Office Depot 2011 Annual Report Download - page 4

North American Business Solutions Division
Our North American Business Solutions Division sells nationally branded and our own brand office supplies,
technology products, furniture and services by means of a dedicated sales force, through catalogs and
electronically through our internet sites. We strive to ensure that our customers’ needs are satisfied through
various channel offerings. Our direct business is tailored to serve small- to medium-sized customers. Our direct
customers can order products from our catalogs, by phone or through our public web sites
(www.officedepot.com), including our public web site devoted to technology products (www.techdepot.com).
We use catalogs and the internet to market directly to both existing and prospective customers. Large catalogs
with our full listing of products are typically distributed annually and supplemented periodically with focused
offerings. Prospecting catalogs with special offers designed to attract new customers also are mailed at certain
intervals. In addition, specialty and promotional catalogs may be delivered more frequently to selected customers
based on their past or potential future purchases. We also produce a Green Book®catalog, which features
products that are recyclable, energy efficient, or otherwise have a reduced impact on the environment. We
continually evaluate our catalog offerings for efficiency and effectiveness at generating incremental revenues.
Products purchased through our catalogs and over the internet are fulfilled through our North American Supply
Chain from DCs throughout the U.S. and occasionally through wholesalers.
Our contract business employs a dedicated sales force that services the office supply needs of predominantly
medium-sized to large customers. We believe sales representatives contribute to customer loyalty by building
relationships with customers and providing information, business tools and problem-solving solutions to them.
We offer contract customers the convenience of shopping on dedicated web sites and in our retail locations,
while honoring their contract pricing in lieu of retail pricing. We also use an inside sales organization that is
staffed by Office Depot employees who support select existing and new small business customers who prefer or
require a more personalized experience, primarily by telephone. This function, previously outsourced, was
brought back in house at our new inside sales office in Austin, Texas in 2012. Sales to our contract customers
that are fulfilled at retail locations are included in the results of our North American Retail Division. Part of our
contract business is with various local, state and national governmental agencies. We also enter into agreements
with consortiums of governmental and non-profit entities for non-exclusive buying arrangements.
North American Supply Chain
The company operates a network of DCs, crossdock, and combination facilities across the United States. In prior
years, retail stores were largely replenished through our crossdock flow-through facilities where bulk
merchandise was sorted for distribution and shipped to the requesting stores about three times per week. Based
on our supply chain consolidation, we closed six crossdock facilities in 2009, three in 2010, and one during 2011.
The crossdock function has been transitioned to the existing DCs within the same market. These combination
facilities, which share real estate, technology, labor costs and inventory, satisfy the needs of both retail stores and
delivery customers. Costs are allocated to the North American Retail Division and North American Business
Solutions Division based on the relative services provided. Benefits of this consolidation include improved
inventory management and greater operational efficiency, as well as improved service.
Crossdock facility activity for the last three years has been as follows:
Open at
Beginning
of Period Opened Closed
Open at
End
of Period
2009 ............................................. 12 — 6 6
2010 ............................................. 6 — 3 3
2011 ............................................. 3—1 2
2