Moving forward, Yoshimura says that Office Depot's supply chain function will continue to focus on inventory management. "We're spending quite a bit of time re-looking at how we order things, our safety stock levels, our replenishment algorithms, our service levels," he says, "looking for opportunities to reduce stock-outs and improve fill rates while reducing inventory." The company also is implementing a merchandizing and planning system from Retek. The emphasis here, too, is on deploying processes and systems that contribute to supply chain flexibility, so that as M2 continues to roll out and as new corporate initiatives arise, the supply chain function will be able to support those efforts.
Looking back at the M2 rollout, Yoshimura points to one important lesson: By continuously working to improve the company's supply chain processes, his organization positioned itself to take on the tasks necessary to support the M2 project. "There haven't been that many challenges from a supply chain perspective because we were already working on things, such as the flexibility, that have allowed us to adapt to these new concepts without a lot of pain."
Adding Private Labels and Addressing Complexity at Corporate Express
At Corporate Express, the supply chain function has been working to support the company's move toward a greater emphasis on private-label brands by creating a revised logistics network called "mixing centers/private-label warehouses," according to Tim Beauchamp, senior vice president of distribution operations at the company.
Broomfield, Colo.-based Corporate Express, which had 2003 sales of about $4.4 billion in North America, is a wholly owned subsidiary of Holland's Buhrmann. Traditionally, private-label product has made up about 10 percent of the company's business in the United States, versus about 40 percent in some other regions, such as Europe. However, Beauchamp says that over the past few years of difficult economic times, as the company has been carrying on conversations with its customers to learn how Corporate Express could bring more value to the table, the idea of introducing a wider variety of private labels grew increasingly attractive. So much so that this year the company has been rolling out four differentiated private-label brands, including the top-of-the-line CEG, or Signature products; the CEB line, intended to be equivalent to similar branded products; a "price fighter" line known as EXP; and DPS, or Diversity Product Solutions, a line of products sourced from diversity suppliers.
Corporate Express has been sourcing its private-label products both domestically and internationally, either on its own or through third parties. The company has been using a trading partner called Atico International, for example, for most of the goods sourced abroad, primarily because Atico has established foreign offices and "feet on the street" in a dozen countries. But Corporate Express also has its own dedicated sourcing staff working on the private-label products (in fact, the company has added some staff to manage the increased international sourcing it is undertaking), and its personnel has been involved in developing standards for the products and ensuring that the necessary testing is in place.
On the distribution side of the business, the company's supply chain organization has set up and staffed a new network of five mixing centers, or private-label warehouses with one each on the West and East coasts, as well as Dallas, Atlanta and Chicago to support the new lines. The private-label products will come into the mixing centers in containers and go into inventory. Then, as branded products come into the mixing centers and get cross-docked, the private-label goods will be married up with branded goods for transfer out to the company's more than two dozen distribution centers (DCs) for eventual delivery to customers. (Interestingly, on the branded side, Corporate Express has worked with many of the suppliers to decouple the freight costs from the branded products, with Corporate Express taking control of the product at the suppliers' factories, eliminating the need to send the products through the suppliers' own DCs and reducing cost and complexity.)