High tech company standardizes $150M in hardware purchases to reduce costs, improve customer satisfaction, and gain spend visibility

Situation:

Research and development hardware – amounting to $150M in annual spend – was purchased group by group in this major corporation, with varying levels of sourcing capability and no cross-group visibility, resulting in sub-optimal pricing. The existing system automated the process but provided no spend visibility to support aggregation and did not sustain the company’s need to manage reciprocal trade relationships with key hardware providers. The company recognized the need to drive cost savings and simultaneously improve operational efficiencies, optimize resource utilization, and standardize and streamline order processes across all groups. Through the project evaluation process, the company also realized that a significant amount of development engineers' time across 100 groups was spent on order processing and tracking. To reduce engineers' time spent on order tracking, the company needed to find a way to efficiently provide proactive order visibility, and additional Call Center support as required.

Solution:

ICG Commerce worked closely with the company to develop standard, operational procedures to guide IT hardware purchases – from initial request to final receipt of products that were deployed across groups. These procedures simplified the requisition process for end users and provided needed visibility to cross-group hardware requests. The solution leveraged the company's existing technology to support a hardware-specific Buying Center for all IT purchases across all groups. The Buying Center conducts eRFQs/auctions for aggregated orders, optimizing the company's internal aggregation and mutual trade relationships. Once orders are placed, the Buying Center supports all order-related buyer and supplier inquiries, order submission, and management. Through development of additional supplemental tools, the Buying Center is also able to provide much needed additional on-demand spend visibility and performance metrics.

Results:

Within the first 12 weeks the dedicated Buying Center yielded 20% in incremental savings, while optimizing the reciprocal trade relationships. Best-in-class RFP processes have been established, and the engineers' time spent managing orders has been greatly reduced. The success of the hardware buying center has led the company to expand the categories supported by the buying center to include application development services and training.