It's not just about cost
Buyer involvement in design has helped IBM consolidate more of its spend with fewer suppliers to reduce cost.
By James Carbone -- Purchasing, 3/15/2007 2:00:00 AM
At IBM, purchasing has a comprehensive role in design. Buyers influence what technologies, components and suppliers are used in new IBM computer and storage systems.
Buyers involved in design work in IBM's Global Procurement, Logistics and Engineering Group, which is part of the Armonk, N.Y. company's Integrated Supply Chain organization.
Much of the purchasing design activity involves Procurement Brand Management teams, or PBMs, which work closely with product design development teams as new IBM products are being conceptualized, says Sophie Bechu, vice president of worldwide engineering, integrated supply chain. She reports to chief procurement officer John Paterson.
"The PBMs help define the system offerings and the architecture of the products that Systems and Technology Group ultimately designs," says Bechu. They also help to ensure that commodity strategies that were developed by procurement and individualized for various IBM brands are used in design. The strategies include recommendations for design for supply, cost reduction, quality, parts availability, and technology availability.
She says purchasers work closely with designers to make sure IBM's product roadmaps converge with suppliers' roadmaps. "Purchasers' role is to make sure suppliers' technology roadmaps, the cost of technology and continuity of supply are considered during design, says Bechu.
Buyers focus heavily on cost, but they also contribute to design by their knowledge of the supply base and product roadmaps.
She says involving buyers with engineers in design has resulted in "positive results across all of IBM's brands and ensures that IBM's products leverage technologies that the suppliers can actually make."
"The designers often focus on performance and functionality, while the buyers focus on cost, supply and technology availability," says Bechu. By working together, the buyers and designers serve as a check and balance for each other," she says.
An example of the interaction between buyers and engineers occurred in IBM's storage systems. The PBMs drove the design team to use industry standard double data rate 2 DRAMS instead of custom designed memory. That resulted in lower cost and less design complexity while still meeting the requirements.
 “Purchasers’ role is to make sure suppliers’ technology roadmaps, the cost of technology and continuity of supply are considered during design.” —Sophie Bechu, vice president of worldwide engineering, integrated supply chain, IBM |
That also occurred with IBM servers. Buyers worked with designers to use more industry standard memory rather than higher density and more expensive dual in line memory modules.
Buyers involved in design also make recommendations on how to best fulfill a product.
That sometimes means moving it to lower-cost geography to get better total cost.
Involving purchasing in design has had a positive impact on cost, quality, customer satisfaction with IBM products, and product development times, according to Bechu.
She says buyers' design involvement has helped IBM to restrict its number of suppliers, resulting in IBM achieving more leverage with fewer suppliers to drive down material costs.
In addition, steering the design away from non-preferred suppliers has prevented quality problems because more business has been placed with suppliers that have proven quality systems.
Additionally, buyers work with designers and product engineers to understand how IBM's products are performing in the field. So, if quality improvements are necessary, the buyers, designers and suppliers all work together to drive those improvements as quickly as possible.
Bechu adds that by getting involved at the beginning of the design cycle, buyers can drive suppliers to deliver the technology that the designers need when they need it. This minimizes delays in getting prototype hardware.
"This reduces turnaround time and ultimately improves the product's time-to-market," she says.
Bechu says involving buyers in design is also good for suppliers because buyers bring them into the design process.
"By having buyers, designers and suppliers working together, the suppliers understand our roadmaps better and are more likely to meet IBM's requirements."
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