U.K. Department of Health Outsources Supply Chain Management to DHL

DHL Logistics won a 10-year deal to manage GBP 22 billion ($41.2 billion) of the Department of Health’s annual procurement spending. DHL has committed to return GBP 1 billion ($1.87 billion) savings over the contract period back to the English National Health Service (NHS, www.nhs.uk). Under the agreement, DHL will run a division called NHS Supply Chain (www.dhl.co.uk/nhs), 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 healthcare providers in England. The U.K. Department of Health believes the arrangement will allow public health authorities can dedicate more resources to patient care and continue to manage their cost base.

The range of products NHS Supply Chain will manage encompasses a range of goods including supplier and maintenance contracts, food, bed linen, office equipment, stationery, cleaning products, patient clothing, medical and surgical equipment, 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., U.K.-based distribution center 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 center and an additional DC in 2012.

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."