Goodyear Dunlop Tyres Europe has announced a 10-year outsourcing programme worth an estimated €50 million in cost savings in the first two years alone.

The agreement to partner with IBM on a procurement-to-payment programme for indirect supplies represents another step in the company’s effort to reduce costs by $US1.5 billion by the end of 2005.

Goodyear Dunlop Tires Europe will retain core purchasing staff but the between 50 and 80 Goodyear Dunlop employees will be transferred to IBM, on a phased basis. The main savings will be achieved by using IBM’s procurement organisation, which will negotiate on behalf of Goodyear Dunlop.

The procurement-to-payment project will establish a consistent and consolidated system across all 15 countries mandating a strict procurement process for all employees. Indirect supplies include such items as telecommunications, information technology, business travel, office supplies, marketing and advertising, manufacturing maintenance and repair expenses and professional services, among others. They do not include the company’s purchase of raw materials.

Initial implementation of the project has already started following a comprehensive review phase. The programme is expected to be fully operational by early 2005.