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CASE: OIT-34

DATE: 03/25/04

ESOURCING TECHNIQUE AT SUN MICROSYSTEMS

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In May 2k, Sonia Syngal, director of procurement approach and distributor relations for Sun Microsystems, needed to produce a critical decision. Under Sonia's leadership, the business had merely completed their first " dynamic bidding” pilot assessments and as a result, cut its finding costs simply by 30 percent. Given these benefits, the potential for price cutting via the implementation of a dynamic bidding system over a widespread range at Sun was tremendous; on an annual basis, the business was currently spending about $9 billion in direct materials procurement.

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While the potential to significantly save money was obvious, Sonia acquired several other problems to consider. First, Sunlight had invested heavily in developing good relationships with its suppliers. How would these kinds of suppliers act in response if Sun were to begin awarding their contracts through online auctions? Could Sun possibly damage their relationships with key suppliers? Also, at the time, the market demand for servers was extremely excessive, but the availability of the key immediate materials Sunlight needed to create its servers was so scarce that suppliers literally were deciding on which consumers to satisfy. Sonia worried that if the suppliers were unhappy, they would avoid Sun's business and choose to work with other server manufacturers. In addition to its suppliers, Sonia as well wondered how Sun's inner constituents would react. Most of the commodity administrators at Sunlight had spent years trying to identify the simplest way to work with the company's suppliers. Will they become resistant to this abrupt modify and/or could they feel that their careers were threatened by this new technology? Finally, Sonia knew that if she were to force for dynamic bidding on a broader size, she would must make sure she picked the best application vendor. Considering that the market for applications with this space was so populated, she knew this would be a horrible task.

Carry out

Research Affiliate Andrea Meters. Higuera, MBA 2001, well prepared this case beneath the supervision of Charles A. Holloway, Kleiner, Perkins, Caufield and Byers Professor of Management, since the basis pertaining to class discussion rather than to demonstrate either effective or inadequate handling of the administrative scenario. Some person and organization names have been disguised to get reasons of confidentiality.

Sun makes simply no warranties or representations, share or intended, with respect to the Example, including although not limited to any warranties of merchantability, health for a particular purpose, or non-infringement of perceptive property. Sunlight, Sun Microsystems and the Sun logo are trademarks or registered art logos of Sunlight Microsystems, Inc. in the United States and other countries.

Copyright laws В© 2150 by the Panel of Trustees of the Leland Stanford Junior University. Almost all rights arranged. To order copies or perhaps request agreement to replicate materials, e-mail the Case Composing Office by: [email protected] stanford. edu or perhaps write: Case Writing Office, Stanford Graduate student School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of this kind of publication can be reproduced, trapped in a collection system, employed in a schedule, or sent in any form or in any respect –– electric, mechanical, photocopying, recording, or perhaps –– with no permission from the Stanford Graduate School of Business.

This document is authorized to be used only by Hassan Chaudhry until Drive 2013. Replicating or publishing is an infringement of copyright. [email protected] harvard. edu or 617. 783. 7860.

Supplier Management at Sunshine

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eSourcing Strategy by Sun Microsystems OIT-34

As the overseer of purchase strategy and supplier contact, Sonia Syngal was a very influential person in the Globally Operations crew at Sunlight Microsystems. Worldwide Operations was your functional group responsible for helping all lines of organization at Sun through the...



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