SDCExec.com |

By Andrew K. Reese

Fortune 500 corporations have embraced supplier diversity initiatives in recent years as they have sought to ensure, among other things, that their supply bases reflect the growing diversity in their customer bases. However, corporations sometimes struggle to balance their drives toward e-procurement with their supplier diversity goals, as the small and midsize businesses that make up the bulk of diversity vendors frequently do not have the technical resources to integrate with advanced e-procurement systems.

Now, office supply retailer Office Depot is leveraging its own diversity initiative to help historically underutilized businesses not only win new Fortune 500 clients but also adopt a fully enabled procure-to-pay process. In the process, Office Depot is improving its own efficiencies, winning new business and reducing its days sales outstanding.

Partnering for Enablement

The Tier One Program at Delray Beach, Fla.-based Office Depot is aimed at developing a nationwide network of viable, independently owned historically underutilized businesses, or HUBs, to service top-tier corporate customers, as well as public sector customers, such as state governments and institutions of higher education, which may also have diversity spend goals. "When an organization comes to Office Depot wanting to engage with us on tier-one minority vendor spend, we identify a minority vendor with an established relationship with us to service that customer, and Office Depot becomes the distributor," explains Glenn Trommer, director of e-commerce and implementation services with Office Depot. Trommer adds that Office Depot may also incorporate HUB partners into the program at the suggestion of the customer organization, but only after a stringent qualifications appraisal process to ensure that the supplier is a true diversity vendor business.

Through the program, Office Depot provides HUBs — which include certified minority, women, disabled, veteran and small enterprises — with product, order fulfillment and a shared services package. The office supply retailer also has formed a relationship with technology company Osiris Innovations Group to offer the HUBs a procure-to-pay solution that they can use as an "on-demand" e-procurement engine and e-invoicing platform for doing business with the large enterprise clients. This is particularly important for smaller vendors that do not have large IT staffs or that might not have sophisticated e-commerce systems already in place.

Osiris, based in Oakland County, Mich., provides solutions aimed at meeting the process-specific needs of each of the three stakeholders in the purchasing cycle: the buyer, the supplier and finance. It's OS Procura, Fulfillment and Payment solutions are offered in a Web-based, "software-as-a-service" model that requires no applications running at customer sites, which made them particularly suitable for the smaller vendors participating in Office Depot's Tier One Program. In fact, Office Depot originally tapped a competing e-procurement solution to handle the purchasing side of the equation while Osiris handled the payment side, but the office supplies company later, in April 2006, handed the entire procure-to-pay process over to Osiris' platform. "Their technology was more flexible, so we felt that Osiris made more sense as an end-to-end solution for us," Trommer says.

Overcoming Skepticism

That flexibility was important, first of all, because the solution had to work with Office Depot's own enterprise resource planning (ERP) systems. "We had to look at all the different protocols that needed to be put into place to facilitate the different transactions with Office Depot's ERP," says David Saroli, CEO of Osiris, "and we had to be able to grow with them as they made changes to their systems." In particular, Osiris was able to adapt its solution to handle the CXML communications standard that Office Depot uses for transactions with its trading partners. In addition, Osiris had to be able to adapt its solution to handle the processes and systems already in place at the various small vendors and large enterprises that might participate in the program.