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Doing away with the $10 pen:
Vendors of office supplies help purchasers cut costs
Shaina Luck
When Grand & Toy's huge re-branding project hit the market on January 29, it was a nod toward a new way of thinking that's becoming more common among office suppliers.
Prices on pens and paper are pushing ever lower, and are nearly identical from one supplier to another. In order to hold their customers' contracts, they must cast themselves as a business partner willing to search for the best options for each organization.
"Grand & Toy has been this big sleeping giant for the last few years," says Leslie Murray, Toronto-based senior marketing director of large business for Grand & Toy. Murray says the re-branding will take the company in a totally different direction.
"We've realized we can no longer compete based on price. We need to add more value into it for customers," she explains. "So instead of saying, 'We're going to tell you how to do business,' we're actually letting our customers tell us how we should be managing our business."
That means additional services such as imaging, technology repairs and interiors planning. "There are lots of cost savings that can be made in the short term by consolidating their spend into one provider," Murray says.
The longer-term plan will offer ways to make buying even more efficient, by laying out detailed spending reports and making recommendations on the best places for the customer to cut corners.
Murray says the system is still in development, so she's unsure exactly what form it will take. An online system, detailed paper reports and business meetings are some possibilities.
"In our catalogue, there are five hundred pens…But do companies really need to provide their employees with five hundred pens?" What Grand & Toy will do is, we'll rationalize and we'll tell you what the best pen is for the best value."
Corporate Express has already implemented a similar system, called the smart consumption model, says Stan Dabic, vice-president of sales and marketing.
"Big companies are really looking to be armed with as much information as far as consumption: by department, across the country, so they can analyze the spend and really understand where they're spending," he says.
Corporate Express tries to be proactive in bringing different types of efficiency solutions to its customers, Dabic says. Examples include a "lost opportunities" report, which shows what would happen if specific changes were made in spending.
The Corporate Express online ordering system is customizable to ensure the best value products are up front. Corporate Express holds business review meetings to make sure the partnership is still on track. The response from customers has been very positive, Dabic says. "They're looking for solutions. They see us as the experts."
Working with Corporate Express turned out well for Royal Bank of Canada, says Ken Scott, senior manager of procurement infrastructure at RBC. "They worked really hard with us to bring our catalogue down to about 1,400 items from 6,500," he says. Now, the remaining items are the most cost-efficient necessities. "There will be no more $10 pens; it's all $1 pens," Scott says.
RBC and Corporate Express slashed the size of the catalogue in three to four months, and then took six months to put all the items on an electronic ordering system, eliminating paper catalogues altogether.
The new online catalogue and ordering system has been very successful in cutting costs, Scott says. Spending has dropped from $40 to $33 on office supplies, per quarter, per employee. That's a total of 22 per cent savings overall.
At first, there was some resistance to the new ordering system, Scott says. "Office supplies are the most personal of purchases in the office, and dictating that stuff to people is very challenging. It has to be a soft sell, a positive approach."
Most people have gotten used to the new system, he says. It's just a matter of time, and sometimes, firm convincing for those who are stuck on their staplers. "Royal Bank has got 60,000 employees, and every one of them uses office supplies," Scott says.
On the small business end of the scale, the methods are different, but the ideas are the same: give the customer everything under one roof, and anticipate their needs.
"Our core customer is the small home office business and the medium-sized business," says Pete Gibel, vice-president of merchandising for Staples Business Depot.
Staples offers many services that keep customers' business within the store, such as servicing all technical equipment they sell, and an instant rebates program.
"If a vendor is offering a mail-in rebate, customers don't like having to send stuff away, so we have a thing now where you can enter the transaction number from our customer service desk in the store, and you can enter that in the online site. So you don't have to mail in stuff or fill out forms," says Gibel.
"If you're buying in-store they want it in-stock—the whole instant gratification thing," he says. In order to keep customers satisfied, Staples did an RFID tracking technology test last year in one store and one delivery centre.
"I'd say it worked pretty well," Gibel says. "We haven't finished our budgets for next year so we haven't decided how much we're going to focus on it, but what we're trying to do is really stay abreast of the technology so that if it does make sense to deploy it, we will."
The RFID tags would be used on items worth more than $500, primarily computers and technology parts. The system is intended to reduce out of stock situations, and to give managers a better view of inventory.
The project fits nicely in with the overarching theme among vendors these days to go beyond selling pens, and help purchasers get costs and convenience under control.
Shaina Luck is a freelance journalist based in Halifax.
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