IBM announced a multiyear contract with General Dynamics to help its Electric Boat unit link partners and suppliers via the Web, a move aimed at accelerating the construction of submarines for the U.S. Navy.
IBM said it will host and manage a supply chain network designed to reduce inefficiencies in contract management and component procurement inherent in today's largely paper-based shipbuilding supply chain. Defense contractor General Dynamics' Electric Boat unit will pay a monthly usage fee for the service based on the number of registered users, suppliers and business processes.
"Access to the highest-quality technology on demand is critical to helping U.S. shipbuilders increase efficiencies and compete in a global marketplace," said Jim Corgel, general manager of IBM's e-business on-demand division.
IBM said the deal is the first commercial result of its work with the National Shipbuilding Research Program to use technology to improve collaboration and information exchange among shipbuilders and their suppliers. The program is a consortium of U.S. shipbuilding companies that helps focus national shipbuilding research and development funding on technologies that will reduce the cost of warships to the U.S. Navy and increase the United States' international competitiveness.
Supply chains mean big business at IBM. The company shaved approximately $5.3 billion in 2002 from its own operating expenses by tightening relationships with suppliers and customers as well as by getting internal divisions to cooperate more on product development.
In February, the company announced plans to fund and jointly build a supply chain laboratory at Michigan State University's Eli Broad College of Business. Among other benefits, the lab will give IBM access to technological developments and graduates with expertise in the field, IBM executives have said.
The General Dynamics contract was snagged by IBM's Global Services unit. The division raked in revenue of more than $36 billion last year, making up 45 percent of IBM's total annual revenue.