Big office supplier boosts small business sales

Jim Contreras, vice president of the minority-owned Abisco Products Inc., needed to figure out a way to distribute his company's three-ring binders-its main product-across the country. When OfficeMax Inc., an office supply behemoth, offered to do it for them, Contreras considered it a perfect match.

"Without them, it would have been next to impossible to go national," he said. Abisco annual sales have grown to $2.5 million, most of which Contreras said can be attributed to sales through OfficeMax.

OfficeMax helps the government buy from small businesses by distributing products of companies that are minority-owned and classified as disadvantaged, which are often also small. The Small Business Administration encourages agencies to make 23 percent of purchases from small businesses.

OfficeMax recently was rated the fourth most supportive of minority and women-owned businesses by DiversityBusiness, an industry organization. The top three were Bank of America, Lockheed Martin, and IBM. Office Max was the only office supply company in the top ten.

Wanda Lewis, director of OfficeMax's supplier diversity program, said both her company and the diverse suppliers benefit from the relationship.

"One of the things that suppliers bring to us is innovation and lower costs," she said, adding that small companies often are more flexible than large suppliers. She challenged the common assumption that buyers have to pay a premium to do business with small or disadvantaged companies. "That's not the way we do business here at OfficeMax," she said.

Lewis said she also has seen suppliers benefit from working with OfficeMax. She said that some grow enough to start offering medical insurance to their employees.

Bob Reuter, director of operations for Appliedinfo Partners Inc., part of OfficeMax's supplier diversity program for the past six years, said the program works well for his company, and is well-managed. When delayed payments caused a cash holdup at Appliedinfo several years ago, OfficeMax quickly responded by putting the company on a shorter pay cycle.

"There were not a lot of stories or a corporate line about being a big company. [An OfficeMax director] understood what the problem was," said Reuter. Appliedinfo is a minority- and woman-owned business.

At the end of 2004, OfficeMax's program included 142 suppliers, 42 of which were minority-owned and 64 of which employed blind or severely disabled workers. The remainder were owned by women.

One challenge for the company has been getting its customers to buy the items made by small or disadvantaged companies. "It's hard to enforce end-users buying those items. People just buy brands they're most familiar with," said Mark Heuer, federal business manager for BCOP Federal, the federal arm of OfficeMax. About 5 percent of OfficeMax contracts are with the federal government.

Lewis has been working to address that problem by instructing customer service representatives to encourage callers to consider diverse suppliers. "The customer will call in and say, 'I'm looking for a red pen with a blue cap.' [The customer service representative] will say, 'A woman-owned company makes that; would you like to try it?' " she said.

Representatives also remind callers about their employers' diversity goals. In addition to the federal government, many companies also set goals for how many supplies they buy from small or disadvantaged businesses. OfficeMax catalogs clearly mark which supplies come from diverse businesses.

Some agencies focus more on direct contracts with small businesses, instead of going through large companies that subcontract with them. Just over half of the Postal Service's fiscal 2004 contracts, for example, were directly with small businesses.