DHL launches procurement outsourcing branch

May 26, 2010
by Purchasingb2b Staff

One of the world’s largest logistics service providers has branched into the procurement field.

DHL has launched a procurement outsourcing service designed to help organizations—public and private—cut costs through “transformational sourcing” of products and services.

The service is meant to work in concert with the company’s other capabilities.

The team behind the unit—called DHL Procurement Outsourcing—will be based in the UK and headed by Roger West, former procurement director of NHS Supply Chain, a business unit created by DHL in 2006 under contract to the UK Department of Health. This unit generated £100m in savings over the past three years, in large part because of a direct-from-manufacturer sourcing program.

For public sector organizations—in particular, governments—West says the opportunity lies in smaller, non-centralized spend categories.

“Central procurement programs will only really effectively target some 25 percent of government spend. In the case of the UK this would still leave in the region of £150 billion worth of ‘long-tail’ purchasing savings that could be delivered at lower cost from more intelligent procurement outsourcing,” West points out.

“Governments need to set aside ideological or political differences and ally with the private sector in using procurement to help tackle the debt crisis.”

He says companies in the private sector stand to benefit from gaining access to one-stop procurement and delivery process.

“We hope to extend our well-known and trusted logistics services to integrate procurement of some of the things that we move. This will give our customers procurement capacity to focus on other opportunity areas in their businesses,” he says.

DHL expects to expand the business into other countries, though it has not announced any official launch dates.