Rent-A-Center,procurement,outsourcing,cost,performance,IGC

Rent-A-Center, Inc. looks to procurement outsourcing as key vehicle for combating rising operating costs and achieving performance improvement goals

ICG Commerce, a leading procurement services provider, today announced a multi-year engagement to provide procurement business process outsourcing (BPO) services to Rent-A-Center Inc., America's largest rent-to-own operator. ICG Commerce will provide Rent-A-Center with a complete suite of procurement services that will enable the company to reduce costs, improve processes and maintain consistent and efficient operational practices.

Rent-A-Center will leverage ICG Commerce's comprehensive procurement infrastructure including category experts and process specialists, a best practice-driven Buying Center, and flexible tools and technology to manage a broad spectrum of processes including strategic sourcing, savings implementation, transaction processing, and ongoing category management across a wide array of indirect goods and services. "After considerable research into different operational areas, procurement outsourcing has been identified as a key vehicle for enabling the company to obtain sustainable cost reductions and process improvements," stated Robert Davis, chief financial officer and senior vice president of finance at Rent-A- Center.

"The ICG Commerce team emerged as a natural partner for Rent-A-Center in this initiative due to their understanding of the procurement function, as well as their demonstrated success with other companies." Aberdeen Group's July 2005 "Procurement Outsourcing Handbook" reveals that leading companies are incorporating outsourcing as a method to augment and accelerate their procurement transformation, not in lieu of creating a world-class capability. Tim Minahan, vice president at Aberdeen and author of the report, states, "Firms are outsourcing (procurement) to leverage economies of scale and improve execution and control of underperforming or non-core tasks and poorly managed spend categories, while focusing internal resources on high-value activities such as the strategic sourcing of direct materials."

The primary benefit of BPO in most other functional areas such as customer service, human resources and finance & accounting is cost savings through labor reductions, which has traditionally been accomplished through offshoring. The procurement outsourcing value proposition, however, is much more impactful and rooted in acquiring better capabilities to materially and continuously lower the costs of goods and services purchased externally to run the business. These costs can represent up to 80 percent of a company's revenue and thus just a five to 10 percent cost reduction can have a material earnings impact.

Leading companies like Rent-A-Center view procurement outsourcing as a vehicle to quickly achieve and sustain these savings across a much broader scope of expenditures.