IBM Shifts Procurement Office to China

IBM has shifted its global procurement headquarters from Somers, N.Y., to Shenzhen, China, a move that initially is more symbolic than any kind of upheaval in the company’s purchasing operations. For now, the move involves the relocation of one person.

John Paterson, IBM’s chief procurement officer, is now based in China, an IBM spokesman said Thursday. “This is the first time the headquarters of one of our corporate support organizations is based outside of the U.S.,” said spokesman Fred McNeese.

Choosing Asia as the location for the vendor’s top decision maker on how IBM sources components, products and services from suppliers will help sharpen the company’s focus on the region and particularly on China, he added.

Asia has been a key region for IBM’s procurement, mostly in the hardware space, over the past 50 years. One of Paterson’s new focuses will be to help IBM ramp up the purchase of third-party software and services from the region’s suppliers. He’ll also work with Asian suppliers on improving their supply chain processes.

Some 700 of IBM’s total 7,500 worldwide procurement staff are based in China, McNeese said. IBM has relationships in place with 3,000 suppliers across Asia. The vendor spends about 30 percent of its annual US$40 billion procurement budget on goods from Asian suppliers, a percentage IBM expects to see rise in future, he added.

At present, IBM has no plans to make any similar moves to relocate other of its business unit headquarters outside of the United States, McNeese said.

By China Martens, IDG News Service (Boston Bureau)