Greif Wraps up Procurement Outsourcing Deal with ICG Commerce

Packaging company looks to service provider for sourcing, purchase-to-pay processing, ongoing category management

Packaging company looks to service provider for sourcing, purchase-to-pay processing, ongoing category management

Philadelphia — January 24, 2005 — Industrial packaging specialist Greif has engaged ICG Commerce to provide procurement business process outsourcing (BPO) services, including everything from sourcing to purchase-to-pay processing to ongoing category management across more than 20 indirect materials and services categories.

In other news, Greif reported recently that it has promoted two executives into new vice president positions within the company's supply organization.

Based in Delaware, Ohio, Greif offers industrial packaging products and services for a range of industries. The company, which also produces containerboard and manages timber properties in the United States, reported net sales of $2.2 billion in 2004, and it had some 9,400 employees globally at the end of October.

Feeling continued pressures from cost escalations in major raw materials, Greif has announced some price increases recently. But the company has also undertaken initiatives to trim its own costs by improving its labor and manufacturing efficiencies and reducing its supply chain outlays.

Under the BPO deal with ICG Commerce, the service provider will make available to Greif a suite of services. Greif will leverage ICG Commerce's integrated procurement infrastructure, which includes category sourcing experts; a best-practice-based Buying Center; and RealExchange, a technology platform for the purchasing of both goods and services.

In signing the deal, Greif is looking to maximize procurement cost savings and standardize the procure-to-pay process across 80 facilities. Annually, Greif spends more than $1.5 billion for materials and services, according to Ron Brown, the company's senior vice president of global sourcing and supply chain.

Commenting on the deal, Myron Gramelspacher, Greif's recently named vice president of global indirect materials and services, said, "With a company-wide focus on achieving sustainable cost reductions and process improvements, we identified ICG Commerce as a means to help drive measurable savings in under-resourced buying categories in a fast and cost-effective manner."

Gramelspacher said that partnering with ICG Commerce would give Greif fast access to sourcing specialists in indirect categories, savings implementation and compliance management programs, and the support of the provider's purchasing center. "At the same time, this strategy allows us to keep our existing team focused on other strategic categories and activities," Gramelspacher said, adding, "ICG Commerce is an extension of our team."

The BPO agreement with Greif is ICG Commerce's fifth major outsourcing deal in the past year.

Veeps Promoted in Supply Organization

In addition, earlier this month Greif announced that its board of directors had elected Gramelspacher as vice president of global indirect materials and services and named Dan Ronchetto to the position of vice president for global direct materials.

Joining Greif in February 2004 in the supply chain organization, Gramelspacher previously worked three years for Mettler-Toledo in its sourcing and supply chain group, and 12 years with GE in various manufacturing, Six Sigma and sourcing positions.

Ronchetto joined Greif in November 2004 as director of global direct materials. He had been with Emerson Electric Co. in St. Louis, where he was strategic sourcing manager for steel.

For more information on procurement business process outsourcing (BPO), see the articles "The Procurement Outsourcing Imperative," "The Procurement Outsourcing Imperative, Part II" and "Has Procurement Outsourcing's Time Come?"

For more information on the current state of the sourcing and procurement markets, see the articles "The Analyst Corner: Sourcing" in the June/July 2004 issue of Supply & Demand Chain Executive, and "The Analyst Corner: Procurement" in the August/September 2004 issue of the magazine.