IBM moves buying boss to China

24 May 2006
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25 May 2006 | Rebecca Ellinor

IBM is moving its procurement chief to China to run the firm's global purchasing operation.

The move, the first relocation of such a senior figure, could start a trend of firms shifting key buyers closer to overseas supplier bases.

Vice-president and chief procurement officer John Paterson, who has been with IBM for 35 years, will relocate from New York to Shenzhen this summer.

He oversees the company's global procurement function made up of around 5,000 employees in more than 80 countries and has a $40 billion worldwide spend.

This is the first time IBM has located the headquarters of a global corporate function outside the US and, as far is Paterson is aware, he is the first senior procurement post of any company to be sent there.

Rachael Stormonth, research director at business process outsourcing analyst firm NelsonHall, said IBM is the first to do this.

René de Sousa, senior procurement specialist at CIPS, said: "Companies have always had senior staff in these countries but I'm not aware of any other organisations that have a head of procurement out there.

"This is something to watch to see if it develops into a trend."

Paterson called the move a "bold step" and told SM: "This challenges some long-held assumptions that global functions must be managed centrally from corporate headquarters. This will help us think and act more like a truly global company."

He said the motivation for the move was to improve relationships with suppliers and form new ones, tap into a "talent pool" and to be well-placed if and when China becomes a customer base as well as supply base of IBM.

"As markets in Asia continue to grow, IBM will need to source more from this region to remain cost, and time-to-market, competitive," he said. "By moving the leadership of procurement into this region, we believe it will strengthen our ties to suppliers there."

De Sousa said having such a high-profile post located close to suppliers and potential suppliers may give businesses an "edge" in establishing relationships.

Paterson added: "We can foresee demand growing in Asia as well. To be successful, we need to develop a deeper internal procurement team and external supply chain in Asia that will support this offering."

While Paterson's move does not affect any other IBM procurement staff, he said the firm wanted to "deepen the talent pool in sourcing in Asia".

Christopher Sciacca, manager for strategic communications, supply chain at IBM, added: "IBM is always looking for experienced talent in emerging markets. We have also established relationships with the local universities, to help them develop a curriculum based on the needs of IBM and our clients."

This was good news, said De Sousa, because it would raise skills levels in China.

SMmay2006

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