Colgate, IBM, Procurement, Accounts Payable, Outsourcing
Colgate signs 7-year procurement and payables outsourcing deal with IBM
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As part of its worldwide efforts to generate global efficiencies, Colgate-Palmolive Company announced a seven-year agreement with IBM to provide procurement services for designated materials and services worldwide and to provide accounts payable services for Europe and North America.
The agreement builds upon Colgate's current global best practices for raw and packaging materials purchasing and for the first time extends this approach to all goods and services. Increased purchasing effectiveness is expected to generate more than $30 million annually in incremental aftertax savings by 2008.
The purchasing and accounts payable changes are a meaningful part of the overall four-year restructuring and business building plan Colgate announced in December 2004. Total savings from the plan are projected to be in the range of $250 to $300 million aftertax.
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Relying on innovative and unique purchasing tools developed for its global SAP systems, Colgate will oversee all global purchasing carried out both by internal Colgate procurement teams and IBM specialists. This arrangement will provide Colgate an extraordinary capability to deliver industry-leading purchasing expertise to all its global locations.
Under the new agreement, IBM will also manage Colgate's accounts payable function in North America and Europe, streamlining this process and generating additional savings from IBM's best practice capabilities and innovative technologies.
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