Office Depot 2012 Annual Report Download - page 5

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 three crossdoc
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facilities in 2010 and one in 2011. The crossdock function in the markets where crossdocks were closed has been transitioned to the
existing DCs within the same markets. 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.
DC activity for the last three years has been as follows:
Crossdock facility activity for the last three years has been as follows:
Inventory is held in our DCs at levels we believe sufficient to meet current and anticipated customer needs. We utilize processes to
evaluate the appropriate timing and quantity of reordering with the objective of controlling investment in inventory, while at the same
time ensuring customer satisfaction. Certain purchases are sent directly from the manufacturer to our customers. Some supply chain
facilities and some retail locations also house sales offices and administrative offices supporting our contract business.
Out-bound delivery and inbound direct import operations are currently provided by third-party carriers.
International Division
As of December 29, 2012, Office Depot sold to customers in 57 countries throughout Europe, Asia, Latin America, and Australia.
Outside of North America, the Company operates wholly-owned entities, majority-owned entities or participates in other ventures
covering 37 countries and has alliances in an additional 20 countries. Refer to the Merchandising section below for additional product
information.
The International Division sells office products and services through direct mail catalogs, contract sales forces, Internet sites and retail
stores, using a mix of Company-owned operations, joint ventures, licensing and franchise agreements, alliances and othe
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arrangements. The Company maintains DCs and call centers throughout Europe and Asia to support these operations. Currently, we
have catalog offerings in 15 countries outside of North America and operate more than 40 separate public web sites in the
International Division. As of December 29, 2012, the International Division operated, through wholly-owned or majority-owned
entities, 123 retail stores in France, South Korea and Sweden. In addition, we participate under licensing and merchandise
arrangements in South Korea, Israel, Japan, Dominican Republic and the Middle East. During 2010, we sold the operating entity in
Japan as well as the operating entity in Israel and entered into Office Depot licensing agreements with the respective buyers fo
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continued presence in those markets. During 2011, we acquired additional operations in Sweden, adding customers to both the
contract and retail distribution channels.
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