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Thahina Rahman, Rania Rizvi, Ronnie Rodriguez, Dylan Tuch, Benjamin Xian

Business Logistics & Transportation

Professor McLaury

Group 9

October 26, 2020

AND ITS SUPPLY CHAIN STRUCTURE

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COMPANY OVERVIEW

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STAPLES’ MISSION

Mission Statement: “By expanding our product assortment and making shopping and saving easier than ever, we’re helping customers make more happen every day. And it’s our mission to make more happen for associates, local communities and even the planet — through programs, policies and the values we live by”.
Environment: To truly make a difference for the environment, you have to understand all the ways you impact it and adapt your business accordingly. That's exactly the path we're pursuing through our business practices and policies.
Community: Staples is bigger than office products. It’s about the people who work for us, who shop with us and who we serve. That’s why we support the communities where we live and work through outreach programs, employment opportunities and more.
Ethics: Integrity matters in business. And we hold ourselves to high standards through our Code of Conduct.
Diversity: Staples supports and embraces diversity in all of its forms. And we seek to develop a workforce that reflects the diversity of the communities we serve.

BEN

Overview (Ben):

Staples Inc. is a multinational retail giant in the office product supply industry. It was founded in 1986 by Leo Kahn and Thomas G. Stemberg in Brighton, Massachusetts. Staples is headquartered in Framingham, Massachusetts. After three years of its first store opening, the company went public on the stock market in May of 1989 until it went private again in 2017, after being bought out by private equity firm, Sycamore Partners. Staples became a fortune 500 company by 1996. Today, Staples has over 1000 stores and operates across North American and Europe.

Staples’ missions is “by expanding our product assortment and making shopping and saving easier than ever, we’re helping customers make more happen every day. And it’s our mission to make more happen for associates, local communities and even the planet — through programs, policies and the values we live by”. The company wishes to create a space that could fulfill every possible office need that may arise amongst people. It is also a goal to enrich the communities they are a part of, by promoting rightful ethics, diversity inclusivity amongst partners and members and protection of the environment.

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CORE BUSINESS

Office Retail Market

Ranks 5th in market share
$14 Billion in revenue (2019)
Rank #22nd largest private company in America by Forbes

International Operations

3rd party logistics with cutting edge warehouse in the United Kingdom

Business Acquisitions

Quill Corporation
Essendant Inc.
Dex Imaging

BEN

Ben: Staples’ main business would be the office supply retail, Staples was also ranked #22 across all private companies in America by Forbes. Despite their decline in physical store retail, they have been transitioning some of their operations in Europe towards third party logistics to become a logistics powerhouse. Staples had consolidated six warehouses across the UK and Ireland to create one cutting-edge warehouse. The warehouse is a shared-user facility for other brands such as Adidas, Fedex and Kwik Fix, meaning that other companies have foregone the option of owning a warehouse of their own and have instead chose to utilize Staples’ warehouse as its distribution center, making it a consolidation warehouse in the process. The property utilizes automation technology to the fullest as the warehouse is 70% automated (£9 million investment), all of which emphasizes the company’s transition to e-commerce. Staples can be a competitor in both the office retail segment but also the third party logistics segment.

Staples throughout its history has acquirement many businesses to expand it market and strengthen its offerings whether it is to consumers or businesses. An early acquisition of Quill Corporation gave birth to Staples.com and allowed Staples to have an online market presence. More recent acquisitions include Essendant Inc. in 2018 which is a wholesale distributor of office supplies in Illinois and DEX Imaging in 2019, which is the largest document imaging technology dealer, located in Florida. Staples had previously attempted to acquire Office Depot, whom directly competes with Staples, but the deal was blocked by the Federal Trade Commision on antitrust grounds. Staples has since made many other acquisitions with companies such as HiTouch, CPI One Point, PNI Digital Media, Corporate Express Canada, and many more.

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INDUSTRY ANALYSIS

Market value of $236.26 billion (2018)
Annual growth (CAGR) of 2.7% from 2019-2024
The computer and printer segment is anticipated to grow as companies continue to transition towards e-commerce
Decrease demand in traditional office supplies due to technology

BEN

Ben: The market is anticipated to grow at 2.7% annually from the years 2019 to 2024. The office supply market was valued at $236.26 billion in 2018 and it currently projected to grow to $273.9 billion by the end of 2024. The market is segmented into categories of writing supplies, calendars, planners, computer and printer supplies, and many more. More specifically the computer and printer segment of the office supply market is expected to grow in the coming years as more traditional office supplies such as paper are seeing a decrease in demand year after year. This is due to the overhaul of office systems, utilizing technologies such as cloud services that allows companies to store necessary data virtually and access anywhere, which makes paper obsolete is terms of convenience.

Despite the growth in overall office supply market, Staples has been incurring a decrease in revenue growth. Staples’ revenue from 2019 was $14 billion resulting in a 12.5% decrease from the previous year, 2018. The decrease in sales could link to its competitors taking up more market share as they offer a wider range of products at the convenience of online shopping. Over the past decade, Staples has been looking for ways to cut cost in their operations. In 2014, Staples announced that it will be closing 225 stores, to make an annual savings of $500 million and in 2016, the company announced that it will lay off hundreds from their Framingham Headquarters with more rumored layoffs coming in 2020.

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COMPETITORS

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STAPLES’ LIST OF COMPETITORS

Office Depot/OfficeMax - One of Staples’ key competitors as company structure and services are similar to Staples.
OfficeMax and Office Depot merged together in 2013 to consolidate costs and maximize resources to keep market share and battle Staples.
Office Depot FY19: $10.2B. Staples FY19: $14B (Owler)

Target - Another competitor for office supplies and furniture but not a competitor for operational resources such as printing, sign laminating, or 3rd party delivery services.
Target stores are not structured exactly as Staples or Office Depot as they are a giant consumer warehouse for home essentials but does have physical footprints for office supplies and resources inside stores.
Target and Staples compete heavily in school supplies and office furniture offerings.
Due to Target’s full product offerings, they are a one stop shop for all essentials which hurts Staples market share.

Presented by: Thahina Rahman

Thahina: Staples is an office superstore - they provide all the essential resources and tools for all businesses needed to operate in any company all around the world. We observed earlier that Staples was the first office superstore that provided resources to all companies in America. However, Staples is not the only company that offers office supplies and other tools as other very well known business magnates that consumers readily shop in also have these resources. Staples sells office supplies, computer hardware and software tools, food and drinks, office furniture, business operational resources such as printing and business/employee management tools, and 3rd party delivery service logistics. These offerings can be similarly found in their top competitor Office Depot. I am sure many of us are aware of either Office Depot or OfficeMax and have shopped there and they have the exact same product offerings as Staples.

Office Depot and OfficeMax merged together in 2013 to consolidate costs and group together to keep the company going and compete against Staples. In FY19, Office Depot generated $10.2 billion in revenue while Staples generated $14 billion. This indicates that Staples has more market share and more customers which makes them the leader in comparison. The retail store structure is similar, their online websites are similar, and their product offerings are similar. Look at the image shown in the slide - Office Depot store aisles are structured similar to that of Staples. Office Depot is Staples’ direct competitor in the retail brick and mortar locations, and based on the earnings reports, Staples is doing better. This is somewhat different when we discuss Staples’ next competitor: Target. Target has office supplies and furniture just like Staples, but Target does not contain the extensive office products lineup nor do they offer printing services. Target’s retail stores are designed to look more similar to a consumer warehouse like Walmart than solely an office superstore. Due to this distinction, consumers can go to Target and obtain almost all the items they need for their homes which takes away valuable market share from Staples.

Expected duration of talk: 2 minutes 15 second (135 seconds)

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STAPLES’ LIST OF COMPETITORS CONT’D

Walmart - The giant consumer warehouse. Walmart has almost everything for the home and business and that includes Staples’ product offerings.
Office supplies, furniture, computer hardware and software, food and drink - all available and priced competitively cheaper to draw away customers from Staples and Office Depot.
Walmart has online services that significantly rival Staples and more quantity available that makes them a strong competitor. School supplies is one area Walmart dominates in which siphones revenue away from Staples (Owler).

Amazon - The “king of e-commerce”. No limitations to product offerings in the office products space and a monumental threat to the existential threat of brick and mortar locations for Staples and Office Depot.
Prices, quantities, availability, and distributions much more convenient than Staples but Staples still has brick and mortar advantage.
Staples has 3rd party delivery logistics partners such as Fedex, UPS, or DHL and offers printing services that Amazon does not.
Staples and Amazon compete heavily in e-commerce office, home, and school supply business.

Presented by: Thahina Rahman

Thahina: After Target comes the famous Walmart as the next competitor. We are all fully aware of who Walmart is and what consumer product resources and offerings they can provide to customers. Many call Walmart the “giant consumer warehouse” as they sell almost everything. And everything includes 90% of Staples’ product offerings. Office supplies sell in substantial volumes at Walmart due to the consumer foot traffic in their store aisles and due to lower prices for items. When it comes to school supplies, Walmart has big sale offerings that draw traffic to their stores from parents that in the past were channeled to Staples. Walmart has an extensive online shopping network that hurts Staples and Office Depot due to product availability and delivery times. Walmart also beats Staples when it comes to office and home office furniture as Walmart has a much bigger product lineup and variety. Staples only advantage is a more direct offering of some supplies not readily found anywhere else such as cash, credit card, or labor management tools and printing services for home and businesses such as flyers, signs, and posters.

The e-commerce giant Amazon is the next competitor, and a big one. Amazon has significantly caused Staples and Office Depot to reduce their annual revenue and physical store locations as more consumers demand convenience, product availability, and reasonable prices for purchase. Amazon has a supply chain system that provides strategic distribution from its warehouses to residential and business customers all over the US. While Amazon has key advantages in competing with Staples, the physical brick and mortar stores are advantageous for Staples if the customer wants the item(s) immediately. Another advantage that Staples has is that it can provide consumers the ability to observe what kind of supplies are available in their respective departments that cannot be quickly determined in an e-commerce setting, and that offers Staples the ability to be a showroom and place of purchase for office supplies and furniture. Staples also has 3rd party delivery logistics such as Fedex and UPS services that Amazon does not have which can be attractive to customers requiring those services. Staples has an extensive e-commerce business that somewhat rivals Amazon but lack Amazon’s ease of ordering items which clearly favors Amazon better. Unfortunately, the brick and mortar locations are not unique advantage to Staples as Office Depot, Target, and Walmart have this offering as well. So with all this competition, how is Staples able to remain in operations today and generate $14 billion in sales annually?

Expected duration of talk: 2 minutes 15 seconds (135 seconds)

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STAPLES’ ADVANTAGES IN COMPARISON

Staples is still in business today and continues to generate $14 billion in sales as seen in FY19. Full performance metric are not available as company is actually private in comparison to its competitors.
Staples is fully cognizant of brick and mortar competition, so they price match with their competitors.
Unique product services such as printing, delivery, computer hardware/software repair and installation, furniture and assembly, and corporate supply contracts allow Staples and Office Depot to continue operating.
Staples’ powerful branding, customer service, extensive niche product offerings, and other services offer advantages to drive consumers to their stores. Consumers still need paper, ink, electronics, and furniture and Staples has them ready for sale. Staples is after all the “office superstore”.
Staples has 1,000+ physical stores in the US strategically located in high volume travelled areas which offers some real estate advantages. E-commerce is still Staples’ continual threat as Amazon and Walmart grow.

Presented by: Thahina Rahman

Thahina: Despite strong competition, Staples is still performing well and continues to own some market share in office supply and services business. Brick and mortar competition from Office Depot, Target, and Walmart positions Staples to compete strategically and effectively to maintain a footings for consumers to buy from Staples than the next door competition. Staples and Office Depot both offer printing services that million of home and business customers require. Need a flyer for an event or a batch of cards or posters for a business meeting? Staples and Office Depot have those services readily available in their store locations all over the US, something Walmart and Amazon do not have readily available.

Staples is a known brand with good customer service. In a supply chain, customer service is one of the core principles in its output and measure and Staples has a good standing. 1,000 plus stores means available real estate advantages to bring people inside a store rather than search through a website - the showroom advantage that I mentioned in previous slide. However, that does mean Staples is the dominant category in this sector as Walmart and Amazon generate much much more revenue. E-commerce has significant upside in today’s consumer driven market, and Staples knows this and is working hard on their online distribution.

Expected duration of talk: 1 minute (60 seconds)

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SWOT ANALYSIS

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

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STRENGTHS.

Successful track record of developing new products - product innovation
Investing in building a strong brand portfolio

Brand Portfolio - when large businesses operate under multiple different brands, services and companies. Used to to encompass all these entities under one umbrella.

High level of customer satisfaction
Highly skilled workforce through successful training and learning programs
Successful track record of integrating complementary firms through mergers and acquisition.
Sustainable brand

EcoEasy - provides its customers access to earth-friendly and recyclable products.

Ronnie-

When it comes to offices supplies, Staples Inc. is still one of the leading companies in that particular market. Staples Inc. has numerous strengths that help the company thrive in such a specific market. Often when an individual needs office and/or school supplies, one of the few stores that come in mind is Staples Inc. Staples Inc. has establish itself to be one of the few trusted companies when it comes to the purchase of supplies necessary for school or offices. These strengths just not simply help the company protect the market share in existing markets but also helps in penetrating new markets.

One of the many strengths that Staples Inc. possesses is a successful track record of developing new products that are innovative and efficient. Not only that, but Staples Inc. has made sure to create a strong brand portfolio which can become extremely useful if the organization ever decides to expand into new and innovative product categories in order to keep a competitive advantage. Staples has a high level of customer satisfaction level. This is due to the fact that the company possesses a dedicated customer relationship management that ensures that a high level of customer satisfaction is achieved among present customers; and that a good brand equity is present among potential customers. This facilitates the creation of loyal customers who will pick products being sold by Staples Inc. instead of those of competitors. Staples also possesses a high level of satisfaction because the company itself spends large resources in training and learning programs in order to make sure that they possess a highly skilled workforce. This is not just resulting in a workforce that is not only highly skilled but also one that is motivated to achieve more.

Additionally, Staples Inc. has successfully integrated a large number of technology companies in the past couple of years in order to streamline their operations and further build a reliable supply chain. Also, they are taking a more green side of business, which implies that they are using programs that allow for the usage of recycle items in order to prevent environmental damages.

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WEAKNESS OF STAPLES INC.

High attrition rate in workforce compared to other organizations in the industry
Not excellent at creating a product demand forecasting
Financial planning is not done properly and efficiently
The marketing process for certain products is not done properly

Investment in Research and Development (R&D) is below the fastest growing companies in the industry
There are gaps in the product range (available stock) sold by the company
Days inventory is high compared to the competitors

Inventory turnover is low compared to competitors’

Strong competition

Staples competitive advantage is getting diluted due to a merger of OfficeMax and Office Depot and also threat by Amazon on its delivery business.

Ronnie-

Like many other companies, Staples Inc. possesses weak areas where they can improve upon. Weakness allow companies to visualize ideas on how to fix said weakness in order to achieve or sustain a competitive advantage, or further improve strategic positioning.

Compared to other companies in the same market, Staples Inc. has a high level of attrition, which in other words refers to the idea that many of their employees tend to resign or quit their jobs. They possess a higher attrition rate and often have to spend a lot more resources compared to its competitors on training and development of its employees in order to keep their customer satisfaction level as its peak. Additionally, Staples Inc. has shows their competitors that they are not very excellent at performing product demand forecasting which often leads them to a high rate of missed opportunities. This ties to another weakness of Staples Inc., which is their low inventory turnover. The reason to their low inventory turnover is because they are not good at demand forecasting which ends up forcing the company to keep higher amount inventory both in-house and in channel.

Furthermore, their investment in Research and Development (R&D) is below the fastest growing players in the industry such as Amazon, Target or Walmart. Staples Inc. is spending above average on R&D, yet they haven’t been able to compete with the leading players in the industry in terms of product innovation. Staples is slowly becoming a mature company used to bring out products as testers for the market. Not only that, but their financial planning is not being done properly and efficiently. Their current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing currently.

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OPPORTUNITIES FOR STAPLES INC.

New trends in the consumer behavior can open up new market
New technology can provide Staples Inc. to practices differentiated pricing strategy in the a new market
New environment policies

Implement new technology and gain market share in the new product category

Government green drive
Initiate a multi-cost saving plan
Restructure its internal operations

Market development

This can lead to dilution of competitor’s advantage and enable to increase competitiveness compared to competitors

Decreasing cost of transportation
Economic uptick and increase in customer spending
Organization’s core competencies can be a success in similar other products field
Growth Acceleration

To integrate its retail and online offering, increase investment, and implement leadership changes

Ronnie-

The rapid rise of the revolutionary e-commerce provides many includes companies, including Staples Inc., which various opportunities to expand their operations in the market they are currently present. New trends in the consumer behavior, e-commerce, can open up new market for Staples. It provides a great opportunity for the organization to branch out and/or build a new revenue streams into new products categories. Also, new technologies will provide Staples with an opportunity to practice a differentiated pricing strategy in the new market, e-commerce. It will allow the company to to maintain loyal customers with great service and attract even more new customers through various value oriented propositions.

Another opportunity that Staples Inc. can potentially do, is decrease their cost of transportation. Decreasing cost of transportation because due to lower shipping prices can also bring down the cost of the company’s product which will provide an opportunity to either boost its profitability or pass on the benefits to their customers and which can potentially increase their market share. Additionally, due to economic uptick and increase in customer spending, due to long recession and slow growth rate in the industry, Staples Inc. has the opportunity to capture new customers and keep increasing their market share.

Since new environmental policies are often being put into action, these new opportunities will create a level of playing field for all the companies in the market. Staples Inc. should take the new found opportunity to introduce advantages in the new technologies they are creating, and just like that gain market share in a new product category. Not just that, but the government green drive will also open an opportunity for the procurement of Staples Inc. products, by either the state or even the federal government contractors.

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THREATS FOR STAPLES INC.

Imitation of the counterfeit and low quality products
Intense competition

Includes Amazon, Walmart, Target, OfficeMax, etc.

New technologies developed by the competitor or market disruptor.
Currency fluctuations across numerous countries in which Staples Inc. operates
No point of differentiation

Rising raw material can potentially pose a threat to Staples, Inc. profitability
Changing consumer buying behavior from online channel

Increase in use of digital alternatives
This can also be considered a opportunity

Growing strengths of local distributors
Liability laws in different countries

Ronnie-

Just like many other companies, they all possess a common threat, which is Amazon. Amazon can potentially be placed as the main threat Staples Inc. possess at the moment, but they also possess other threats aside from Amazon taking over their market share. Just like other companies in the same market, Staples Inc. has to deal with imitation of the counterfeit and low quality products that are delivered. This becomes a bigger threat especially in the emerging markets and low income markets. Another potential threat for Staples, is the new technologies being developed by competitors or market disruptor, which can become a serious threat to the industry in short to long term future. The fast-past change of consumer shopping behavior from online channel could quickly become a threat for the existing facilities and/or infrastructure driven supply chain model.

Additionally, the growing strengths of local distributors also potentially present a threat in some markets since they can easily be paying higher margins to the local distributors. Since Staples Inc. is currently operating in numerous countries, the company is constantly being exposed to currency fluctuations that occur in foreign countries, given the the political climate in various number of markets across the world. They are also exposed to liability laws that take place in forreign countries. This can expose the company to various liability claims given the change in policies in those said markets.

Even with all these threats that they possess, their biggest threat as it was previously stated, is the intense competition. Staples Inc. profitability has increased the number of players in the industry over the last couple of years, which has decreased the pressure on not only profitability but also on overall sales.

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LOGISTICS FLOW

SUPPLIERS

MANUFACTURERS

FULFILLMENT CENTERS

DISTRIBUTION

RETAILERS

CONSUMER

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SUPPLIERS

MANUFACTURERS

Staples’ wide supplier base extends over a wide variety of of industries.
This includes suppliers in the technology, raw materials, machinery, appliance, audio/video, and logistics industries (csimarket.com)
Raw materials are sent to manufacturing to be made into office goods
Other materials, like Apple computers and Canon cameras, go straight to fulfillment and distribution centers

40 fulfillment centers
Does much more than just store inventory:

Aids in the flow of goods for ecommerce sale
Material handling

Very expensive and have cutting edge technology

MANUFACTURERS

FULFILLMENT CENTERS

Staples has a variety of manufacturers that assemble brand office goods
Staples has over 500 factories that are audited to ensure they meet code of conduct compliance (staples.com)
“Manufacturing logistics includes the planning, scheduling and control of all activities resulting in the acquisition, processing, movement and storage of inventory” (lehigh.edu)

RANIA RIZVI: As a multi-billion dollar retailer, Staples’’ massive and consistent success is primarily due to the efficiency of its supply chain, particularly within its primary logistics flow. With over 1,000 stores and 40 fulfillment centers in the United States alone (wikipedia.org), Staples’ supply chain consists of an incredibly complex network of players that allow for the efficient flow of thousands of products through the chain. For the purposes of this presentation, we will be analyzing the macro components of Staples’ supply chain, which consists namely of: 1st tier suppliers, manufacturing, fulfillment centers, distribution, retailers, and customers/customer service.

At the first link of the logistics are the suppliers. Staples has a diverse supplier base, with suppliers coming from the technology, raw materials, machinery, and appliance sectors (just to name a few) due to the fact that not all of the products sold at Staples are designed by the brand itself. For instance, the retailer also carries Apple technology and Canon ink cartridges. But despite this large supplier base, Staples is renowned for its supply chain efficiency capabilities, which can largely be attributed to its successful integration of logistics suppliers, or 3PLs (see “Distribution”).

In the second step of the logistics flow, raw materials are turned into Staples brand products though the manufacturing process. The manufacturing process is comprised of many activities, namely the planning involved to not only acquire inventory from suppliers, but to process and transport that inventory as well.

According to the Staples website, the company has audited 525 factories in total that are responsible for manufacturing hundreds of Staples brand products. It’s important to note that not all of the products offered at Staples have to go through manufacturing; if the supplier is a first tier supplier, like Canon, it will simply go to one of Staples’ fulfillment centers. However, other Staples brand products, like the infamous “that was easy!” red button or Staples brand notebooks, must go through the traditional manufacturing process at one of the factories. Activities in the manufacturing process include acquiring the materials, using machinery and worker assembly lines to put the products together, and using strategies like Make-to-Order and Make-to-Stock to develop inventory.

Once the product is manufactured, it is sent to one Staples’ fulfillment centers. What’s unique about Staples is that, unlike other companies, Staples actually does not have hundreds of small warehouses, but rather several expensive, high-tech facilities that were designed to decrease the number of warehouses needed in the logistics chain. This allows the company to increase distribution efficiency, and in turn, faster shipping. As mentioned before, in the United States, Staples has 40 fulfillment centers, which is much different than a warehouse. While stand-alone warehouses simply store inventory, a fulfillment center is a hub that stores product and contains the technology to allow third-party logistics (3PL) providers to fulfill customer orders for ecommerce retailers. Fulfillment centers exists to get online orders to customers in a timely fashion and relieve ecommerce companies of managing this difficult process (shipbob.com). As seen in this video, https://www.youtube.com/watch?v=ocbMIgR5nLI, the company uses advanced robotic technology to track orders and uses both bots and manually operated forklifts to retrieve, pack, label, and ship products in a systematized manner.

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TRANSPORTATION (inbound)

TRANSPORTATION (outbound)

DISTRIBUTION

RETAILERS

CONSUMER

To optimize their supply chain, Staples heavily relies on third party logistics
3PLs allow the organization to outsource aspects of operational logistics, such as warehousing and delivery.
Around 60% of activity is revolved around 3PL (supplychaindigital.com)

Staples’ retail stores receive shipment at speedy rates
Ecommerce retail is done via UPS
Retailers are responsible for displaying and selling product

Staples is located in all 50 states, with over 100 stores in California alone
Consumers can shop online at staples.com or can visit the store in person
Customer service is key in retaining consumer satisfaction

“Click to chat with an expert” feature on their website
Hotline available everyday; varying hours

RANIA RIZVI: It’s important to note that, throughout this process, there is the crucial flow of products through inbound and outbound transportation logistics occurring simultaneously. In the United States, almost all goods are transported by Staples trucks to and from fulfillment centers, and UPS for delivery orders.

In the fourth step of the logistics flow is distribution. As mentioned previously, Staples heavily relies on logistic suppliers, or third party logistics, to move product in and out of the centers. This idea started in the UK, when Staples Supply Chain Director Kevin Lewis redesigned the Staples supply chain to rely much more on third party logistics. Third party logistics is the practice of outsourcing parts of the logistics process to other companies. This can range anywhere from warehousing products to packaging, handling, or even delivering the product. For example, instead of Staples doing all the deliveries to the retailers, they can outsource the delivery function to a 3PL that can take care of it at a lower cost. Lewis utilized 3PLs to consolidate six warehouses into one major fulfillment center with cutting-edge technology that allows for both less buildings and human involvement, as well as a more automated process for order fulfillment. According to Lewis, more than 60% of the activity on site revolves around 3PL. (supplychaindigital.com).

In the fifth step of the logistics flow is product being received by retailers. At this point, all products have been appropriately labelled, packaged, and are ready to be displayed on shelves for customer purchase. Retail stores typically carry a small amount of inventory for replenishment. They are also responsible for the selling of the products and must meet specific sales goals outlined by the company in order to remain in business. However, with the increasing popularity of online shopping, Staples has shut down hundreds of stores to invest into ecommerce development.

Finally, the product has reached the customer, the last link in the logistics flow. With hundreds of stores and a wide variety of products available on their website, it’s easier than ever for customers to purchase products from Staples. As we learned in class, maintaining customer service is a crucial part of creating committed customers. Staples aims to achieve this by offering both an online, chatting feature with Staples’ representatives, as well as an 800 hotline.

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FUTURE ISSUES

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KEY ISSUES

Covid-19

Staples faced chronic stock outs of essential items during shutdowns caused by the Covid-19 pandemic

Retail

The market for supplies is shifting more to ecommerce making its strong retail presence obsolete

Data Security

More of Staples business plans revolves around business solutions a main objective of which is securing data

Dylan Tuch

Covid- 19

The coronavirus pandemic exposed staples shortcomings within its supply chain as it did with many companies. Staples was able to stay open amid the pandemic by being an “essential store” as it sold paper towels and hand sanitizer. During the beginning of the pandemic stables were suffering from stock outs of these items. This was met with backlash from its employees who felt they should not be forced to work because staples were not truly essential. Petitions were created online by the employees resulting in bad PR for Staples. Also memos were leaked acknowledging the shortcomings of the supply chain. While these items are most prone to stockouts a shutdown will affect all products timely delivery.

Retail

Staples is shifting more towards online business making its brick and mortar retail stores less significant to the overall business plan. Staples recently moved to close 120 stores in the United States and Canada. This is not the first instance of Staples moving to unload its properties. 88% of businesses prefer to get their supplies via e-commerce and Staples is following the trend. This would greatly affect its supply chain strategy as the need to deliver to stores will become less of a necessity and the ability to deliver straight to a business will become its main focus. Staples will need to increase its transportation abilities or use third parties to handle more of its transactions that will go directly to a consumer.

Data Security

In 2014 Staples was cited for a data breach at its stores that saw customers credit card data compromised. With the growing number of people relying strictly on electronics for all forms of work data security is of the utmost importance. This is especially true for a company like staples that deals with many peoples credit card information. Staples is also positioning itself as a solutions provider for businesses. With this business proposition Staples will operate more on the cloud and set up other companies' cloud softwares. A data breach would be catastrophic to Staples position in this industry as companies will have doubts about using Staples.

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RISK MANAGEMENT

COVID

Use anticipatory model during the pandemic accounting for a potential shut down. Increased inventory will eliminate stock outs

RETAIL

Continue closing retail stores that do not perform well. Revert capital gained into increased distribution network for ecommerce

DATA

Invest into secure server networks. Can also use third party company such as netgear to handle cyber security

Dylan Tuch

In order to prepare for another shutdown caused by the pandemic staples should shift to an anticipatory Model (Push) for its inventory. It should carry high levels of inventory of paper towels and hand sanitizer in order to keep up with the demand of essential items. THis would temporarily increase costs but would be made up for by the potential gains of having these items in stock. Also it will prevent Staples from suffering another PR blow from claiming to be an essential store while not having essential items. Also staples should keep high inventories of items such as personal computers and office furniture that would see an increase in purchases if remote work will continue. If another shutdown occurs it will be harder to get these items to the stores if the warehouses first need to order them. Its main objective while the pandemic continues should be to avoid stockouts of items.

Staples should invest heavily in better data security infrastructure. This will benefit all aspects of the company. In retail customers will be more confident in shopping at staples knowing their information will be safe within its servers. For the business to business side it is imperative to maintain security over companies data as one breach can result in a massive loss of the market share. Staples is also looking to become more involved in 3PLs, handling other companies warehousing and logistics. In order to do this the companies must feel safe handing over massive amounts of information to Staples that is required to perform this type of work. While the supply chain is in a constant state of change the one thing that will remain and become more important is data security.

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FINANCIAL IMPACTS

Staples has been steadily losing revenue mainly due to the inefficiencies of the retail stores

In the first quarter of 2017 North American delivery sales fell by 2.8%

Retail sales fell by 8.2% (total of 4.9%)

Net losses of 850 million occured in that period compared to 41 million in gains the year before

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