Buyers want suppliers that can reduce costs
By Susan Avery -- Purchasing, 11/19/1998
Capability to reduce purchasing costs is the performance criterion corporate buyers most desire in an office-supplies distributor. How distributors exhibit this trait, buyers say, is what distinguishes "a best supplier" from the rest.Most cost-conscious buyers select a single supplier for the office supplies purchase at their companies. Making this selection from an extremely competitive marketplace means such traits as price, quality, and delivery oftentimes are given, say buyers. Still, they do not ignore them. At most companies, meeting these criteria is a rigorous process for suppliers.
Next-day delivery, summary billing, and usage reports are what most purchasing managers are demanding of their office supplies providers, says Tara Santry, vice president of marketing and business development, Staples National Advantage, South Hackensack, N.J. "What we try to do is take a concept [for providing office supplies companywide] and turn it into reality."
Such is the case at First Union Corp., Charlotte, N.C. Three years ago, First Union entered into a five-year agreement with Staples National Advantage. Cyndi Joiner, director of strategic sourcing, says the bank considered the distributor's buying power coupled with its advantageous contract pricing in its selection decision.
"Still, we were looking for a partner with something beyond core competencies of providing office supplies," says Joiner. "Our goal is to be best of breed in the financial services industry. We want to align ourselves with someone who has the same drive to be the very best.
"Staples runs its organization with the same sense of urgency and excellence as we do," she says. "We expect to continue on the rapid growth track and we believe Staples can support our ever-changing environment."
First Union has acquired more than 15 financial-service companies since initiating the original agreement. But if the acquired company is working with another supplier, First Union does not automatically convert the business, Joiner says. Staples has to continue to be competitive and outperform the incumbent.
"We challenge them on a daily basis and continue to raise the bar," says Joiner. She believes the relationship First Union has forged with Staples works because both partners have the ability to change. "Together we must be proactive in seeking out opportunities and ensuring that we stay ahead of the curve."
Automation cuts costs
Supplier capability for purchasing to set up buying systems online, enter orders through the supplier's own system, send requisitions via electronic data interchange (EDI) or by facsimile are other criteria that seem to set the best suppliers apart from the rest.
Office buyers, however, are looking for the supplier that is willing to work with them to help set these systems up. Capability to accept purchasing cards is another criterion important to many office-supplies buyers. The systems must be easy to use, quick, and efficient: Buying office supplies, corporate purchasing managers say, should not be a hassle.
At Hasbro, Inc., capability for internal customers to place orders for office supplies via the Internet as well as pay for them with a purchasing card are traits A. Leo Caisse, senior buyer, wanted in a supplier.
By selecting Boise Cascade Office Products as Hasbro's supplies provider Caisse has been able to streamline internal buying processes, improve cycle time, and reduce buying costs. What's more, implementing a system that's easy for requisitioners to use helps give the purchasing operation more control over office-supplies buying activity.
Summary billing provides Caisse with more detail on individual line items purchased each month. This helps to improve efficiencies for the accounts-payables function as well as American Express purchasing cardholders who must reconcile statements each month. Use of Boise's e-commerce systems provides Caisse's customers with improved tracking and reporting as well.
E-commerce systems "help to improve order accuracy, and there are not as many returns," says Caisse. "With fewer processes, receiving typically improves as well."
Internal customers using First Union's automated ordering system oscar (Ordering Simplified Convenient and Reliable) two or three times a day initially increased costs for Staples. Instead of raising prices, the supplier worked closely with First Union on a communications plan to heighten users' awareness and developed flyers and other media to get the message across. As a result, the number of orders per location decreased significantly and the average order size increased by $30 to $40.
The challenge, says Joiner of First Union, is to reduce operating costs while improving quality and service. "We need partners such as Staples to be proactive in identifying areas to reduce costs and in having action plans for implementation."
Quarterly reviews that measure such criteria as availability and cost savings (from process improvements) are part of the process at First Union, says Joiner. Others agree. To measure a supplier's performance, purchasing operations first monitor customer satisfaction. Buyers say that there should be no back-order reports. Many keep tabs on supplier pricing as well.
Another criterion important to office-supplies buyers is impeccable capability to satisfy internal customers. An agreement with a supplies distributor helps to reduce purchasing costs only if internal customers are ordering their supplies through the provider. The system, therefore, must be easy to use, have already established approvals, and must provide the requisitioner with updated information on his or her order.
The supplier also must provide reliable delivery to the internal customer. Whether delivery is direct to the requisitioner's desktop or to a company's receiving dock varies among purchasing operations. Some buyers also prefer to have supplies delivered next day, while for others, delivery once a week is suitable as well. Desktop delivery also means that internal customers are not storing supplies in their closets.
Office-supplies buyers also are selecting suppliers based on their capability to provide value-added services. Providers must have their own internal IT support, be attentive to ergonomic issues, and provide regular new-product reviews and demonstrations.
Finally, office supplies buyers are beginning to look to suppliers with capability to implement integrated supply management. While buyers have been interested in entering into such agreements for a while, technology is now at the point where it is possible. Viewed by many as the ultimate in one-stop shopping, integrated supply agreements allow buyers to interface with one supplier for many requirements. This one supplier, in turn, handles all of the paperwork.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
