IBM is to relocate its global procurement headquarters to Shenzhen in a move indicative of the rising technological status of China.
The move will see the headquarters of an IBM horizontal function being located outside the US for the first time.
"In a globally integrated enterprise a company's worldwide capability can now be located wherever in the world it makes the most sense, based on the imperatives of economics, expertise and open environments," said IBM chief procurement officer John Paterson, who will be moving to Shenzhen.
IBM already has more than 1,850 procurement and logistics professionals in the region, many of them at its China Procurement Centre in Shenzhen, which has been in operation for more than a decade.
The company also has strong and collaborative relationships with nearly 3,000 suppliers across Asia, accounting for about 30 percent of the US$40 billion IBM spends annually on procurement.
Paterson will expand and strengthen IBM's internal procurement skills in the region, developing leaders and preparing them to take on global roles. He is also tasked with reshaping the company's supply base in the region.
Although IBM has been sourcing in Asia for more than 50 years, most of it has been in support of its hardware businesses. While this is still important, the demand for software and services skills across Asia and worldwide is growing.
Meeting the demand will require relationships with new partners and suppliers and working with existing ones to help build skills, processes and management practices to compete globally in the services market.
Paterson's move to China does not mean a shift by IBM away from global sourcing.
"IBM has procurement professionals in 400 cities in 60 countries worldwide and the competitive advantage that procurement provides is to locate those skills close to our clients and suppliers around the world," he said. "That strategy does not change."
IBM shifts global procurement HQ to China
By Andrew Charlesworth on Oct 17, 2006 10:17AM