Big savings lead to new goal at IBM

26 July 2000
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27 July 2000

Computer giant IBM, which saved more than £160 million on a £27 billion purchasing spend through e-commerce in 1999, plans to conduct 95 per cent of its buying electronically by the end of the year.

At the Alliance for Electronic Business's recent e-commerce summit, Tim Shercliffe, IBM's e-commerce director, said the firm had achieved the "holy grail" of real business benefit, but it still had a long way to go to fulfil its aims.

"We want to be the premier supplier of e-commerce capability to industry and the top e-commerce business," he told delegates.

IBM started purchasing online in 1998, following a review of its human resources and finance departments.

"We took a holistic and global view of the whole supply chain and decided that e-procurement was the next logical step," Shercliffe said.

The review resulted in a total re-engineering of IBM's buying processes, which has saved the company about £2.5 billion to date.

"Much of our purchasing was fragmented by geography and involved high-value one-offs," added Shercliffe. "E-procurement allowed us to make process and efficiency savings and develop better supplier integration."

The firm sees great potential in business-to-business e-procurement. "Our aim is to conduct 95 per cent, or £25 billion, of our buying electronically by the end of the year," said Martyn Smith, customer solutions procurement manager.

But observers have pointed out that IBM should be ahead with e-commerce. "IBM has a big finger in the pie with sales, let alone purchasing," said Brian Jeffery, senior lecturer in IT and supply chain management at the University of Coventry's business school.

SMjul2000

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