Office managers have the inside scoop on the buying habits of their co-workers. They know what products their colleagues love, what they use the most and what items they’re likely to miss if forced to give them up. But how can an office manager help balance those needs and wants against the budget? By encouraging the use of approved vendors.
“On average, businesses spend about $200 on office supplies per employee every year,” says Cindy Du, research analyst at ProcurementIQ, a buying and sourcing researcher. “Buyers who purchase from contracted vendors often receive significant volume-based discounts, ranging from 5 percent to 40 percent.” That could mean a savings range of $2,000 to $16,000 per year for an office of 200 employees.
To better understand why purchasing office supplies from a contracted supplier is a smart business decision, an office manager should start by evaluating overall purchasing needs for the office, says Leigh Merz, a senior consultant at Source One, a procurement and sourcing adviser.
Define the office’s requirements, and make sure you look at purchasing holistically, instead of by individual office supplies, she recommends. If you can consolidate with one vendor, or a select group of vendors, you might be able to access a variety of benefits for the company.
Reducing Suppliers, Increasing Savings
A business that has one or more employees trying to hand-pick vendors to get individual products at lower prices doesn’t achieve overall savings, Merz says: “The actual dollars spent are not going to be better than those negotiated on a long-term contract.”
Typically, contracts have a competitive enough rate that even with price increases, the long-term savings are still better than individually cherry-picking and sourcing each item.
Plus, there’s a cost associated with the time you spend hunting for low prices across multiple vendors. When you consolidate vendors, that time (and money) is recouped.
Improving the Quality of Service
Tapping just one or two major suppliers is often the best strategy, Merz advises.
“The major office supply carriers can provide all the services and more volume than you can leverage with a single source. The net result is going to be lower pricing across the board and better incentives.”
When a business spreads its spending across multiple contract vendors, it might not be making large enough purchases to gain the service it wants from a supplier, Du notes. “If you can spend your total budget with just two accounts, you will have a stronger relationship with these vendors.”
There’s also the value of a dedicated account team that knows the business’s industry. That means the supplier will be more likely to share details about new products and promotional savings, or make sure that shipments are delivered at explicit times to exact locations.
That relationship comes in handy if problems arise, too. Office managers who tap multiple suppliers need to call customer service blindly if there’s a hiccup or a quick-turn need, Merz says. “There’s no real chain of escalation and no priority when you don’t have a corporate contract.”
“The actual dollars spent (buying individual products at lower prices) are not going to be better than those negotiated on a long-term contract.”
Tools for Managing Supply Costs
An office manager might only have time to evaluate supply use and overall spending trends occasionally. But a strong supplier relationship brings advantages in managing spend based on actual use, Merz says. An account manager will make it their business to know your company’s favored products, understand purchasing history and help you make better buying decisions.
“While the office manager may be looking at invoices every month, an account team from the supplier is doing a business review to essentially say, ‘You have these hundred items as core items. You haven’t bought them in the past six months. Let’s shift the profile around,’” she says.
Additionally, larger suppliers often offer online buying portals, spend dashboards and reporting tools to businesses that make purchases through contracts. Office managers can dip into data to check on purchases and spending, and they can also automate regular buys or make quick purchases when needed.
The Right Supplies for the Business
The contract approach also helps office managers reduce costs by letting them evaluate where it makes sense to consolidate specific categories of products offered. For example, say an office has been buying three different types of blue ballpoint pens — that’s probably not necessary for most workplaces.
Unless there’s a business reason to support having three types of pens, the contract and its purchase tools will limit what’s available for employees to purchase. Those controls and processes limit rogue spending or high spending on supplies that are rarely used, Merz says.
At the end of the day, consolidating can lead to overall savings — even if you have to pass up the occasional one-off promotion from a non-contract vendor.
“Office managers can help their business by leveraging total volume of office supplies orders and looking at things holistically to help better control their business operations and reduce cost,” Merz says.