IBM 2014 Annual Report Download - page 33

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32 Management Discussion
International Business Machines Corporation and Subsidiary Companies
In 2014, IBM was awarded more U.S. patents than any other
company for the 22nd consecutive year. IBM’s 7,534 patents
awarded in 2014 represent a diverse range of inventions poised
to enable significant innovations that will position the company to
compete and lead in the emerging opportunities represented by
cloud, big data and analytics, security, social and mobile. These
inventions also will advance the new era of cognitive systems
where machines will learn, reason and interact with people in more
natural ways. It was the most U.S. patents ever awarded to one
company in a single year.
The company continues to actively seek intellectual property
(IP) protection for its innovations, while increasing emphasis on
other initiatives designed to leverage its IP leadership. Some of
IBM’s technological breakthroughs are used exclusively in IBM
products, while others are licensed and may be used in IBM prod-
ucts and/or the products of the licensee. While the company’s
various proprietary IP rights are important to its success, IBM
believes its business as a whole is not materially dependent on
any particular patent or license, or any particular group of patents
or licenses. IBM owns or is licensed under a number of patents,
which vary in duration, relating to its products.
Integrated Supply Chain
IBM has an extensive integrated supply chain, procuring materials
and services globally. In 2014, the company also managed approxi-
mately $21.8 billion in procurement spending for its clients through
the Global Process Services organization. The supply, manufactur-
ing and logistics operations are integrated in one operating unit
that has optimized inventories over time. Simplifying and streamlin-
ing internal processes has improved sales force productivity and
operational effectiveness and efficiency. Supply chain resiliency
enables IBM to reduce its risk during marketplace changes.
The company continues to derive business value from its own
globally integrated supply chain providing a strategic advantage
for the company to create value for clients. IBM leverages its supply
chain expertise for clients through its supply chain business trans-
formation outsourcing service to optimize and help operate clients’
end-to-end supply chain processes, from procurement to logistics.
Utilizing analytics, mobile, cloud and social—with numerous proj-
ects, has allowed the integrated supply chain to drive positive
business outcomes for the company and its clients.