DHL wins contract worth GBP 1.6 billion revenue over 10 years with the UK Government's Department of Health
- DHL operates support organization for healthcare - NHS Supply Chain
- GBP 1 billion/Euro 1.4 billion savings targeted to the NHS over 10 years
- Around 1,000 new jobs to be created
DHL Logistics has won a 10-year deal totaling GBP 1.6 billion /Euro 2.3 billion in revenue to manage GBP 22 billion/Euro 32 billion total spend with the UK Government's Department of Health. DHL will target over GBP 1 billion/Euro 1.4 billion savings over the contract period back to the English National Health Service (NHS). Klaus Zumwinkel, CEO and Chairman of Deutsche Post World Net, said the contract marked the significant success of the Group's strategy: "After the take-over of Exel and given DHL's extensive expertise in the health sector, we were able to make our customer a truly convincing offer. We now reap the benefits of both our internationalization strategy and our broad product range."
Under the agreement, DHL will run a division called NHS Supply Chain, on behalf of NHS Business Services Authority, and be responsible for delivering all procurement and logistics services across an initial 500,000 products to support 600 hospitals and other health providers in England. The business will ensure that public health (NHS) authorities can dedicate more resources to patient care and continue to manage their cost base. It will help protect existing jobs and lead to the creation of over 1,000 additional positions.
John Allan, Chief Executive of DHL's Logistics division and Management Board Member of Deutsche Post World Net, says, "This contract is both good for staff and good for the NHS. We are committed to targeting savings on behalf of the Department of Health that can be directed back to patient care by building upon the success of both NHS Logistics and some of the scope of the NHS Purchasing and Supply Agency. The contract will ensure that NHS Trusts get access to a wide range of high quality, innovative products that will be selected by having extensive dialogue and testing procedures with clinicians. We are thrilled to play such a major part in this change to manage and deliver a world-class supply chain for the NHS."
John Pattullo, Chief Operating Officer for DHL Exel Supply Chain, Europe, Middle East and Africa, adds, "By applying commercial experience and procedures to core logistics and procurement functions, and working very closely with the supplier community, we now have a unique opportunity to deliver innovative, high quality products to support public health in England. This is exactly the kind of strategic sourcing deal where we think we can generate major value for our customers, in this case - the NHS."
The range of products NHS Supply Chain will manage encompasses a wide range of goods including key supplier and maintenance contracts, food, bed linen, office equipment, stationery, cleaning products, patient clothing, medical and surgical equipment (such as operating theatre equipment and machinery) dressings and provisions. NHS Supply Chain will have its own management team and be governed by a Board dedicated to managing the performance of the operations. In addition, it will be overseen by the NHS Business Services Authority, a government body responsible for managing core public sector support services.
In 2008, DHL will open a new 250,000 sq ft UK-based DHL distribution centre (DC) to act as a stockholding hub for food and other products. It is expected that around 1,000 extra employees will be recruited to manage this distribution centre and an additional DC in 2012.
With extensive experience in the healthcare sector, including over five years experience with the former NHS Logistics, DHL will build upon existing knowledge, relationships and capabilities to pass savings back to the Department of Health. In addition, DHL will have freedom to invest and develop the business along commercial best practice, work even more closely alongside industry professionals and suppliers, and introduce more employees to the benefits of working alongside DHL.