One of the screaming themes in today's economy is the role of supply officers in improving corporate performance. Company after company, from Ford to Motorola, wants instant bottom-line salvation from its purchasing pros.

In that light, we met recently with the executive purchasing team at IBM, the winner of our Medal of Professional Excellence in 1999. They haven't sat on their laurels in the past three years. Some highlights:

• IBM buyers now control virtually 100% of the company's spending. They controlled only 45% prior to 1995.
• IBM documents and reports its purchasing savings. This is very important in the new IBM because close to 80% of the cost of goods sold for production is controlled by the buyers. The really neat part is that IBM measures its savings by evaluating its performance against "absolute low cost" whereas most companies use year-to-year or PPI benchmarks.
• E-procurement covers 95% of what IBM buys. The total e-buy is $40.3 billion. Cost avoidance from e-procurement alone is $405 million. "If a buyer has to touch something manually, there's a defect in the system," says chief procurement officer (CPO) John Paterson. Overall, about 70% of purchasing's activities are now strategic and 30% are tactical.

IBM conducts e-procurement with 32,000 suppliers using more than 280 Web-based catalogs. IBM has also established its own private marketplace, "The Singapore Trading Center," where transactions ($2+ billion) take place with contract manufacturers and 300 component suppliers. One new online tool eliminates legal approval from contract negotiations, which means that new contracts can be completed in 10 days, down from two months.

Advance engineering is one example of extensive supplier relationships in electronics. IBM buyers meet with supplier R&D teams to make sure the company has access to the very newest developments before or at least no later than anyone else in the world. This is particularly true in high-end servers. One of the hot trends at IBM is buyer involvement in design. IBM employs 600 purchasing engineers.

We'll be taking an in-depth look at IBM in our March 21 issue, with a particular focus on design and e-procurement issues. In our April 4 issue, we'll look at a range of best practices in cost reduction from a baker's dozen of great companies, including IBM.