26 May 2010 | Nick Martindale
Logistics company Deutsche Post DHL is targeting both private and public sector organisations with a procurement outsourcing service.
DHL Procurement Outsourcing claims it can help organisations deliver substantial cost savings. It added that the private sector is particularly well placed to help the public sector meet tough cost-cutting targets as part of the battle to reduce the public deficit, which in the UK currently stands at £156 billion.
The new team will be based in the UK and led by Roger West, the former procurement director at NHS Supply Chain. Run by DHL, NHS Supply Chain was created in 2006 to deliver savings of £1 billion to the health service over 10 years. The company said it has so far saved the NHS more than £100 million in the past three years.
West said: “National and local governments are starting to appreciate the sheer strength of their buying power, and our new proposition will rapidly and effectively transform that power into substantial savings.
“With many countries having to commit upwards of 25 per cent of public spending to finance borrowing costs, it makes no sense to wait for the necessary culture change and cross-departmental consensus required for the public sector to create their own specialist procurement expertise.”
He added that many central government procurement programmes only effectively targeted one-quarter of spend in categories such as energy, telecoms and travel, leaving around £150 billion of “long-tail” savings in the UK that could be delivered through effective procurement outsourcing.
On Monday the UK government announced the creation of a central Efficiency and Reform Group, which it claims will have “Draconian” control over government spending as part of its plans to cut £6.2 billion from this year’s budget.
But West said private sector organisations would also benefit from DHL’s new offering, and said customers would also gain from its other service capabilities such as warehousing and distribution and freight forwarding. “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,” West said.