Depot bags major global contract

Office Depot wins EU-based contract worth over €100 million.

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Office Depot has recently won a major office supplies contract from what it calls the “world’s biggest purchasing consortium”

Depot has been awarded the contract by a purchasing consortium that was established by four blue-chip German enterprises for the global procurement of indirect materials and services. 

This alliance is not limited to the founding members, and three other DAX-listed companies have already joined, taking the number to seven, although the office supplies contract is understood to only involve the four original members at present.

According to Ben Grudda, International Business Development Manager at Office Depot Europe, the concept of such an alliance for the purchase of indirect materials and services is one of the first of its kind.

“Previously, contracts of this nature have mostly been seen for the procurement of direct and raw materials, of which the automotive sector is an excellent example,” he told OPI

“Office Depot is delighted to have the opportunity to demonstrate how this approach can be delivered in the provision of office supplies and services.”

Competitive process

The contract was awarded in a competitive tender process with bidders required to demonstrate that they could provide best-in-class solutions and delivery across 30 countries in line with the alliance’s vision statement of ‘cross-company creation of a sustainable, cost-effective supply chain founded on sustainability and efficiency’

“The tender also required applicants to submit a service level agreement and a strategic plan which included a saving commitment, reporting, the optimisation of current alliance spend, plans for active participation in reducing complexity, and the ability to deliver to additional countries around the globe,” stated Grudda.

He said that Depot won the contract after it outperformed the other applicants when evaluated against all the criteria, adding that its price/performance ratio, global presence and ability to meet green goals were key factors in its success.

The actual details of the contract are somewhat sketchy, but Grudda said that it was a multi-year deal that is worth in excess of €100 million ($126 million).

Depot already had a limited relationship with one of the firms involved, but the contract represents 98% in new business for the reseller, he revealed.

Products to be supplied include general office supplies, ink and toner, paper, and cleaning/hygiene items. Depot will also provide customer-specific products such as branded and printed consumables.

Challenges

The contract has been running for a few weeks now, and Grudda admitted that setting things up for four major companies in 30 markets was not without its challenges.

“We need to account for different business cultures, currencies and languages, as well as the various e-procurement systems these businesses use,” he noted. “We’re currently servicing the contract in almost every world continent, delivering high levels of customer satisfaction and have overcome any initial challenges. Within weeks we’ve succeeded in implementing a complex global deal and meeting high customer expectations.”

Grudda pointed out that Depot already had the systems in place to deal with this type of contract. The contract is invoiced on an individual company basis within each country. In most cases invoicing is electronic as part of Depot’s e-procurement systems and processes. 

In terms of customer support, there is a single point of contact for the alliance as a whole at Depot and then in each market there is a local business support team including a dedicated Account Manager from Depot’s international team.

There is also a customer account team which will help to establish procurement efficiencies and share best practice.

“Looking at what has happened in the direct material arena, for example in the car industry, we do expect to see more contracts like this in the future,” said Grudda.

“This type of contract benefits all parties involved and enables customers to maintain tighter controls on budgets and meet ever more stringent sustainability and efficiency targets.”