Foxboro's strategy for PCs & peripherals cuts costs
Managing a global corporate agreement for PCs cuts purchasing costs by 30% annually, says Ronald E. Rioux, commodity manager, The Foxboro Company
By Susan Avery -- Purchasing, 5/20/1999
Purchasing at The Foxboro Company has put in place a strategy for buying personal computers and peripherals that helps the industrial-controls manufacturer cut buying costs, improve process efficiencies, and satisfy rigorous requirements of both internal and external customers.The supply strategy comprises a global agreement with Dell Computer for desktop and notebook PCs and an agreement with an in-plant supplier that employs JIT II practices for peripherals. Foxboro also has in place a global agreement for software with Software House International.
Responsibility for managing these agreements belongs to Ronald E. Rioux, commodity manager. Rioux has worked in various capacities within Foxboro's MIS (management information systems) function since 1969 before being tapped in 1990 to put his technical expertise to work within corporate purchasing. Now, he helps set company standards for computer equipment and negotiates agreements with preferred suppliers.
"If you love change, you will love this," says Rioux, speaking of the challenges of his position in purchasing. "You have to keep your eye on the market."
As commodity manager, Rioux works closely with Mike Skelly, director of CIS (corporate information systems), and Ron Pariseau, vice president, procurement. As Rioux's internal customer, CIS is the biggest end user of computer equipment not only at Foxboro, but also at parent company BTR Siebe. Also: Reporting to Rioux is Firm Locke, who purchases computers, peripherals, and software.
Located in Foxboro, Mass., the Foxboro Company manufactures instruments, systems, and software for industrial automation. Customers are in the process industries: chemicals, oil & gas, pulp & paper, food, pharmaceutical, mining & metals, electric utilities.
In 1990, Foxboro was acquired by Siebe plc, a diversified engineering company, of Windsor, UK. Nine years later, Siebe and BTR, another British diversified engineering company, merged to form BTR Siebe, an engineering group (value-added controls and automation industry).
Foxboro is viewed as the cornerstone of the U.S.-based Intelligent Automation division of BTR Siebe. Its flagship product is the Intelligent Automation Series, the first generation of open industrial systems designed to meet measurement, control, and real-time information requirements of today's plants--from field sensors to corporate boardrooms. I/A Series systems are fully scalable from standalone systems that run on PCs to plantwide and enterprisewide networks.
The PCs upon which the I/A series runs are sourced by Rioux and Locke under BTR Siebe's new agreement with Dell. In fact, roughly 30% of the $30-million BTR Siebe spends annually with the computer maker is for PCs that go into its OEM products. The remaining 70% of desktop and notebook computers purchased under the agreement are used internally.
To address demanding specifications of BTR Siebe's external and internal customers, the company put in place a cross-functional PC buying team made up of representatives of purchasing, manufacturing, MIS, quality, marketing, and engineering.
The buying team selected its primary supplier last spring. Among its selection criteria, the team was looking for a supplier with a product that has both brand and quality recognition. To help reduce buying costs, the team wanted to purchase its PCs direct from a manufacturer. It set equipment standards that would drive its volume to the supplier, further lowering prices. Members wanted global sales and service support and global net pricing (with all locations paying the same price).
In setting computer equipment standards for the entire company, team members minimized the number of PC models available to end users: Two desktops and three notebooks. To order a PC, an end user obtains a price quote from the Dell Web site, which lists BTR Siebe standards. Then he or she prepares a request to purchase (RTP) and capital expenditure form, obtains proper authority, and submits the RFP to purchasing for acquisition.
Use of Internet technology within the order process was another of the team's selection criteria. In the effort to help improve process efficiency, end users will not only be able to access Dell's Web site for current pricing info, but also for order status.
In the year since the agreement has been in place, BTR Siebe has reduced costs of purchasing PCs by 20%.
To ensure that Dell's pricing is competitive with other computer manufacturers, "We bring to MIS monthly benchmarks," says Rioux. "We test the market each month against the competition." He also makes use of resources of the company's in-plant peripherals supplier, Computopia.
As a Dell strategic partner, BTR Siebe is provided by the computer maker with a continuous road map of technology advances. The OEM will ask some suppliers (Intel, for one) to demonstrate the latest technology and brief its customers' purchasing department on its pricing plans to go along with new announcements. "They can pre-determine the price based on what we are paying for today's technology," says Rioux.
Dell also agreed to a five-day delivery schedule for standard desktops and notebooks and a five-year customer support program. The supplier, in fact, has assigned BRT Siebe a global account manager. There also is an employee sales program.
Peripherals & software
In place since 1993, Foxboro's agreement with its in-plant peripherals supplier, Computopia, Warwick, R.I., also has resulted in cost savings and process efficiencies (PUR: Mar. 3, '94; p. 21).
Based on principles of JIT II , end users at the Foxboro plant in Massachusetts deal directly with Computopia's on-site account rep. The supplier processes orders for printers, LAN cards, and the like, and enters them on the automation company's information system. Foxboro's Locke proves and posts orders, and follows up with customers to ensure that they receive deliveries. "Computopia also services us on site," says Rioux. "Its account rep is part of the IA (Industrial Automation) team. He proposes alternatives."
Advantages of having a peripherals supplier located on site include quick response for internal customers and regular notice of the latest advances in technology. All employees in the continental U.S. can access the support service by calling the home-office help desk. Even remote locations can take advantage of volume contract prices.
Cost savings measured in reduction of manpower at Foxboro as well as what the supplier is able to provide in price discounts come to approximately $100,000 annually. Many shipping charges have been eliminated as well.
For software for PCs, Foxboro is a Microsoft solution provider. To purchase its software, BTR Siebe has an agreement in place with Software House International. The supplier provides the company with global sales and support as well as global net pricing. Delivery is within 48 hours.
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