Xerox debuts purchasing outsourcing service
Xerox Procurement Solutions provides a range of services that assist purchasing professionals with sourcing direct or indirect goods and services.
By Susan Avery -- Purchasing, 2/12/2009 2:00:00 AM
Xerox Corp. is launching a new service for those looking to source components from suppliers in other regions of the world but who may not have the resources to do so on their own.
Xerox Procurement Solutions provides a range of services that assist purchasing professionals with sourcing direct or indirect goods and services. These services range from consulting to Xerox's procurement operation actually sourcing parts and components for the client. Fees vary depending on services rendered.
Of the services offered on the direct side, Xerox's procurement operation is touting its expertise at low-cost country sourcing. Xerox's buyers who purchase direct parts and components are based located in seven different countries in Asia.
The offices are staffed with between 10 and 40 procurement professionals with skill and expertise at buying (i.e., negotiating and managing contracts), quality engineering, advanced manufacturing engineering and cost engineering. The direct procurement team, led by Dave Partridge, is especially experienced at sourcing parts and components typically used in the office equipment Xerox manufactures such as electronics, plastics, electromechanical parts and sheet metal, among others. The team also manages relationships with contract manufacturers.
Xerox spends $6.7 billion annually on goods and services, much of it ($3 billion) with suppliers based in Asia.
The procurement operation also has a cost modeling system that it developed 15 years ago that it is making available for use by external clients. The cost modeling system consists of an extensive database that collects data from different regions of the world and enables the procurement operation to establish target pricing for parts and components. Procurement also has ability to conduct value analysis/engineering activities for clients.
The idea to launch the new service came from one of the company's suppliers.
"The supplier told us 'We'd like Xerox to do for us what you do to us,'" Ginny Tucker, vice president at Xerox Procurement Solutions tells Purchasing. "For me, it's a new way for Xerox to take something we're good at and share it with the marketplace."
Xerox CPO Ken Syme says, "We have the size and scale to help some of these supplier companies be more competitive and more effective at sourcing which will improve efficiencies and remove costs from the supply chain."
Syme restructured the procurement operation at Xerox about two years ago, significantly building up the group's presence in Asia and, in effect, changing the model of how the company sources its direct parts and components around the world.
Syme's team developed the idea of marketing their expertise and presented it to Xerox strategy and operations management committees to see how it fits with solutions and services the company already offers. "It was absolutely a logical extension of some of the things we're doing," he says. Xerox already had been doing print procurement for some of its customers.
Typically, companies that decide to outsource the purchasing process begin with the transaction piece, he adds, speaking to the trend. Then, they move on to indirect procurement, with direct procurement a next step in a progression. On the indirect side, Procurement Solutions builds on the procurement operation's expertise at providing Xerox offices in 160 countries with a variety of indirect goods and services. The service's differentiator for indirect procurement "is our ability to understand the market in all these countries," says Syme.
While Xerox has initially targeted purchasing operations at mid-size companies as potential customers for the new service, Syme says the new business offering already has the interest of some larger companies.
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