Consolidating the 'Office Supply' Chain

Contributed by David Rounsevell

The Office Supplies industry has spent the last two decades consolidating. In an industry that was dominated by small suppliers first national companies then international companies acquired their competitors until there were very few players left in the market. Then came the “single source solution”, where not just stationery, but everything for the office could come from one supplier. This covered all the washroom, kitchen and canteen, print and warehouse could come from one supplier.

After years of successfully pushing this approach, some things are changing again. There is a resurgence of the small supplier, from niche business providing service in a single local market, to new Australian - owned business growing in a national presence the competition is heating up.

And while the single source solution has worked for some, it has disappointed others. This has created space for the specialists to move back in, with mailroom, paper and print management providing fierce competition.

David Rounsevell Principal Consultant at Expense Reduction Analysts believes the competition between office suppliers will increase in a few years: “With the competition fierce, the customer will be able to focus on the suppliers that care,” says David.

So, with all this competition in the marketplace, what has happened to your office supplies cost? Unfortunately it has gone up. Even with the strong AU$, the cost per employee has risen in almost every business. The margin increase practices of the industry are again being used aggressively. Suppliers, in a bid to maintain market share, are bidding aggressively, but in a short time the savings are eroded through product changes, price changes, and many other methods used to increase the profit on the account. When a company purchases hundreds or even thousands of products, sometimes it is difficult to understand and control what is happening.

The supply of office supplies is currently requiring management and controls more than ever:

• Contract and list management is the only way companies can achieve cost control and manage the cost of their office supplies;
• Choose a supplier that can perform well and service your needs, your time is better spend on managing the category than managing the supplier;
• Select a basket of goods that suits the business, stick to it and monitor it;
• Check the charges, and query the increases. If your supplier knows you are managing the category they are less likely to try on increases;
• If a company’s internal resources are not equipped to manage this category they might require specialist knowledge. 

David Rounsevell is Principal Consultant at Expense Reduction Analyst and has more than 25 years experience in the Office Supplies industry.