01 March 2006 | Anusha Bradley

The Goodyear Tire & Rubber Company in North America is outsourcing a number of indirect spend categories in a drive to cut costs.

The world's largest tyre manufacturer said the decision will result in "multi-million dollar savings" for its operations in the US, Canada and Mexico over the life of the contract with procurement services firm IGC Commerce.

A Goodyear spokeswoman told SM that the deal, the duration of which is undisclosed, will help save $1 billion (£577 million) by 2008 and allow buyers to focus on strategic direct spending.

Outsourced categories include transportation and distribution, maintenance, repair and operations, packaging, energy, and marketing services.

In March 2004, Goodyear Dunlop Tires Europe outsourced all its indirect spend to IBM for 10 years. It estimated procurement savings of ?50 million would be achieved within two years. The deal was part of a programme to reduce costs to the global business by $1.5 billion by the end of 2005. Other measures included efficiencies, redundancies and closures. The company has not revealed if it reached its target.

SMmar2006