Office Depot’s Supply Chain Diversity Empowers Small Businesses

During the past decade, an increasing number of office supply company Office Depot’s business customers have gotten in touch with its sales representatives and voiced their desire to purchase supplies or services from diverse vendors. Many of the company’s contract customers have relationships with the government or are in heavily regulated lines of business which require diverse spending, and they want Office Depot to help them increase their expenditures with small and diverse businesses.

Office Depot leaders realized they needed to do something quickly to fulfill customers’ needs. Thus, in 2000, it created a supply chain diversity team to implement supplier diversity throughout the company.

During the next year, the team identified hundreds of current suppliers that could pursue historically underutilized businesses (HUB) certification. HUBs are defined by the U.S. government as certified minority-, female-, disabled- and veteran-owned small business enterprises.

Office Depot identified minority companies through its request for proposal process and by working with third-party organizations such as Women’s Business Enterprise National Council (WBENC), National Minority Supplier Development Council, National Gay & Lesbian Chamber of Commerce and the U.S. Small Business Administration. The identified companies provided documentation to these organizations, including records and tax information to verify that the HUB business owner has financial control of the company. The businesses could then become certified through the organizations.

Since forming the supply chain diversity team and later a formal program, Office Depot has accumulated spending with HUBs of more than $2.5 billion. Its HUB spending for 2012 was $250 million.

“We saw the supply chain diversity program as a positive for our suppliers and our business customers,” said Steve Calkins, senior vice president of Office Depot’s business solutions division. “We’re helping our suppliers grow by getting their businesses certified, which in turn gives them a better opportunity to expand their customer base. And our customers are happy with the wide assortment of HUB suppliers that we’re able to provide.”

The goals of the Office Depot Supply Chain Diversity Program are to:

• Form strong partnerships with HUBs.
• Pursue nationally certified HUBs that reflect today’s diverse global marketplace.
• Ensure that HUBs are well-represented in its product assortment and have an equal opportunity in its supplier selection process.
• Affiliate with national organizations that share its goal to make a positive impact on economic development through supplier diversity.

Equal Opportunity Selection Processes
Calkins said making HUB products available and top of mind for business customers is crucial to the supply chain diversity strategy. As such, Office Depot created an annual HUB catalog for customers in 2009, which contains more than 1,600 products offered by certified HUBs. The initiative has fueled growth in sales, inventory turnover and market expansion for these enterprises, and provides a mechanism to help customers meet their diversity purchasing goals.

Further, Office Depot also has developed a strategy to expand opportunity for HUBs, which includes actively seeking them out. During the past year, the supply chain diversity team has participated in more than 30 conferences, tradeshows and matchmaker events at the state and national levels to uncover promising HUBs.

Office Depot also hosts meetings at its corporate headquarters for HUB suppliers to meet and greet the company’s merchandising and sales organization and provides HUBs with an opportunity to showcase their products in person. The meetings afford suppliers the chance to learn more about the different departments that affect and support their business, including marketing, compliance, pricing and communications.

Supply chain diversity team members also train Office Depot’s internal merchandising organization on the importance of including HUB vendors in the company’s product assortment. Company leaders believe that because this is important to customers, it is important to the company and a source of significant revenue.

Top Tier Diversity
Calkins said an integral part of every partnership is helping the HUBs build their capacity to compete more effectively in the marketplace. One way to do this is through the company’s Tier One program. Tier One partners are HUBs that are third-party product resellers. In Office Depot’s case, the program helps meet the goals of large customers that have requirements for direct spending with diverse vendors but desire Office Depot’s service and capacity.

“OutSmart Office Solutions’ Tier One partnership with Office Depot has been instrumental in the growth of our organization,” said Dawn Ackerman, president of OutSmart Office Solutions, a certified lesbian, gay, bisexual and/or transgender business enterprise that distributes office furniture and supplies, which was named Supplier of the Year by the National Gay & Lesbian Chamber of Commerce.

Tier One partners can undergo training led by internal Office Depot associates through all functional areas that contribute to the long-term growth and economic viability of their businesses. Calkins said the program combines e-commerce, distribution and product assortment capabilities to give Tier One partners a superior position in the marketplace and maximum opportunity for profitable growth.

“Office Depot is a company that embraces diversity throughout its entire enterprise, which directly correlates to building a successful, sustainable partnership,” said Todd Rose, president and CEO of Telrose Corp., a minority-owned, full-service office products company that received the James Brown Achievement Award from the Minority Supplier Development Council.

Mentoring to Create Relationships
To assist HUBs in growing their brand, Office Depot offers a mentoring program for HUB vendors. Mentoring initially consists of an Office Depot representative, usually from the supply chain diversity department, walking the business owner through the steps to becoming an Office Depot vendor. HUB vendor mentorship is an ongoing program, and different departments within Office Depot are matched up with mentees based on their business needs. If a business owner needs help with finances, he or she will be matched up with someone in finance or accounting; if a HUB vendor is having difficulty with advertising, he or she would be matched up with a marketing associate.

“In our retail stores, building each company’s brand is an important step in establishing their products with Office Depot’s customers,” said Shari Francis, manager of HUB merchandising for Office Depot. “The Office Depot mentoring program not only helps guide HUBs on using marketing contacts to provide opportunities for customers to learn more about their company, but also helps the business to convey key elements of their brand, such as their company’s philosophies and how their product provides solutions to existing or potential customer issues.”

While the following companies would not provide the revenue numbers to illustrate exact gains, they all have experienced substantial growth as a result of Office Depot’s mentoring program:

• KleenSlate Concepts, which offers a line of dry-erase products, was one of the first businesses to go through the program, and its leaders say business has continued to grow exponentially.

• Stride, which manufactures office products including binders and writing instruments, has experienced a large increase in sales with the introduction of its products in the Office Depot HUB catalog.

• Addendia, developer and maker of the Hi & Dri Storage Pallet, has experienced growth for the past few years.

The Power of External Recognition
In 2012, Office Depot was a co-chair of the WBENC National Conference & Business Fair, where it scouts certified Women’s Business Enterprises (WBEs). Businesses that are WBENC-certified are able to partner with the company to supply their merchandise or services to its customers. Many of Office Depot’s HUB vendors showcased their products at the event as well.

Further, Office Depot held a variety of workshops at the WBENC Business Fair booth to help business owners understand branding, marketing and doing business with the company. Speakers included Marshawn Evans, an expert on maximizing potential and a cast member of “The Apprentice” Season 4; Nancy Michaels, a small business owner and consultant; and Office Depot supply chain, merchandising and procurement executives.

Office Depot also has been recognized for the past 13 years by DiversityBusiness.com as one of the Top Organizations for Multicultural Business Opportunities. The company was named to the 2012 list of America’s Top Corporations for Women’s Business Enterprises by WBENC for the 11th year, and in 2012, Minority Business News USA magazine ranked the company as one of the Top 40 Corporations Impacting Supplier Diversity.

The supply chain diversity team members also have been honored, including Francis, as one of the 2012 Top 25 Women in Power Impacting Diversity by DiversityPlus Magazine. Further, the company was also presented with the 2011 Supplier Diversity Advocate of the Year award from the National Gay & Lesbian Chamber of Commerce.

Since 2000, when its supplier diversity journey began, leaders at Office Depot have said the key to success in supplier diversity is having executive buy-in and internal support. “Build your business case for the program, and present it to the leaders of your company,” Calkins said. “Support needs to come from the top down, and our leaders are highly involved. Without them championing the program, it would not be as successful as it is today.”

Frantz Tiffeau is senior manager of supply chain diversity for Office Depot. He can be reached at editor@diversity-executive.com.