ICG Commerce plans to leverage its online platform, together with its human procurement experts, in the hefty outsourcing contract with the industrial packaging giant.
In its fifth big e-procurement win of the past year, ICG Commerce Inc. has signed a multiyear, multimillion dollar business process outsourcing contract with industrial packaging giant Greif Inc.
Under the agreement, ICG Commerce will outsource all of Greifs procurement in indirect categories, which range from MRO (maintenance, repair and operations) items to facilities and temporary staffing, for example, said Keith Hausmann, ICG Commerces vice president of sourcing and contract management, in an interview with eWEEK.com.
Greif, on the other hand, will continue to handle its own procurement for direct materials, including steel, old corrugated cardboard, paint and coatings.
"Greif has been growing through acquisition over the past few years, particularly in North America and Europe. This has given them increased opportunities to leverage their spend and to standardize their business processes across large numbers of facilities," Hausmann said.
ICG Commerces procurement services combine the RealExchange online procurement platform and a best practices-based buying center with deep category sourcing experts in areas such as MROs, transportation and utilities.
Greifs indirect sourcing was previously handled "by in-plant operating stakeholders," Hausmann said. "It was more decentralized."
Although the deal with Greif was unveiled this week, ICG Commerce won the contract during the fourth quarter of 2004, according to Hausmann.
He added that most of the companys other e-procurement customers are multibillion dollar manufacturing firms. "Greif is right in the wheelhouse for us," he said.
Other customers signed over the past year include Cooper Cameron, a major maker of oil and gas pressure equipment; Universal Packaging; and Avaya. Hausmann said ICG Commerce has also signed a large player in the aerospace field, but he declined to give the name.
Hausmann predicted that ICG Commerces use of RealExchange will help Greif to reduce its transactional costs while improving visibility into spending, billing, contract management and performance vs. other companies in the same market.
ICG Commerce was awarded the contract through a competitive process involving several other candidates, according to Hausmann. "[Greif has told us] its number one reason for choosing us was that we take an operational approach, as opposed to a consulting company approach. We have a much longer history of working with these kinds of customers than [competitors] do," he said.
"Also, we spent a good deal of time really getting an understanding of [Greifs] needs and resources. We made a sizable business case, but we did not oversell [the case]. And we truly have deep [sourcing] expertise," Hausmann said.
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