PCI Helps Office Depot Create Global Commerce Solution

Office Depot, Inc. (NYSE:ODP), founded in 1986, is one of the world’s largest sellers of office products and an industry leader in every distribution channel, including stores, direct mail, contract delivery, the Internet and business-to-business (B2B) electronic commerce. The company sells its products under the Office Depot, Viking Office Products, Viking Direct, 4Sure.com, Guilbert and NiceDay brands. As of March 14, 2005, Office Depot had 969 retail stores in North America, in addition to a national B2B delivery network supported by 22 delivery centers and approximately 60 local sales offices. Internationally, the company conducted wholly owned operations in 14 countries via 78 retail stores and 25 distribution centers, and operated 153 retail stores under joint venture and license arrangements in another 7 countries. To support an ever-growing consumer base, Office Depot must constantly evaluate, upgrade and improve its world-class service and delivery platform, taking advantage of the most-promising and effective technology advances.

The situation

In 1995 Viking Office Products (later acquired by Office Depot) recognized that the limitations of their current homegrown ERP solution were adversely impacting their growth. Senior managers were deeply concerned with the current system’s ability to scale and provide the functionality needed for this rapidly growing International organization. Viking Office Products (also selling at the time under Viking Direct throughout Western Europe and Australia) needed to address multiple financial and global distribution challenges in order to position itself for the next growth phase.

Due to their rapid international growth Viking Office Products had modified its existing systems to suit each country’s unique requirements, resulting in a unique solution per location. Consequently, Viking was faced with inconsistent and inefficient processes and controls, prolonged month-end closing and multi-currency challenges in addition to complex financial consolidations.
The time had come for a complete overhaul of the company’s financial and distribution systems. An internal solution selection and acquisition team was formed to identify the best solution.

Solution

After an exhaustive software evaluation and selection process, Viking Office Products selected JD Edwards World ERP solution over several competitors, including SAP, Lawson and others. Now that Viking Office Products had selected its ERP solution, a quick and effective implementation strategy was needed to beat a rapidly approaching Y2K deadline. Viking Office Products selected PCI to perform the implementation based on the company’s reputation for quality and performance. To ensure alignment with business requirements the implementation was split into multiple phases. The first phase included the financial/accounting applications implementation in the U.S., creating a model for later rollouts. As part of the initial phase, International locations committed to participate in the solution design — ensuring future compliance with their local business requirements. The U.S. financial implementation rolled out successfully and was immediately followed by rollouts into UK/Ireland, France, Germany/Holland/Austria, Australia, Italy, Spain, and Japan (Japan and Spain were implemented after Office Depot acquired Viking Office Products in 1998). The introduction of EDI and the automation of matching inventory receipts to invoices improved efficiency well beyond even the most optimistic predictions.

With the first phase of implementation completed, a separate internal team was assembled to evaluate JD Edwards World Warehouse Management solution as a possible platform to optimize Viking’s warehouse operations and improve their inventory controls. The internal team was augmented by JD Edwards’ and PCI’s consultants, with PCI’s consulting team heading up project management. The end result was the successful rollout of JD Edwards Warehouse Management module and RF Smart Data Collection in Viking Office Products’ Seattle-Tacoma warehouse. In the first year of operation the year-end inventory adjustment was reduced from millions to a few thousand dollars.

Following the International rollout of the new financial/accounting applications, the next phase included overcoming multi-currency challenges — specifically conversion of the Euro. PCI led this effort including project management. Based on Profit Concept International’s expertise, the conversion of all of Office Depot’s European locations subject to Euro currency went flawlessly.
As a result of PCI’s ability to meet and exceed all of Office Depot’s solution selection and implementation needs, Office Depot de Mexico (a joint venture of Office Depot and Gigante, one of the largest retailers in Mexico and Latin America) requested that PCI implement JD Edwards EnterpriseOne solution for their expansion in Mexico and into Latin America.

Through successful implementations, a trusted relationship and expert advice, Office Depot International continues to rely on PCI’s expertise in supporting their International locations.

Benefits / ROI

Office Depot International/Viking Office Products has been a successful user of JD Edwards World and EnrterpriseOne software for almost a decade now. The greatest measurable improvements attained during the implementation were and continue to be:

1. Standardized financial systems and procedures
2. Consolidated financial reporting
3. Improved month-end close from 15 days to three days
4. Significant productivity gains in accounts payable and warehouse
5. Integrated distribution and financial processes
6. Improved controls

In conclusion, Keith Bjelajac, former vice president and controller, Office Depot International, said:

" The Profit Concepts team was engaged to provide a complete systems solution to Viking Office Products, Inc.
The JD Edwards systems that we implemented, not only supported our rapid growth, but helped facilitate our expansion in many international locations, including the UK, France, Germany, The Netherlands, Italy, Spain, Mexico, Japan and Australia.

While our consultants from Profit Concepts had thorough knowledge of the JD Edwards software, the real value was their practical expertise in implementing this software in our multi-national, multi-currency environment. Because of the depth of their experience, we were able to understand the functionality of the software and apply it to our local businesses. As for the breadth of knowledge of Profit Concepts consultants, they assisted us in the installation of the full financial systems including General Ledger, Accounts Payable, EDI, Matching, Purchasing, Receiving, Warehouse Management and Financial Inventory.

The Profit Concepts team displayed a very high level of integrity, professionalism and responsiveness throughout our implementation projects. I have, and will continue to highly recommend Profit Concepts to anyone in need of their services. Profit Concepts was introduced to Viking as a business partner of JD Edwards. The highest complement I can pay to PCI is that, during our projects, they became our business partner.”

Enviroment

1. JD Edwards World ERP, version A7.3 running on multiple IBM I-series; approximately 800 users world wide.
2. JD Edwards EnterpriseOne ERP, version Xe running on IBM I-series, employing Windows Terminal Server to deploy the application to approximately 100 users in Mexico, and Latin America.