Ruud Majenburg

RM: The office supplies division of Samas Groep was an effective and efficient operation… that is one of the reasons why Buhrmann acquired it. However, when Samas became a part of Corporate Express, there was the opportunity to create a new and highly efficient business model – a single source supplier concept we at Corporate Express call ‘the power of one’. OPI: What is the single source supplier concept? RM: Basically, we realised that administration costs for purchase and processing made up a large proportion of the total cost of office products for most companies. If we could make all 50,000 of our products available through one platform – a single source – paid for by our customers with one invoice, we would slash customers’ administration costs and boost our competitiveness. OPI: Corporate Express is an amalgamation of a number of acquired companies. That must have provided something of a headache when it came to combining all you offer? RM: That’s certainly true. The Buhrmann Group in total employs around 18,000 people in 18 countries and we generate about Euro 6 billion ($7.7 billion) in sales on an annual basis. Corporate Express Europe accounts for 17 per cent of that. In Europe, the first step in our vision was to create a single organisation. Between 2001 and 2003 we went from 33 to 13 distribution centres and created one central European merchandising department. All companies are now operating under the name Corporate Express, with one ecommerce solution and one standard top level supply chain process. Change happened fast. OPI: Did you change the product range? RM: We rationalised it. It was a great opportunity to compare the products and services that the different companies offered and to pick the best. We looked behind the products and studied the companies that supplied them. If ‘the power of one’ concept was to work, we would rely on fewer suppliers that combined speed of delivery with reliability. They needed to fully understand what we were trying to do and be willing to partner with us in delivering for our customers. OPI: And you also introduced a Corporate Express brand? RM: Yes, a Corporate Express brand for essential office products, ranging from paper to computer supplies and basic stationery, was a key strategic priority during 2003 and 2004 and was driven by customer demand. By mid-2004 we had rolled out more than 1,500 Corporate Express branded products accounting for more than 20 per cent of our office supplies sales. It was a major exercise converting all the old private label brands such as Classic and Universal Office Supplies into one Corporate Express brand throughout Europe. OPI: And I guess that investment in IT systems must have been central to the development of single source supply? RM: We selected IBM technology as the basis for our ebusiness platform. IBM delivers integrated hardware and software solutions and it is a sound and proven technology. The aim was to offer B2B tools that operated with the look and ease of use of B2C. We wanted more from our ecommerce systems than a reduction in the cost of sales. We were looking for systems that would help our customers control their costs. It had to offer customers improved access to expanded information about order status and centralised, consolidated invoicing. For example, one tool allows global customers to benchmark their expenditure on office products against the average expenditure in their business segment to improve their performance. OPI: But I’d imagine not all your customers want or can handle such detailed information about their office products supplies? RM: In consultation with our customers, we identified four different customer groups which we categorised as mega, large, mid and small. Then we developed etools to meet the specific needs of each group. Currently, electronic ordering represents more than 60 per cent of our office supplies sales. Mega customers usually have invested heavily in eprocurement systems like Ariba, CommerceOne, SAP or Oracle. These customers would like to trade with us 100 per cent electronically. Our role in the process is to connect to their eprocurement platforms completely. For this segment we developed ExpressConnect, a software system that integrates with customer systems. The package includes the creation of electronic catalogues and an integration tool, Seeburger, to set up communications between multiple systems on the customer side. We also have a team of ebusiness consultants who work alongside these mega customers during the implementation process. At the next level, large customers are also interested in eprocurement, but do not have the platforms available internally and are looking for solutions from a procurement service provider. For these customers we created an outsourced eprocurement platform, ExpressProcure, offering online supply chain management tools that support the complete eprocurement platform, including multi-vendor functionality which allows the customer to use the platform for other suppliers as well. ExpressProcure tools support the complete cycle from requisition to payment. Corporate Express has developed a tool for defining the true costs involved in buying office products, and it can be used after a customer has switched to ExpressProcure to produce a cost-savings analysis. OPI: And lower down the scale? RM: ExpressOrder is aimed at the medium-sized companies. It is an easy to use internet-based ordering system incorporating some features like budgeting and limited workflow capabilities for customers that are less involved in the eprocurement process. And for small customers that want online shopping with direct payment facilities there is ExpressDirect. It is an open web shop for small businesses. An advantage of the system is the level of integration between the different tools. Customers can start on ExpressDirect and then migrate automatically to ExpressOrder when they are ready to do so. No additional set-up is required. Other companies could use ExpressConnect at headquarters level and ExpressProcure or perhaps ExpressOrder at subsidiaries, yet the complete spend will be directly integrated into one environment. OPI: Nevertheless, the ordering system is only as good as your ability to deliver? RM: All our 13 distribution centres are from a technological point of view highly advanced. Our most advanced in Corporate Express Europe is the new distribution centre we opened at Almere in the Netherlands in 2003 to serve the entire Benelux market. The optimised layout and advanced technology combine to make it one of the most efficient facilities of this type in Europe. Across our distribution centres we have up to 12,000 products in stock at any time and we are able to supply between 5,000 and 60,000 order lines per day from each of the DCs – all with next day delivery service and very late order cut-off times. OPI: Are all aspects of the order process controlled and integrated? RM: Our systems deliver the whole concept, including stock location control, tracking and tracing, not only in the warehouse but on the complete track to the customer with wave control, so we release batches going to the same area onto the same carrier. The flow throughout the warehouse is also determined by computer. It selects the right size of box and number of boxes to minimise transport costs. OPI: What is the next stage in the development of your ordering systems? RM: We have successfully road-tested a Pick to Voice system in the US and we are implementing it in our warehouses in Europe. Pick to Voice can locate a product or box via our warehouse management systems. Then, through headphones, it gives an order picker verbal instructions on how to locate that box and it does it in whatever language the picker prefers. OPI: Do you believe investing in technical leadership in ecommerce will deliver sufficient return? RM: We see some clear trends. What we call ‘best possible service’ today will soon be routine. Low cost logistics will be essential to survival – particularly in a market sector where transport and supply processing make up a major part of the final cost of the product. The move towards global procurement is also set to continue. An increasing number of customers want the same service and more or less one supplier for more than one country. That means the trend to supplier reduction will continue. The penetration of ecommerce will also continue and within five years I would expect it to be well above 80 per cent. By leading technologically and developing our services ambitiously, I hope that we will be the leading single source supplier of products for the office in Europe and the world in five or ten years. OPI: Where do you see the best opportunities for growth? RM: Obviously, the mega companies are going to be the first to spot and exploit the savings that can be made through the power of one. Globally, approximately 80 per cent of Corporate Express’ total sales comes from mega and large businesses and public sector organisations. But, proportionately, the benefits to smaller businesses of the power of one are just as great. The group’s ambition is to rebalance this customer base by rapidly growing our sales to medium-sized companies. A focused sales organisation with dedicated sales teams in every geographic region and a segmented marketing strategy is driving this forward. OPI: Tell me about those new markets you have entered in Europe? RM: We have been very successful at extending our reach into new markets through the development of a partner network. We recently entered partnerships with DZS in Slovenia and Activa in the Czech Republic. Our strategic partners become a part of our pan-European network. They link into our distribution capabilities and take advantage of our purchasing power. We share our knowledge with them and give them access to competitive differentiators such as our Corporate Express brand product assortment. In Scandinavia, our partners have even chosen to adopt the Corporate Express brand name and corporate identity. We operate as if we were one company throughout the Nordic region to the benefit of both our strategic partners and our customers. OPI: Are these kind of partnerships central to your future growth plans? RM: Partnership is important to our plans to extend our reach into new European markets, but it is just as important in other areas. We see partnership with suppliers as crucially important to the development of Corporate Express services. We have appointed category managers, who are responsible for a category as a whole in terms of revenue, profit, assortment and choice of supplier. Based at our headquarters in the Netherlands, they work closely with our suppliers to improve our services, our product assortment and increase sales for both our suppliers and ourselves. We look to build close relations with our suppliers on a local and a European level and we encourage their initiatives in areas such as product innovation or product extensions. They work hard with us to ensure we continue to take cost out of the supply chain. Through partnership, our suppliers have an opportunity to build a strong and growing relationship with end consumers as well as to increase our joint sales. At Corporate Express we never forget that we are one link in the supply chain. In the era of ecommerce, supply chains must be as competitive as the companies that form them. OPI: How difficult and time-consuming is the process of finding international partners with which to enter new markets? RM: It takes a long time to identify companies and then negotiate so that both sides are happy. We continuously scan relevant countries for the right partners and they become part of our family. We plan for them to become part of our network for a very long time. It is like a marriage – you have to make sure you pick the right partner. OPI: There have been some recent examples of firms buying former partners. For example, last year Lyreco bought Australia’s National 1, a company it already had a strategic sales alliance with. Could Corporate Express make a similar move for a partner? RM: I wouldn’t want to be specific here, but obviously it is not something that could be totally excluded. OPI: I know you are in a non-disclosure period, but how would you describe your financial targets? RM: We have ambitious but realistic financial targets. In terms of B2B, we are one of the more important pan-European contract stationers and of course we have the ambition to continue in this position. OPI: How would you sum up the future strategy of Corporate Express Europe? RM: Distribution has so far focused on growing economies of scale, acquisition and rationalisation. In the future, we will have to work with suppliers to add volume and expand turnover in the category. OPI: Thanks for your time Ruud, best of luck in the future.