Office supplies

Like so many other industries, office supplies has been through a significant period of consolidation of businesses across manufacturing, wholesale and retail, which has changed the shape of the market. The independent and smaller players in the market have faced the hardest of times due to the growing pressure of price deflation that has resulted from the increased competition. A few brand names stand out, but with fewer vendors to manage for quality and price, office products in general have become much more commoditized.

The market is under further pressure with the rise of e-auctions as a popular purchasing strategy for large businesses and government offices. These are very commodity and price driven, with contracts raised for fixed prices and service level agreements (SLAs) for an extensive range of products, often below cost price. Such low prices can be offered because of the volumes and suppliers hope to recover profits through long term market moves and increased overseas sourcing. While providing high volumes for high cost networks, suppliers have to be aware that they can also lose significant volumes of business in one go. All these issues place particular pressure on retaining profitability through the supply chain. Longer inventory lead time from overseas sourcing creates the opportunity for a more efficient and profitable supply chain, but requires a high level of certainty with regards to long term demand.

With this continued trend toward lower margins and increasing price pressure, companies are looking to gain back margins by finding new ways to improve and expand their businesses; either through consolidation, partnering with an alliance, or becoming a multi-channel player. Only the office products suppliers that can adapt to this change and meet it head on will ultimately succeed. Distributors and wholesalers also need to meet the challenge of the various channels to market, which are different from the retail end of the market. They need to provide catalogues, wholesale/dealer purchasing groups, business-to-business channels and business-to-consumer solutions. Companies must strive to make the whole end to end ordering and delivery process simple, flexible, effortless and reliable. In effect, the experience for both end-user customers and dealers has to focus on creating loyalty in a commoditized world.

The market itself is growing slowly in Europe. For example, in the UK, the stationery market for 2006 was worth 270 billion euros, showing growth of just 4.3 percent since 2002. This growth does not match the UK’s own gross domestic product growth and competitive pressures are the main reason for price rises being kept to a minimum as well as deflationary pressure on product pricing.

The total market size for all office products, including stationery, electronic products and office furniture in 2006 was approximately EUR 9.1 billion for the UK, EUR 7.7 billion for France and EUR 11.2 billion for Germany. 

The fragmented, multi-cultural nature of the European market has also created its own problems that office supplies companies have had to overcome. The individual country markets are relatively small, and purchasing groups have formed across nations and channels to increase the buying power of the various channels and companies operating in the market. The European Office Supplies Alliance (EOSA) and Business Products Group International (BPGI) are two significant purchasing organizations that have formed in Europe.

Market drivers

• Consolidation to smaller number of main players, both regional and global
• Formation of corporate supply contracts
• Increased demand for personal choice
• New creative versions of standard products
• Buyers are becoming even more demanding for new products and services
• Range, price and cost to serve
• Maximize availability with minimized inventory
• Greater need for communication with customers

Business pains

• Competition eroding margins
• Need to keep customers informed of new products
• Channel /industry overlap
• Increase range whilst reducing inventory
• Dynamic/ flexible supply chains
• Increased automation to remove cost
• Develop new service ranges, which adds complexity
• Need to provide one stop shop service to maintain customer loyalty

Customers demand

• Increasing range of product lines
• More flexible supply
• Competitive pricing
• Fast delivery
• Comprehensive on-line catalogue and e-commerce facility

Complete customer service

To help them succeed in this increasingly competitive business requires the effective use of IT, overlaid with best practice in business processes. There are some very specific requirements for office supplies distributors, which need to be considered before any significant investment is made in IT. There is little point implementing a system that just doesn’t fit the requirements and complexities of the industry and has to be constantly modified to meet day to day needs.

Distributors require a system that delivers high levels of flexibility and functionality when it comes to financial areas such as credit control, margin control, contract management and e-commerce. The software needs to be able to allow distributors to work in the most efficient and profitable way for them and automate these complex purchasing procedures, while maintaining the highest possible levels of customer service and satisfaction and driving instant margin decisions.

• Advanced/rapid  sales order management and CRM
• Integrated web ordering with account visibility, order and quote creation and tracking
• Distribution and logistics with planning and dispatching of outbound shipments, truck routing and planning plus seamless integration with parcel carrier systems
• Automated procurement, back-to-back ordering for non-stocked and out-of-stock lines, demand planning, purchase management, replenishment optimization, suggestion management and inventory alert
• Complete visibility of your supply chain and securing safe inventory levels whilst driving network flexibility
• Understand profitability and cost to serve in a high volume rebate driven market
• Greater control and visibility across the entire organization
• Additional service solution options for developing the business, e.g. installation and consignment stock
• Integration into specialized catalogue management software
• ASP services for dealer / buying groups
• Adherence to industry standards and data exchange formats

IBS software allows office supplies distributors to gain leverage over their entire organization, with industry specific, tailor-made functionality that delivers high levels of flexibility and seamless integration.

Contact IBS for more information. »