IBM shifts global procurement headquarters to China

Mumbai: IBM has announced the relocation of its global procurement headquarters to Shenzhen, China as the company pursues its strategy of drawing more efficiently on its global capabilities by capitalising on the emerging market opportunities from the world's largest growing economy.

The decision marks the first time the headquarters of an IBM corporate-wide organisation has been located outside the US. The company says that this indicates a shift underway at from transforming itself from a multinational corporation to a globally integrated enterprise.

IBM chose China as the global procurement headquarters because it already has more than 1,850 procurement and logistics professionals in the region, many of them at its China Procurement Center in Shenzhen, which has been in operation for more than a decade.

The centre is one of IBM's largest procurement organisations outside the US. The company also has strong and collaborative relationships with nearly 3,000 suppliers across Asia, accounting for about 30 per cent of the $40 billion IBM spends annually on procurement.

To make the shift successful, IBM will have to transfer knowledge and build internal procurement skills in China, develop managers and prepare them to take on global roles, a task that Paterson is in Asia to handle.

With this shift, IBM will reshape its 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 that's still important, to capitalise on the growing demand for software and services skills — across Asia and worldwide — IBM will have to source from new suppliers to continue to be able to compete globally in the services market.

"In a globally integrated enterprise, for the first time, a company's worldwide capability can be located wherever in the world it makes the most sense, based on the imperatives of economics, expertise and open environments," said John Paterson, chief procurement officer, whose office is being shifted from Somers in New York to Shenzhen in China." The move will help IBM expand its own capabilities, but it also has benefits for local markets. IBM's procurement activities have long aided the economic development of the regions from which it buys.

"IBM is a global company," Paterson said. "And today that is as much about making efficient and effective use of skills everywhere in the world and integrating them globally to serve clients, as it is about developing deep local relationships in markets around the world. We are becoming a globally integrated company that allows us to do both."