Office Depot Consolidating Supply Chain

Not unlike many companies in the U.S. this year, office supplies cataloger/retailer Office Depot has seen better fiscal times. Given the company’s recent announcements, including shuttering 9% of its North American stores and cutting 2,200 jobs during the next three months, consolidation of facilities appears imminent.

Brian Levine, the company’s vice president of corporate communications, says Office Depot is “faced with conducting business in a difficult economic environment. As a result, we must ensure our supply chain network can provide the highest level of service to our customers at the lowest total cost to the business.”

Total company sales for the third quarter decreased 7%, to $3.7 billion. What’s more, Office Depot reported a third-quarter net loss of $7 million, compared to net income of $117 million for the same period in 2007. Same-store sales in the 1,203 stores in the U.S. and Canada that have been open for more than one year decreased 14% in the third quarter.

In addition to closing 112 stores in the next three months and 14 during 2009, Office Depot plans to close six of its 33 distribution facilities in North America. “After careful consideration and analysis, we have made the decision to reconfigure our network and consolidate operations into fewer buildings,” Levine explains.

The company’s long-term plan, he adds, is to “reduce the total number of facilities and combine our separate supply chain systems. We will convert to combination facilities that have pick/pack and flow-through capabilities to efficiently serve both retail stores and b-to-b customers.”

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