IBM Inks Procurement Outsourcing Deal with Solectron

The electronics and supply chain firm calls on IBM's global resources to handle its procurement processes.

Piggybacking on IBMs global procurement centers and expertise, Solectron has signed a deal with IBM to handle its procurement processes.

Solectron and IBM declined to name the dollar value and duration of the agreement, although the two companies indicated that the deal was for a multiyear span.

Solectron, based in Milpitas, Calif., provides electronics manufacturing and integrated supply chain services. The company recorded $10.4 billion in sales last year.

/zimages/5/28571.gifAriba considers an on-demand procurement model. Click here to read more.

Under the deal, IBM Global Services will manage some $1.2 billion per year of expenses on temporary contract services, office equipment, utilities and telecommunications in 17 countries.

IGS will implement for Solectron IBMs hosted Procure-to-Pay procurement application, which is based on SAP software, and will integrate it with Solectrons internal systems and controls, according to IBM, based in Armonk, N.Y., and Solectron.

"IBM is sharing the procurement expertise it developed for its own internal needs," said Perry Mulligan, senior vice president of materials and chief procurement officer at Solectron.


Solectron is also using IBMs strategic sourcing expertise in its own selection of various worldwide providers and in negotiating contracts with them.

"IBM has a strategic sourcing database that is based on their experience in dealing with different suppliers as a global customer," Mulligan said. Such suppliers range from lawyers to travel agents to facilities managers in various countries, he said.

"There are different levels of quality and service involved. We work with 200 different logistics providers around the world. Well find the best ones for the customer," said an IBM spokesperson.

Mulligan said IBM Global Services won out over other contenders in a process in which Solectron called on Pillsbury Global Services as a consultant. He mentioned Ariba, ICG Commerce and Accenture as competitors on the bid. "IBM had the most global solution, both in the sense of reach as well as in scope of capabilities," Mulligan said.

IBM Global Services has 5,500 procurement professionals in 85 countries, according to the IBM spokesperson. These professionals serve IBMs own needs as well as those of customers. IBM Global Services main global procurement facility is in Shenzhen, China, the spokesperson said.

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