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E Sourcing at Sun Microsystem

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CASE: OIT-34
DATE: 03/25/04

ESOURCING STRATEGY AT SUN MICROSYSTEMS
Introduction

op yo In May 2000, Sonia Syngal, director of procurement strategy and supplier relations at Sun
Microsystems, needed to make a critical decision. Under Sonia’s leadership, the company had just completed its first “dynamic bidding” pilot tests and as a result, cut its sourcing costs by 30 percent. Given these results, the potential for cost cutting via the implementation of a dynamic bidding system on a widespread scale at Sun was enormous; on an annual basis, the company was currently spending about $9 billion in direct materials procurement.

No

tC

While the potential to significantly cut costs was clear, Sonia had several …show more content…

Sonia reported directly to Kevin Caroll, and led a 35-person team responsible for the development of
Sun’s procurement strategy. (Exhibits 1) Sonia was responsible for driving an overall strategy behind the procurement of all of Sun’s direct materials. She was also responsible for delivering key technological tools that would support Sun’s overall procurement process and the activities of Sun’s global commodity directors. (Exhibit 2) According to Sonia, “My goal is to have Sun be the best-in-class in supplier management compared to any metric. It is my job to ensure that we have alignment and communication around our strategy and to implement key programs that will allow us to maintain our number-one position as the top provider of products, technologies and services for enabling the Networked economy.”

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GLOBAL COMMODITY DIRECTORS

No

Sonia worked closely with Sun’s five global commodity directors (GCDs), who also reported to
Kevin Carroll. The GCDs had purchasing responsibility for one or more of Sun’s commodity areas, which included ASICs, cables, drives, memory, displays, enclosures, printed circuit boards/FABs, power supplies, and storage software. (Exhibit 3) Each GCD was responsible for the development and

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