- Common Challenges
- The Sourcing Alliance Program
- Why Office Depot?
- Procurement Process
- Getting Started
Contrary to popular belief, office supplies are complicated. Managing your office supplies budget and overseeing the actual sourcing and procurement of office supplies can be a real challenge, and are often a flat-out nightmare, as anyone who has ever had these responsibilities can attest. Some organizations purchase office supplies on a “spot buy” basis from a pool of multiple vendors, while others establish a purchase agreement with a primary vendor. Our members have experienced challenges with both approaches.
The “Spot-Buy” Approach
Why do organizations buy office supplies from multiple vendors? Because they are confident they secure the lowest available price on each item they purchase on any given day, and therefore are maximizing their savings. But are they really?
- How much time does staff spend securing and comparing pricing for each item from three, four, or even five vendors? Is it worth 30 minutes of time to save $.50 on a box of pens?
- Are shipping costs, delivery timeframes, and minimum order sizes consistent from one vendor to the next?
- How does the staff effectively manage receiving multiple deliveries at different times from different vendors on any given day?
- What is the burden placed on the Accounts Payable team to manage payments and returns to these multiple vendors? How much time (read: money) would an organization save by receiving and paying one invoice each month from just one vendor?
- What pricing concessions are the organization giving up by dividing its buying power across multiple vendors?
- Is poor or inconsistent customer service worth saving a few pennies?
- When purchasing from numerous vendors at any given time, how difficult is it for an organization to determine how much it spends on office supplies each year?
The Primary Vendor Approach
Selecting a primary office supplies vendor solves many of the “spot buy” challenges, but can lead to other issues, such as:
- Price Increases – the primary vendor charges different pricing than originally proposed, unilaterally increases prices without notice, or replaces “discontinued” SKUs with higher priced alternatives.
- “Rogue Spend” – front line buyers purchase from other vendors.
- Lack of Compliance – organization typically receives the most aggressive pricing on a core list of items the organization buys most frequently. THE KEY to saving money on office supplies is to drive as much purchasing as possible to items on that core list, which is called “core list compliance”, and many vendors don’t help their customers drive compliance to achieve the greatest savings. Why not? Because the vendors make less money.
Some organizations utilize a primary vendor through a cooperative contract. The promise is that buying power achieves better pricing. Many cooperative contracts are a one-size-fits-all solution that cannot be customized to meet an organization’s unique requirements. The cooperative purchasing agreements that can be customized, typically through a “custom core list”, often have severe custom core list limitations, such as a limit to the number of items and/or the number of toners that can be added to the list.
Sourcing Alliance Developed a Better Alternative for our Members
The Sourcing Alliance Office Supplies Program was created to address recurring challenges that often arise when our members purchase office supplies.
We engaged a subject-matter expert to lead the design of our program, create the specifications, and spearhead the RFP process to add a cooperative purchasing agreement for office supplies to our portfolio. This individual had been a major national office supplier’s division leader for fifteen years and was responsible for over $500 million in annual revenue. Seventeen Sourcing Alliance members of various types (municipalities, higher ed, schools, and special districts) and sizes actively participated in the program design to ensure we created a program that could be tailored to meet the needs of all Sourcing Alliance members. We required the winning supplier to provide:
- Master Core List – aggressive, fixed pricing on the 700+ items most commonly purchased by Sourcing Alliance members.
- Custom Core List – the ability for individual members to receive aggressive, fixed pricing on an unlimited number of items specific to that member’s unique purchasing patterns.
- Free Delivery – no delivery fees or minimum order sizes.
- Rebate Program – annual rebates based on each member’s prior year spend.
- Demonstrated Savings – verifiable reductions in the office supplies total line item spend.
- Detailed Pricing Analysis – an analysis of each member’s purchasing to achieve a true apples-to-apples comparison of their pricing under our program versus their current spend.
- Periodic Reviews – regular reviews of each member’s purchasing patterns to identify additional opportunities to increase core list compliance, reduce costs, consolidate spend, and increase minority and sustainable/green spend.
- More than just Office Supplies – a wide range of products and services extending beyond traditional office supplies to enable our members to consolidate vendors.
- Employee Pricing Program – make Sourcing Alliance pricing available to the employees of member organizations for their personal purchases, particularly relevant to K-12 school teachers who buy classroom supplies with their own money.
- Minority Business Enterprise (MBE) Offering – a Tier One program that enables members to purchase through an MBE in support of their diversity spending goals.
Why Did Sourcing Alliance Select Office Depot as our Office Supplies Supplier?
Following our extensive public sector procurement process, Sourcing Alliance selected Office Depot as the supplier most capable of meeting our program specifications. Office Depot offers:
- Aggressive Pricing – aggressive pricing on a core list of approximately 700 items and the flexibility to establish customized local lists for each Sourcing Alliance member with an unlimited number of items to meet your specific needs.
- Free Delivery – no delivery charges for catalog items and no minimum order sizes.
- Annual Rebate Program – annual rebates, with the rebate percentage increasing as the total combined spend of all Sourcing Alliance participants increases.
- No-Cost, Up-Front Price Comparison – a detailed, apples-to-apples analysis to determine the financial and operational savings Sourcing Alliance’s program will provide to you.
- Account Reviews – regular account reviews with your team to assess your current purchasing patterns; drive core list compliance; and provide recommendations to save money, increase MBE and sustainable spend, and leverage additional Office Depot product lines to consolidate vendors.
- A Comprehensive Program – you can purchase office supplies, toner, paper, off-site printing, furniture, technology, break room, janitorial supplies, promotional items, and a full line of green and recycled options to meet your sustainability targets.
- Flexible Purchasing Options – receive pricing from our cooperative purchasing agreement whether you buy online, by phone, in-store, or by fax.
- Easy-to-Use Online Portal – robust eCommerce buying platform that can be tailored and customized for your organization (including internal messaging to your buyers, customized shopping lists, and Best Value recommendations).
- Exceptional Service Levels – demonstrated implementation, management, and reporting capabilities, and a commitment to reducing your total office supplies costs over time.
- Employee Purchasing Program – you can extend your organization’s aggressive pricing to your employees and their families for their personal purchases.
- MBE/Tier One Program – nationwide Tier One program available to support achieving your diversity spending objectives.
Why did Sourcing Alliance Develop the Office Supplies Program?
Cuyahoga Community College (“Tri-C”), Ohio’s largest community college and a long-time Sourcing Alliance Participant, approached Sourcing Alliance regarding the Tri-C’s frustrations with its office supplies vendor at the time. Tri-C wanted to establish a contract that would deliver consistent service levels, improve internal operating processes, and reduce its overall costs for purchasing office supplies. Tri-C also recognized that office supplies are a spending category that all types of public sector entities purchase and believed that there was an opportunity to leverage its spend with that of other Sourcing Alliance participants to establish better service and pricing terms than Tri-C could achieve by itself.
Sourcing Alliance surveyed a wide range of public sector and not-for-profit organizations to develop a clear understanding of what our participants’ office supplies needs were. We identified a series of recurring themes and challenges:
- High costs and inconsistent pricing. Purchasing office supplies often seems like a shell game – you can get great pricing on a small number of products as “loss-leaders,” but somehow your overall costs still continue to rise and promised savings do
- Multiple vendors. Many Sourcing Alliance participants were constantly price-checking individual purchases and buying from multiple vendors because they were not confident that working with a single vendor would provide the best overall value. This process was time-consuming and resulted in greater administrative costs necessary to secure the best pricing consistently, manage multiple vendors, and process a higher number of invoices.
- Inability to manage the total costs of office supplies. Managing multiple vendors on an ongoing basis made it extremely difficult to develop a clear understanding of and effectively manage a participant’s total cost of office supplies organization-wide.
- Rogue spending. The absence of a comprehensive, proven money-saving office supplies contract led individual buyers within organizations to purchase outside of established contracts, diluting participants’ individual buying power and ensuring that costs were too high.
- Poor service levels. Many office supplies companies “promised the moon” in terms of pricing and service levels, then were unable or unwilling to provide the high quality, consistent service levels that participants required.
- One-size-fits-all solutions. There are numerous group purchasing “solutions” for purchasing office supplies; however, each participant identified unique needs and requirements that could not be satisfactorily met by uniform cookie cutter group purchasing programs that cannot be modified to effectively meet the needs of individual participants.
This collective feedback from dozens of Sourcing Alliance participants convinced Sourcing Alliance to pursue the development of an office supplies program. Our objective was to establish an already procured contract with a single supplier that would resolve each of these issues while providing individual participants with the ability to leverage the buying power of the entire group to achieve pricing and service levels that individual participants could not achieve by conducting their own individual and isolated procurement processes for office supplies.
We also sought to establish a contract that could meet the needs of participants large and small and be leveraged by public sector, private sector, and not-for-profit entities alike to maximize the total possible buying power through the contract.
The Procurement Process
Sourcing Alliance hired a subject matter expert to serve as our consultant in developing the request for proposal (RFP) specifications, interviewing suppliers, reviewing proposals, and selecting the final supplier. This individual had been a division leader working with a major national office supplies company for fifteen years and responsible for over $500 million in office supplies revenue annually. We engaged him to help us understand the internal pricing and service dynamics of office supplies companies, with the objective of developing an RFP that would position Sourcing Alliance participants as better value, lower-cost-to-serve customers. Achieving these two objectives ensured that Sourcing Alliance participants would be desirable customers for office supplies companies, achieve better pricing, and establish higher service levels across Sourcing Alliance’s membership. Our subject matter expert was invaluable in this process of developing one of the top consortia contracts nationwide.
We developed draft specifications with the input from our subject matter expert and dozens of public sector and not-for-profit entities. Our subject matter expert created an optimized core list that was broad enough to meet the needs of each of these organizations, but could be customized to address any individual requirements. Sourcing Alliance identified numerous potential RFP respondents, from local providers to major national firms. We proactively reached out to approximately ten suppliers from across the country and invited them to participate in the process. We reviewed our program objectives and with each supplier and provided them with an opportunity to review the draft specifications and provide their feedback before finalizing the specifications and publishing the RFP.
After months of research, leveraging the input of dozens of Sourcing Alliance participants, numerous suppliers, and our subject matter expert, the Sourcing Alliance team completed the program specifications and assembled the final RFP. In accordance with Ohio Revised Code, Sourcing Alliance published notice of the RFP opportunity on our website as well as in a newspaper of general circulation for three consecutive weeks. We also proactively forwarded the RFP information to each supplier we had identified and interviewed during our advance research to secure as much supplier interest and as many legitimate proposals as possible to establish the most
Our proposal review team opened the proposals we received in a public forum and scored them on both a qualitative and quantitative basis. We narrowed the field to qualifying finalists and conducted interviews with senior leadership of each finalist. Ultimately, we awarded the contract to Office Depot, Inc. as the lowest responsive and responsible bidder.
To start using the Sourcing Alliance Office Supplies Program, you may request a no-cost, up-front pricing comparison. This comparison is a detailed, apples-to-apples analysis to determine the financial and operational savings Sourcing Alliance’s program will provide to you.
Learn more about this program or request a pricing comparison by calling us at 844.289.6728 or email us at info@SourcingAlliance.org.
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