eSourcing Strategy at Sun Microsystems

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.. While the potential to significantly cut costs was clear, Sonia had several other issues to consider, including: 1) Sun’s suppliers and the potential impact of a dynamic bidding program on the company’s critical relationships; 2) The reaction of Sun’s internal constituents, namely its commodity directors who had spent years trying to identify the most effective way to work with the company’s suppliers; and 3) Selecting the best software vendor, which would be difficult in a crowded space.