Last weeks’ Spend Management Day in Palo Alto featured an insightful presentation from OfficeMax’s Director of Electronic Commerce, Joni Anderson. In that role, Joni runs the group that facilitates procurement of office supplies at large companies via ecommerce channels.

According to their data, eProcurement of office supplies can save companies over 10% in the first year, making it one of the proverbial low hanging fruit categories. That’s the good news. The bad news is, 51% of companies they work with fail to reach that 10% savings rate. Why?

To find out what separates the top performing customers from those who have been under-performing, Joni and her team surveyed their customers. The results showed some strong correlation among the best practices of the top tier:

• Product standardization - 85% (% of top tier respondents who did this) - How many choices do employees need when it comes to pens, chairs or file folders? Standardizing on a smaller subset of the near infinite selection of office supplies can make a difference when it comes to the aggregated spend of a large company.
• Work with suppliers - 76% - We often hear that collaboration with suppliers is key to successfully cutting costs. Whether OfficeMax worked companies implement technology, rollout their change management program or identify savings opportunities, their involvement has helped their top tier performers reach their savings goals. In this competitive market, companies want your business and are willing to help you drive down costs in order to earn or retain your loyalty.
• Get more detailed view of spend - 63% - Quite frankly, I suspect that many companies don’t even have a BASS “system” of aggregating office supply spend. The added spend visibility that OfficeMax can provide its customers is a powerful tool for those companies who choose to use it.
• Mandate & manage compliance - 61% - Joni’s team not only monitors compliance of OfficeMax employees using their own eProcurement system, they publish the monthly numbers internally to stir up a little healthy competition. While you may never take it to that extreme, it’s obviously important to track compliance for a category, like office supplies, that could potentially have a high rate of maverick spend.
• Fully automate P2P process - 54% - Technology can enable things like approval routing, purchasing and payment. The added efficiency for a high volume, low dollar category like office supplies can have a significant impact on the bottom line. Let the procurement department manage exceptions rather than transactions.

Interesting data from the trenches that is likely applicable to other categories of spend and vendor relationships.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.