09 June 2005 | David Arminas
The Boots Company has outsourced part of its indirect purchasing and all its procurement transactional work in a seven-year deal.
Outsourcing firm Xchanging landed the estimated £60 million a year contract and has also taken over Boots' entire operational processing centre.
Xchanging is now responsible for buying elements of travel, marketing, facilities management and workplace services.
Julian Coles, director of sourcing and purchasing at Boots, said the £60 million is for low-value goods and services only: "These are non-strategic areas where we've got the best deals we can and now it is up to someone else with more leverage to improve on prices for us."
Boots spends £800 million-£900 million a year on indirect goods and services, he added.
The deal frees buyers to spend more time on strategic activity.
"Indirect purchasing has recently taken responsibility for raw material and packaging for our manufacturing arm," he said.
"Also we will spend more time working with our direct goods purchasers, transferring negotiation and supplier management skills to them."
David Rich-Jones, managing director of Xchanging, said the focus is on building strong relationships with suppliers.
"It is the first time we have taken over a company's invoice and order processing apart from what we source ourselves for the client," he added.
Some of the transactional work will go to Xchanging's operations in New Delhi and Bangalore.