Staples: Transforming Supply Chain Process to Maintain High Performance

Accenture helped Staples to sustain its high levels of performance and market dominance by transforming its supply chain. Bottom-line benefits like the elimination of $200 million in working capital were complemented by new business opportunities.

To receive more Client Successes, sign up for My Outlook, your single e-mail source for all of Accenture's latest ideas and innovation, personalized specifically to your business interests and the industry issues you face.

As the office supply market matured after the boom of the 1980s and 1990s, resulting in strong competition, low prices and little market differentiation, Staples recognized that it had to find new ways to drive sustainable growth and profitability.

A key part of the answer, it concluded, was improving its supply chain. Staples' goal was to widen its lead over competitors in all key industry metrics by improving supply chain execution, thus decreasing costs while increasing productivity and reliability—and ensuring that customers could always find products they wanted on store shelves. Staples required help from seasoned professionals who could deliver a state-of-the-art supply chain that could serve as a platform for future growth and profitability.

In 2002, Staples hired Accenture as the chief architect of its supply chain program for the US retail business unit. The office superstore innovator selected Accenture because it had the right vision of what Staples needed to do to boost performance—and because Accenture had the experience and skilled resources that could help Staples achieve that vision. Also important: Accenture was willing to share the risk, to tie part of its compensation to its ability to help Staples improve.

Working side-by-side with Staples' business professionals, Accenture helped define a broad-based strategy that extended beyond the supply chain. A high-level analysis pinpointed the drivers of inventory inefficiencies and ways to create a competitive advantage through supply chain improvements. But the analysis also found other opportunities for higher performance in marketing, merchandising, and store operations. Accenture's analysis demonstrated how predictable demand lends itself to a smooth and efficient supply chain. Accenture's solution involved process changes—not technology.

Accenture created a new end-to-end inventory management process that addressed virtually every stage of in-store inventory management. This repeatable and efficient inventory management process was steadily rolled out, region by region, to Staples' more than 1,200 US retail stores. In connection with the supply chain transformation, Accenture applied its scientific methodologies to improve Staples' merchandising and promotional productivity.

The involvement of Stapes' senior executives and their direct reports was critical to the success of the supply chain transformation.

Staples was already a high-performance business when it hired Accenture. But by choosing Accenture, the company received an innovative supply chain strategy and execution capability that is helping Staples sustain its success.

The new capabilities and improvements are contributing to dramatic results. Over two years, Staples enjoyed more than a 15 percent reduction in inventory, eliminating over $200 million in working capital. The remaining inventory was made more productive. In-stock rates grew by over 300 basis points and supply chain programs contributed over $100 million in incremental sales.

As a result, inventory turnover improved by between 4.5 and 5.6 times. Many of the initiatives began yielding results for Staples in the first eight months of the program. The company was also able to deliver higher in-stock availability, reinforcing the company's brand promise to its customers by ensuring that product was in-stock and available for sale.

With Accenture's help, Staples executed two strategic decisions that Accenture's continuing research identifies as traits of high-performance businesses. It created a competitive advantage by innovatively reconfiguring, optimizing and integrating value chains. And it achieved extended mastery through partnering in areas outside the company's core competency. Staples CEO Ron Sargent summed up the value of teaming with Accenture when he said, "We were far from world-class in managing supply chain so we did something about it. The first thing we did was hire Accenture and they've done a wonderful job."

To receive more Client Successes, sign up for My Outlook, your single e-mail source for all of Accenture's latest ideas and innovation, personalized specifically to your business interests and the industry issues you face.