Office Depot is the nation’s second largest seller of office supplies and services. It may also be the most innovative based on its recently released 2011 Corporate Citizenship Report (CCR). And this innovation is making the company more resilient in today’s tough economy.
One initiative, Business Matching, is pushing the external boundaries of the company into an expanding ecosystem of small businesses to achieve symbiotic market growth. Another is dematerializing product delivery. These programs and others, focused on ethics and supply chain standards, have made Office Depot America’s greenest retailer in Newsweek’s Green Rankings.
Business matching as a revenue platform for stakeholders
Historically Underutilized Businesses (HUBs) are certified minority, women, disabled, veteran and small businesses. Setting purchase targets from HUBs is one step to supply chain diversity. The next is finding vendors. Office Depot doesn’t wait for suppliers to find it, but actively recruits. Then it takes a step further toward proactive matchmaking, connecting these vendors to other purchasers who are already Office Depot customers.
Facilitating matches involves screening vendors and organizing introductory meetings. Office Depot partners with other organizations such as the Women’s Business Enterprise National Council and the National Multicultural Business Conference to expand the reach of its matching program. Office Depot also provides vendors a package of shared services such as order fulfillment, customer service and product marketing, providing consistent, reliable service to purchasers.
With this approach, Business Matching is creating a platform benefiting many stakeholders. Office Depot’s customers more easily achieve their own supplier diversity goals and gain access to new products from innovative small businesses. Participating vendors gain access to a network of larger customers and the logistics support needed for growth. Communities are strengthened with growing small businesses and jobs. Office Depot is adding value to these relationships, growing revenue and a network that provides a competitive advantage.
According to the CCR, these efforts generate result with more than than $325 million in HUB sales at Office Depot in 2010.
GreenerOffice delivery reducing costs
Office Depot is also innovating to reduce waste. One example is the GreenerOffice Delivery Service. GreenerOffice is a regional pilot started in 2010 to switch the packaging used to deliver everyday office supplies from cardboard boxes to paper bags. The pilot was so successful, achieving a 96 percent adoption rate, that quick implementation followed throughout the U.S. in 2011. Office Depot’s goal is to replace 5 million boxes with bags. If achieved, the material and energy savings will have significant environmental benefits according to the report:
- 3000 ton reduction in wood consumption
- 7.7 million ton reduction in CO2 emissions
- 1.3 million pound reduction in solid waste
As yet unquantified benefits are the cost savings and delight of customers who have less packaging waste to manage.
Environmental Dashboard is a measurement best practice
Results achieved from initiatives such as GreenerOffice are displayed on the Environmental Dashboard. Office Depot uses this tool to manage execution of its “Buy Greener, Be Greener and Sell Greener” strategy by assigning functional responsibility and establishing quantitative Key Performance Indicators (eKPIs) for all initiatives. The dashboard shows who is responsible for execution making progress (or lack of it) transparent. Andrew Winston recognized Office Depot in his book, Green Recovery (Harvard Business Press, 2009) for this approach to developing a framework of metrics for every aspect of its business.
The three-year trend shows improvement across most of the ten eKPIs. Resource intensity has steadily increased with waste decreasing. Office Depot makes a direct connection to financial statements in this area. The goal is to “earn more money from product recycling than we spend on waste to landfills.” Still, recycling of materials from Office Depot’s operations increased to 59 percent in 2010, but looks set to miss its 2012 goal of 80 percent.
Sales of green-rated products declined in 2009 in line with the economic slowdown, but bounced back in 2010. The number of third party eco-labelled products increased 76 percent in 2009-10 and in-store customer communication is improving, so this trend should continue.
Office Depot demonstrates environmental leadership among large retailers by investing in initiatives to improve performance despite the challenging economy. Or is it because of the challenging economy? Initiatives to connect with stakeholders and provide added value produce revenue while increased resource efficiencies reduce costs. Corporate Citizenship is proving to be the path to growth and resiliency for Office Depot.