Reference no: EM132629381

Sourcing Office Supplies at Greenville Design Inc.

Greenville Design Inc. (GDI) is a medium size media consulting company. Albert Lee, the head of the inter-disciplinary team tasked with exploring savings opportunities in procurement, has just concluded a briefing of the company's executives about the progress of the GDI's strategic sourcing initiative.

The team started the spend analysis by evaluating different spend areas in the company. The work involved extensive interviews with various stakeholders, and many hours of pouring over the company's databases.

Industry Analysis

Office products are sold by many retailers. As a medium-sized company, with 20,000 employees and three locations, GDI needs could not be met by small retailers, so the types of suppliers the team considered included large retail stores, contract suppliers, catalog suppliers, and on-line retailers:

Large Retail Stores: Staples and Office Depot operated over 3,000 stores in the United States, generally 25,000 to 30,000 square feet in size, with 7,000 SKUs, and located in high-traffic shopping areas. Pricing averaged 40% to 60% less than manufacturers' suggested retail prices.

Contract suppliers: Served large companies who purchased via competitive bids. Pricing was often the lowest in the industry with prices 40% to 70% below retail. Selection was broad with up to 15,000 SKUs available.

1. Why is office supply a typical candidate for sourcing improvement efforts?

2. List some potential cost saving strategies for GDI.

3. What are some potential implementation barriers for your proposed strategies?