respective powers, and how they tend to utilize them. This will permit IBM to construct a full picture of their policy stakeholders over legislative issues, controllers, industry and position them for less adverse reaction to changes that threaten their business or partnership with Samsung. Committing to the additional effort affords the company the unique position of identifying risks and proactive mitigation for critical business decision and those who influence policy. This cuts down on the time spent investing in issues and/or people that have little or no influence on the overall goals.
IBM is changing its product and service offerings by detouring from being a hardware powerhouse, to providing more software and consultancy services. IBM also responsible for acquiring, maintaining, and managing the foremost business-critical and private information for the world’s largest organizations, which requires it to have a robust and clean process to ensure the integrity of its hardware, code as it drives innovation and business arrangements. This was mostly due to the divestment of its PC and low-end server commerce within the 2000s, combined with the securing more than 30 companies, primarily in business software solutions and technology service, for more than three years. Moreover, “the way in which software is sold has changed, and over the past 10 years, IBM has moved from 47% recurring as-a-service revenue to 61% as-a-service revenue as of 2017” (Duberstein, 2018). Additionally, “22% of revenue, or $17 billion of IBM's business, now occurs within the IBM cloud, up from just $4 billion a few years ago. The mix of strategic essentials has grown strongly, from just 27% of revenue in 2014 to 46% of revenue” (Duberstein). At this point in time, roughly 50% of the employees at IBM were hired within the last five years, leading then CFO James Kavanaugh to conclude that a reduction in redundant corporate layers was necessary. This action led to the overhaul of organizational processes and reorganization which increased the delivery speed of the company’s service offerings. Because it has for nearly 30 years, IBM has led the tech industry in patents granted last year, with over 50% of the patents in these developing areas. Hence, all these developments arrive at the same conclusion for its entire client base.
International Business Machines Corporation (IBM) has an operations management (OM) strategy that addresses optimization needs in hardware and software development, distribution and maintenance operations in the 10 strategic decision areas. Operations managers are concerned with the 10 decisions that strategically impact the success of the business. IBM implements policies and reforms through these 10 strategic decision areas to maximize the effectiveness of implementation while ensuring the continuity of operations (Ferguson, 2017).
- Design of goods and services. This strategic decision area of operations management focuses on how to maintain consistently high quality within target cost limits for the company’s information technology products.
- Quality management. This strategic decision area of operations management has the objective of satisfying customers’ demands and expectations regarding IBM’s information technology products.
- Process and capacity design. IBM fulfills this objective through a continuous improvement model that integrates new operational standards and requirements in response to changes in the information technology market.
- Location strategy. This strategic decision area of operations management aims for optimal locations in considering suppliers, customers, employees, and other components of the business, thereby impacting the place or distribution element in IBM’s marketing mix or 4Ps.
- Layout design and strategy. High efficiency and productivity in the flow of information and resources are the objectives in this strategic decision area of operations management. IBM satisfies these objectives through a combination of automation and the use of standards and best practices in the information technology industry.
- Job design and HR. The strategic decision in this area of operations management focuses on maintaining an effective workforce for the information technology business. IBM’s organizational structure influences operational approaches used for this area.
- Supply chain management. Operations managers aim to keep high supply chain efficiencies and capacities in this strategic decision area. In this regard, IBM’s approach to operations management involves using information technologies to automate supply chain processes for high efficiency that supports the business strength of high economies of scale. On the other hand, the company satisfies capacity goals through programs that support suppliers’ productivity growth.
- Inventory management. In this area of operations management, the strategic decision deals with maintaining adequate inventory while considering internal and external factors. The company has redundancy allowances and buffer inventory to address such operational issues and to account for fluctuations in market demand.
- Scheduling. Appropriate schedules for processes and resources are IBM’s objective in this strategic decision area of operations management. The company’s scheduling approach is based on the type of operations, operational productivity requirements, and location of operations, among other variables.
- Maintenance. This strategic decision area of operations management has the objective of maintaining adequate resources and processes to support the information technology business. IBM maintains high productivity levels in its technology laboratories through regular checks and upgrades of relevant equipment.
Trade regulations and digital disruption are changing the ways companies invest domestically and abroad. Whether by imposing tariffs or quotas on imports and exports of certain goods, or providing subsidies for local businesses to produce and support local companies versus doing business with an international competitor, governments trade policy can affect how you do business by either making it easier or difficult to trade with international partners (Standford, n.d.).
Digital disruption is defined as “the set of ground-breaking changes that affect companies both as a result of the emergence of new digital technologies on the market and when they introduce them into various areas of their operations, such as production, organization or relations with their customers” (Dominguez, 2019). Digital disruption deals with the effects of the processes of change that we are experiencing as result of the entry of technologies in companies and the market. As digital technologies are part of everyday operations of every organizations, it is rare to find a company that does not rely on technology for critical business functionalities. As technology advances, so does the dependency on technology increases. An increasing number of people today are spending more of their free time spending money online or taking part in a social media outlet. This trend shifts the emphasis of a business towards digital sources of revenue through various digital channels.
The impact of trade regulations on IBM to develop UniPay in South Korea involves the supply chain of both IBM and Samsung. The local governments and political climate of both countries affect how the respective companies can enter into a partnership, especially given the proximity of South Korea’s neighbor to the north – North Korea. Both companies rely on a network of 1,000’s of partners who supply integral parts to their flagship products and services. Some local regulations in the Southern Asian region places a quota on the number of imported products used to develop technologies. Military tension with North Korea negatively impacts foreign companies considering doing business in the region. IBM would have to take into consideration how much of the in-house expertise to use and resources necessary to use local intellectual capital and infrastructure.
IBM could survey common components of computerized commerce and compare them against their internal business practices. Advanced businesses center on the competitive focal points that innovation affords them, whether that’s lessening overhead or giving modern value to their clients. IBM could combine their current innovations with Samsung to cut costs, accumulate information and provide a progressed client involvement. The usage and administration of computerized administrations can require organizational rebuilding, particularly as unused parts are made. IBM should investigate unused trade models that put client encounter at the center of computerized methodology. Consumers are more likely to increase spending for an amazing client involvement, making it a key differentiator within the advanced economy. Trade models that adjust with this accentuation on client fulfillment will eventually focus on computerized administrations.
- DiCarlo, L. (2002, November 11). How Lou Gerstner Got IBM To Dance. Retrieved from Forbes: https://www.forbes.com/2002/11/11/cx_ld_1112gerstner.html#7e1d107e4257
- Dominguez, A. (2019, January 25). 5 key aspects of digital disruption. Retrieved from Pandora FMS: https://pandorafms.com/blog/digital-disruption-2/
- Duberstein, B. (2018, March 19). How IBM's Business Is Changing. Retrieved from The Motley Fool: https://www.fool.com/investing/2018/03/19/how-ibms-business-is-changing.aspx
- Ferguson, E. (2017, June 16). IBM’s Operations Management Areas: 10 Decisions, Productivity. Retrieved from Panmore Institute: http://panmore.com/ibm-operations-management-areas-10-decisions-productivity
- Iansiti, M. (2015, June 30). The History and Future of Operations. Retrieved from Harvard Business Review: https://hbr.org/2015/06/the-history-and-future-of-operations
- Saporito, B., & Madden, S. (1986, September 15). IBM'S NO-HANDS ASSEMBLY LINE. Retrieved from Fortune: https://archive.fortune.com/magazines/fortune/fortune_archive/1986/09/15/68041/index.htm
- Standford, C. (n.d.). How Markets and Trade Relations Affect Business. Retrieved from Fleximize: https://fleximize.com/articles/001264/how-markets-and-trade-relations-affect-business
- Stevenson, W. J. (2017). Operations Management, Thirteenth Edition. McGraw-Hill Education.