Office depot consolidates supply chain operations: retailer names new supply chain VP, rolls out Retek software

Frontline Solutions, March, 2004 by Brian Albright

Office Depot Inc. has restructured its supply chain operations and is installing new software to help improve inventory levels and widen the gap between it and its competitors.

In September 2003, the $13 billion office supply retailer outlined a new corporate structure that included establishing an executive vice president of supply chain for North America. The company operates 10 cross-dock facilities (which serve its retail stores) and 22 fulfillment centers (for direct-delivery business customers) in North America, which all previously reported to different organizations.

"Our supply chain requirements have evolved over time as we have become more sophisticated in our inventory management and delivery capabilities," says Bruce Nelson, Office Depot's chairman and CEO. "Our goal is to establish a more seamless supply chain organization that can respond efficiently to all of our inventory management and replenishment requirements across our North American business units."

The company named Mark Holifield as the new executive vice president of supply chain. Holifield has been with Office Depot since 1994 in various logistics-related positions.

In addition, the company has licensed Retek Inc.'s enterprise software

suite for merchandising, demand forecasting, inventory, planning and optimization, price management and assortment management.

Office Depot's cross-dock facilities ship pallet loads to retail stores, and the customer fulfillment centers pick, pack and ship office supply orders to businesses. Holifield says the restructuring should give Office Depot more flexibility for replenishment, especially for new store formats, such as the mini-stores being set up within Albertson's locations.

"Coming up with the optimal flow pattern for any stock keeping unit (SKU) is really one of the key things we're going to be looking at," says Holifield. "This is really a comprehensive look at the supply chain to determine how any given SKU should flow through to our end customer, whether that be to a desktop in a large office building or to a large store in a suburban area."

Office Depot uses a customized warehouse management system (WMS) from EXE Technologies in all of its distribution facilities in North America, along with wireless bar code scanning equipment from Symbol Technologies. In Europe, the company is installing Manhattan Associates' WMS software. The company also uses custom-built software to manage its flow-through distribution processes, as well as Peoplesoft financials and human resources modules.

On the delivery side, Office Depot uses Symbol mobile computers with software from Aether Systems to manage its delivery trucks.

The Retek installation will drive merchandising and replenishment. Holifield says the new software will also help the company meet the Uniform Code Council's Sunrise 2005 deadline for supporting expanded UPC bar codes.

Holifield adds that the consolidated structure will help drive market share gains as well. "If you're already in an industry-leading position, continuing to widen the gap becomes more challenging," he says. "We achieved that position as separate organizations. Now, consolidated as a single supply chain, where we can leverage all of the talents of all the people in those groups, I think we can unlock tremendous capabilities."

Company Information

Aether Systems Inc.

Owings Mill, Md.

410/654-6400

info@aethersystems.com

www.aethersystems.com

EXE Technologies Inc.

Dallas, Tex.

972/776-6000

www.exe.com

Manhattan Associates

Atlanta, Ga.

770/955-7070

info@manh.com

www.manh.com

Office Depot Inc.

Delray Beach, Fla.

561/438-4800

www.officedepot.com

Peoplesoft

Pleasanton, Calif.

800/380-7638

www.peoplesoft.com

Retek Inc.

Minneapolis, Minn.

612/587-5000

solutions@retek.com

www.retek.com

Symbol Technologies Inc.

Holtsville, N.Y.

800/722-6234

info@symbol.com

www.symbol.com

Uniform Code Council

Lawrenceville, N.J.

609/620-0200

www.uc-council.org

Web Resources

For our Q&A with Office Depot's new executive vice president of supply chain, Mark Holifield, visit www.frontlinetoday.com/holifield

Extra! Extra!

For further reading on this and related topics, see these articles, available at www.frontlinetoday.com/032004links:

"Q4 Logistics Upgrades Meyer's WMS"

January 2004

"Office Depot Selects Retek Solutions to Streamline Supply Chain"

November 2003