L'Oréal outsources indirect purchasing to Xchanging

1 August 2011

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1 August 2011 | Adam Leach

French cosmetic giant L'Oréal has hired procurement outsourcing firm Xchanging to manage more than €500 million (£439 million) of indirect spend.

As part of the deal, which runs until 31 August 2014, Xchanging will assign 40 procurement staff to work in collaboration with the cosmetic company’s in-house purchasing teams across Europe.

The key areas where the firms will look to cut costs include IT, facilities management, human resources, logistics and contract management. Xchanging aims to make savings in excess of €90 million (£79 million) over the contract period.

Speaking to SM, Ed Cross, Xchanging Procurement Services' managing director for UK and Europe, explained that while the company couldn’t disclose the exact amount of spend covered in the contract, it was larger than the firm's previous record of managing around €500 million of indirect spend for French Bank BPCE.

Asked whether there was the potential for the deal to be extended, Cross said: “I think there’s an opportunity for us to work globally with L'Oréal on indirect spend, but we’ve got to walk before we can run.”

Cross stressed that the deal would see the two companies working together to find savings. He explained that Xchanging would be looking to adopt this approach more widely, especially with regard to fast-moving consumer goods.

As reported by SM in February, Xchanging forecast lower than expected profits for 2011, as a result of winning fewer contracts. Its forecast revenue in 2010 was £684 million, but for 2011, its forecast fell to £648 million.

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