Institute for Industrial Engineers
Office Depot Business Process Improvement
Vince Pierce, Laura Wells, and Don Mears
July, 2011
Confidential
Office Depot Company Overview
• Office Depot is a leading global provider of office products and services:
–
2010 sales of $11.6 billion
–
North American Retail Division 43%
–
North American Business Solutions Division 28%
–
International Division 29%
• One of the world’s largest e-commerce retailers – $4.1 billion in sales in 2010
North American Retail
(43% of 2010 Sales)
North American BSD
(28% of 2010 Sales)
• 1,100+ stores in U.S. and Canada
• Largest concentration of stores in
California, Texas and Florida
• Catalog, contract and ecommerce
• Dedicated sales force works with
medium sized to large customers
• Orders serviced through 16
distribution centers
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International
(29% of 2010 Sales)
• Catalog, contract, e-commerce
and retail
• Sell to customers directly and
through affiliates in 51 countries
outside of the U.S. and Canada
• 40+ websites and 400+ stores
Business Process Improvement - Cause for Action
Office Depot benchmarking efforts highlighted a significant opportunity to improve service
levels (effectiveness) while reducing SG&A costs (efficiency).
Senior Leaders also recognized the competitive advantages that would accumulate from
building a cultural focus on Continuous Improvement.
Office Depot created the Business Process Improvement Organization (BPI)
to help us achieve world class execution by effective alignment of people, process
and technology in the service of our business objectives and operational priorities.
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BPI 2010 – Proof of Concept
During our first year, we demonstrated our ability to partner with business leaders, engage
process owners and associates, and deliver meaningful results
Expectations
Partner with Business Leaders
Outcomes
• Defined a Partnership Model
• Established around joint accountability for results
• Enabled Business Leaders without abdicating their responsibility for
results
Engage Process Owners and Associates
• Positioned Process Owners as owners in design, decision-making and
change management
• Positioned BPI as facilitators and coaches first and within carefully
selected delivery roles
• Engaged associates as SMEs to identify problems and
countermeasures
• Involved associates in implementation of solutions and CPI
Fundamentals to sustain results
Deliver Meaningful Results
• Delivered detailed current state analysis
• Delivered integrated transformation plan and business case
• Transitioned ERP integration responsibility with improved performance
• Exceeded targets by a margin of $MM, accretive to P&L and Balance
Sheet
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BPI Dual Strategies
Our dual strategies are designed to deliver near-term results by addressing critical
problems while deploying process improvement principles and practices across the
organization to create a management culture of continuous improvement
Dual Strategies
Process Transformation
Continuous Process Improvement (CPI)
Surgery – Tactical near-term focus to achieve
world-class SG&A efficiencies:
Lifestyle Change – Strategic long-term platform to
increase competitive advantage:
• Reduce Indirect Spend
• Optimize our customer Value Streams
• Restructure our Service Delivery Model
• Deploy CPI Fundamentals
• Improve Process Efficiency
• Build capability for Continuous Improvement
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BPI Integrated Centers of Excellence
Our mission is to drive superior execution that accelerates associates, customers, and
shareholder value
Program/Project Management (PPM)
Partner with Business to drive superior program/project execution
through best-in-class management disciplines and stakeholder
adoption of new behaviors, processes, and technologies
Program/Project
Management
ERP Integration
Partner with Business and IT to deliver
maximum ERP value through best-inclass governance, deployment, and user
adoption
Continuous Process Improvement
ERP
Integration
Continuous
Integration
Process
Improvement
Change
Management
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Partner with Business to apply Process
Improvement principles and practices to
deliver best-in-class process
performance and build the capability for
continuous improvement
PPM Deployment Strategies
We operate a three-channel deployment strategy to drive superior program/project
execution that delivers the required ROI on strategic initiatives
Program/Project Management Deployment Strategies
PMO Operations
PPM Capability Development
PPM Execution
Govern the portfolio of Strategic
Initiatives to achieve the ROI defined
in Strategic and Annual Operating
Plans
Deploy standard Project and Change
Management Methods, Tools,
Training, and Support to enable
Project Managers to deliver significant
business outcomes
Staff Program, Project, and Change
Managers on strategic initiatives
(augmenting Business Unit and
Functional capabilities) to deliver
significant business outcomes
Our PPM Strategies drive program/project execution excellence throughout the
organization
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ERP Integration Strategy
We operate in partnership with the Business and IT to align ERP investments with strategic
priorities and deploy integrated solutions that deliver significant business outcomes
Information Technology
Business
Build, Deploy, and Support
Solution
Identify Business Case and
Requirements
• IT partners with the Business to:
– Design Solution (Technical)
– Build and Test Solution
– Deploy Solution
– Support the Solution
• Business identifies Need
• ERP Integration partners with Business to
define Business Case
• ERP Integration partners with Business to
define Business Requirements
ERP Integration
Design and Integrate Solution
Architecture
• ERP Integration partners with IT and
Business to:
– Build Release Schedule
– Design Solution (Functional)
– Integrate Solution
– Drive User Adoption
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CPI Deployment Strategies
We operate a three-channel deployment strategy to realize significant process
improvements while building the long-term capability for Continuous Improvement
Continuous Process Improvement (CPI) Deployment Strategies
Value Stream Transformation
Tactical Process Improvement
HR Integration
Application of Process
Improvement principles and
practices in an entire Value Stream
to achieve breakthrough
improvement sustained through
CPI Fundamentals
Application of selected Process
Improvement principles and
practices to discrete processes to
deliver a minimum of 5% quality,
cost, speed, or growth
improvement sustained through
CPI Fundamentals
Integration of Process
Improvement principles and
practices into the organizational
management culture through HR
programs and processes
(Training Curriculum; Performance
Expectations; Hiring and Promotion
Criteria; Competency Models; Incentives,
Rewards and Recognition)
Our CPI Strategies apply Process Improvement principles and practices to deliver bestin-class process performance and build the capability for continuous improvement
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CPI – An Inclusive Approach
Office Depot Continuous Process Improvement
Ford 8D
Total Quality Management
Six Sigma
Toyota Production System
Lean
PDCA – SDCA
A3 Problem Solving
Strategy Deployment
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CPI Goals
•
Meaningfully improve process performance
•
Deploy “CPI Fundamentals” to sustain results
•
Use the CPI Fundamentals to build team capability for continuous improvement
Process Excellence
Process Ownership
Leadership Alignment
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A3 Problem Solving
Management
Operating System
Leading and Lagging
Metrics
Process Maps and
Standard Work
Continuous Improvement Capability
BPI Approach to Culture Change
A culture is the repertoire of mutually reinforcing beliefs & assumptions, behaviors &
practices, and values shared by a community of people
Changed Beliefs/Assumptions lead to
readjustment of Values
Beliefs &
Assumptions
CULTURE
Different Behaviors/Practices
demonstrate and reinforce changed
Beliefs/Assumptions
Readjusted Values drive changes
in Behavior/Practice
The culture cycle can be entered and changed through any of its drivers
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BPI Approach to Culture Change – 2
By focusing on Behaviors and Practices we deliver Value and reinforce Belief
Culture Drivers
X Beliefs & Assumptions
X Values
 Behaviors & Practices
• Difficult to influence directly
and slow to change
• Difficult to influence directly
and slow to change
• Can be influenced directly and
changed quickly
• Not directly observable and
measurable
• Not directly observable and
measurable
• Can be directly observed and
measured against a desired
standard
• Cannot be influenced by direct • Cannot be influenced by direct • Can be influenced by direction
order or requirement
order or requirement
or requirement
• People can be brought to
believe that it is in their best
interests to adopt the new
behaviors
• Add Value to new behaviors by
rewarding them and
sanctioning old behaviors
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BPI Partnership Model
Our imperative is to enable and support the Business without removing their responsibility
for delivering results
Collaborative
Partnership
Business
BPI
Business
Owner
BPI
Team Lead
Business
Ownership
BPI
Enablement
Process
Owner
BPI
Deployment Lead
Joint Accountability for
Results
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BPI Delivery Framework
Governance
Plan
Right
Projects
and Metrics
• Strategy Matrix
• Delivery Objectives
• Delivery Strategies
• Delivery Plans
• Delivery Organization
Engage
Deliver
Right
Leadership and
Resources
Right
Actions
and Results
• Business Expectations
• Project Charters
• Opportunity Assessment
• Delivery Approach
• Resource Requirements
• Business Alignment
• People Solutions
• Process Solutions
• Technology Solutions
• Business Results
Enablement
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Sustain
Right
Management
and Capabilities
• Leadership Alignment
• Process Standardization
• Process Metrics
• Management System
• Problem Solving Capability
BPI Delivery Framework – Process View
Governance
Plan
Planning
Engage
Deliver
Sustain
Delivery Methods
Engagement
Strategic
Plan
Business
Requests
CPI Fundamentals
Demand
Management
Project and
Change Methods
Resource
Allocation
Enablement
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BPI Delivery Methods Share a Common Foundation
Our Standard Delivery Lifecycle establishes a fundamental delivery structure and discipline,
but is adaptable enough that it can be tailored to fit a variety of engagements
Standard Delivery Lifecycle
Project Management
Design and Build
Analyze
Plan
Validate
Deploy
Change Management
Value Stream
Transformation
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Process
Improvement
Custom
Methods
Technology
Integration
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Project
Management
Change
Management
Change Management Integrated into Every Engagement
Change Management and Project Management work in partnership
to deliver desired business results
Project Management: Solution is Designed, Developed and Delivered Effectively
Change Management: People Embrace, Adopt and Use the Solution Effectively
Conduct
Stakeholder
Analysis
Define Change
Strategy
Plan
Communications
Execute and Monitor Communication Plan
Define Change
Agent Network
Build and Manage Change Agent Network
Create
Training Plan
Execute and Monitor Training Plan
Create
Re-Org Plan
Execute Re-Organization Plan
Assess
Readiness
Assess
Readiness
Create Change
Sustainment Plan
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Assess
Readiness
Execute Change
Sustainment Plan
CPI Fundamentals Enable Sustained Process Excellence
Process Excellence
• Voice of Customer
• Customer Success Metrics
• Key Input Metrics (Drivers)
Process Ownership
Leadership Alignment
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A3 Problem Solving
Leading and Lagging Metrics
Management
Operating System
• End-to-End / Detailed Process Maps
• Desktop Procedures
• Standard Work
Process Maps and
Standard Work
Process Maps and Standard Work
Leading and Lagging
Metrics
Continuous Improvement Capability
Management Operating System
• Daily Performance Huddle
• Weekly Process Owner Check
• Monthly Executive Review
A3 Problem Solving
• Cross-functional Teams
• Basic 5 Step Process (PDCA Cycle)
• Why-Why Analysis
Business is Accountable to Adopt CPI Fundamentals
BPI Terms of Engagement

The Business will identify and assign “CPI Champions” with clear accountability for
adoption of the CPI Fundamentals

BPI will manage the CPI Champions as a community of practice with weekly touchpoints, monthly learning sessions, and quarterly training events

BPI will implement 30-60-90 day reviews of the CPI Fundamentals with a simple
measurement of adoption, reported to Senior Leadership

Business will conduct routine leadership floor-walks to reinforce adoption and
celebrate success
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Key Success Factors
Factor
Examples
Effective Senior Level
Sponsorship
• Initiative and support of CFO was key
• Initiation within the Finance organization provided an avenue of
influence into the businesses
Dual Strategy – Surgery and
Lifestyle
• Delivering near-term value proposition to demonstrate value and
encourage belief
• Incorporating “lifestyle change” expectation even into “surgery”
engagements
• Incorporating clear value proposition even into “lifestyle”
engagements
Integration of PPM, CPI,
ERP Integration
• Enables wide field of vision across the enterprise
• Recognizes the interconnectedness of business drivers
Structured Change Management
• Proactively identifies and works to align human factors
• Mitigates risk of non-adoption
Business Partnership Model
• Collaborative partnership with joint accountability for results
• Business ownership
• BPI enablement
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