MICROSOFT

By Staff -- Purchasing, 11/16/2000

Name: Lonnie P. Pacelli

Company: Microsoft Corp., Redmond, Wash.

Title: Director, corporate procurement

Education: Bachelor of science, quantitative business analysis, Arizona State University

Work experience: With Microsoft for five years, Pacelli currently serves as director of corporate procurement managing marketing, technology and outsourcing procurement functions. He's also managed IT development & deployment projects for finance, operations and procurement organizations, as well as development of an intranet-based procurement system (MS Market) and an Internet-based invoicing system (Microsoft Invoice). Previously, he worked for Andersen Consulting, where he specialized in procurement business and systems consulting.

Current responsibilities: Directing procurement and supplier-management activities for major purchased commodities which include marketing, software & telecommunications, outsourcing, PCs & peripherals, servers and wireless solutions. Teams for these commodities comprise 24 seasoned procurement specialists that assist Microsoft employees with their procurement needs and "ensure that we are getting the best value possible while minimizing risk to the company."

Purchasing's role in the organization: "Our role is to build up and maintain strong long-term sourcing partnerships and make purchasing goods and services incredibly simple for the population at large.

The supplier's role: "We stratify our suppliers into three groupings: key alliance, pre-qualified and other suppliers. Our key alliance suppliers are outsourced providers that have assumed responsibility for some part of Microsoft's operations. Key functions such as food services, copy services, mail services and technology fulfillment are managed by third-party providers. Pre-qualified suppliers are suppliers that have attained a preferred status due to their ability to deliver quality products and services at the right time at the right price.

Purchasing challenges: "The most challenging aspect of our business is to continually right-size our services and supply base to meet the employee population's needs. We have a policy that an employee is not mandated to using our services or suppliers, which means that they can use non-preferred suppliers or processes to get what they need. Our job is to make sure that we are continually evaluating our pre-qualified supply base and our services to ensure that we're providing the right product at the right time at the best price. We need to make it easier for the employee to use our internally supplied tools and supply base. If employees don't use us then we're out of business."

The future of purchasing: "One of the biggest opportunities that we see (and that Microsoft has clearly embraced) is the leveraging of technology in driving down the cost of procurement.

"Our next generation of systems solutions will not only focus on increased capability in transaction processing (real-time inventory availability, bi-directional order-status updating as examples) but will also focus on helping an employee to better figure out and define what it is they are looking to purchase and to bake the right things into a statement of work, RFP and contract. This opportunity is much tougher than reducing PO and invoice processing costs, but also has the potential to yield greater return in the long run due to more effective procurement, not just more efficient procurement."