team, but it didn’t change behavior.
The first step to drive adoption was to define a minimum and maximum target (reasonable range)
by item. In the process, the Company changed price protection terms. IBM told distributors that if
they had inventory, and the item was within the min-max range of iBAT, the Company would price
protect the product forever. When this new policy was implemented in 2018, IBM salespeople
struggled. It was summer 2008; and, in 2008, there was a major macroeconomic event. As the
recession happened, the distributors were scared. The economic downturn helped drive iBAT
adoption. The project reduced the channel inventories from a six- month supply down to the min-
max levels.
At the time of implementation, IBM had
$160M of inventory in the channel, and 40%
was the old product. By the time second
quarter of 2009 occurred, the IBat program
reduced inventory by 50% resulting in the
reduction of obsolescence from 40% to 5%.
These savings translated to $5M. Due to the
improvement in agility, the Company hit
service levels, and the complaints about
having the right stuff in the channel went down dramatically.
With the US economic stimulus money in September 2009, the IBM business came back with a
vengeance. The result? IBM took market share. The network tool iBAT consistently rationalized
the required replenishment levels improving agility. When the sales team pushed partners to
inventory load the channel, distributors pushed back. Data-driven discussions drove alignment
and balance. The iBAT replenishment approach stopped a dangerous behavior that stemmed
from sales-driven behavior. iBAT was a voice of truth that enabled everyone to succeed together
in the network.
The implementation and the results took time. In Figure 5, we share the five-year project
schedule.
Figure 5. The Roll-out of the iBAT Project by IBM
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