OPI APP JANUARY FEBRUARY 2024 A by OPI

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business products world

BIG INTERVIEW

Patrick Murphy, Codex Office Solutions January/February 2024

TICK TOCK Time to turn pledges into outcomes

INSIDE THIS ISSUE l Hamelin closes Pelikan deal l ODP split in the spotlight l Nectere in trouble l Developments at Büroring l What lies ahead in 2024? l Writing instruments sector: toughing it out l Opportunities in education l Cybersecurity in the age of AI l OPI Partnership preview

CONTENTS 18 Big Interview After a huge amount of work – and investment – Irish player Codex Office Solutions is ready to go bigger and even better 26 Spotlight A stocktake of 2023 and look at the year ahead 28 Focus Progress was made at COP28, but not everybody involved is singing from the same hymn sheet 32 Category Update Under pressure: the writing instruments sector battles on

Big Interview: Scaling for the future

Patrick Murphy took over the reins at Dublin, Irelandbased Codex Office Solutions in 2019. Since then, he has comprehensively built on the solid base his father, company founder Brendan Murphy, created and his predecessor Siobhan O’Connor advanced. The ongoing success of this B2B provider of office supplies and services – the undisputed market leader in this thriving European country – has little to do with the proverbial ‘luck of the Irish’ and everything with the CEO’s passion for the business and a desire to continually invest in it –for the benefit of both its customers and staff. FOCUS: TICK TOCK, TICK TOCK

40 Case Study CoLab: the result of joint research that encourages collaboration in higher education 42 Advertorial Balance highlights the importance of advanced payment technology in B2B online commerce 44 Research Where are we headed? Find out in The Business & Workplace Supplies Industry To 2028 report 46 Preview: OPI Partnership The event returns to Amsterdam, bringing together leading vendors and resellers from across Europe. Added in 2024: Partnership Expo

REGULARS 5 Comment 6 News 14 Green Thinking News 16 OPI Small Talk 48 5 minutes with... Alicia Kolbus 50 Final Word Jim Wheeler

January/February 2024

On the last day of [COP28}, the debate over the exact terminology attached to fossil fuels in the agreement raged on for almost 24 hours after the scheduled end. The draft text, published on 11 December, was rejected because it didn’t include the strong language on phasing out non-renewable energy which scientists and civil society groups had called for. Representatives from the US, the EU and climate-vulnerable countries like many in Africa and the Pacific Islands issued warnings over the draft deal, deepening international division with oil-producing countries.

36 Category Update Maximising opportunities in the changing – and increasingly digitised – world of learning

COMMENT The OPI team EDITORIAL

Editor Heike Dieckmann +44 1462 422 143 heike.dieckmann@opi.net News Editor Andy Braithwaite +33 4 32 62 71 07 andy.braithwaite@opi.net Assistant Editor Kate Davies kate.davies@opi.net Workplace360 Editor Michelle Sturman michelle.sturman@opi.net Freelance Contributor David Holes david.holes@opi.net

SALES & MARKETING Commercial Development Manager Chris Armstrong chris.armstrong@opi.net Head of Media Sales Chris Turness +44 7872 684746 chris.turness@opi.net Digital Marketing Manager Aurora Enghis aurora.enghis@opi.net

EVENTS Events Manager Lisa Haywood events@opi.net

PRODUCTION & FINANCE Head of Creative Joel Mitchell joel.mitchell@opi.net Finance & Operations Kelly Hilleard kelly.hilleard@opi.net

PUBLISHERS CEO Steve Hilleard +44 7799 891000 steve.hilleard@opi.net Director Janet Bell +44 7771 658130 janet.bell@opi.net

nd so it starts – another year, another set of projections (page 26), another shot at making the next 12 months better and more successful than the last. For some, the crystal ball is shining brightly. Having spent a fair bit of time with the Codex team in Dublin at the end of 2023, for example, I can’t help but feel that 2024 will be a good one for this operator, thanks to an awful lot of hard work and – wisely measured – investment (page 18). Acquisitive and diversification-happy companies will do well, I’m sure – among them the likes of BradyIFS/Envoy Solutions in the US, Hamelin and OptiGroup in Europe, and Discount Office National in Australia (see Small Talk, page 17, and News, pages 6 & 9).

One thing is certain for 2024: the march of digitalisation continues unabatedly Then there are those on the ‘to watch’ list: The ODP Corporation in its current format is a good example as well as groups such as Büroring and Nectere (News, pages 10 & 11). The latter in particular appears to potentially have reached the end of the road, although at the time of going to print with this issue of OPI, it wasn’t confirmed. By the time you read this, however, there will undoubtedly have been an update on opi.net. On a more macro note that our readers globally will have an interest in, all ears were tuned into news from Dubai during COP28 in December last year. Sceptics and optimists alike had good reason to feel vindicated, given that although climate action progress is being made, it’s arguably too slow and somewhat watered down – political and economic agendas continue to rule the roost (page 28). One thing is certain for 2024: the march of digitalisation continues unabatedly. This is evident in pretty much every single feature we publish in OPI. Whether it’s Category Updates on the writing instruments or education segments (pages 32 & 36, respectively), a Case Study about the latter (page 40) or the increasingly sophisticated advances in online payment technologies (page 42), it’s quite simply omnipresent. So get on board. And we haven’t even reached the giddy heights of what AI can do yet – nowhere near. What we do know already is that it can be extremely powerful and should be treated with the greatest respect, certainly from a cybersecurity perspective (page 50). Wishing all our readers a happy, healthy HEIKE DIECKMANN, EDITOR and successful 2024!

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No part of this magazine may be reproduced, copied, stored in an electronic retrieval system or transmitted save with written permission or in accordance with provision of the copyright designs and patents act of 1988. Stringent efforts have been made by Office Products International to ensure accuracy. However, due principally to the fact that data cannot always be verified, it is possible that some errors or omissions may occur. Office Products International cannot accept responsibility for such errors or omissions. Office Products International accepts no responsibility for comments made by contributing authors or interviewees that may offend. OPI is printed in the UK by

January/February 2024

Executive Assistant Debbie Garrand +44 20 3290 1511 debbie.garrand@opi.net

The good, the bad and the unpredictable

NEWS

From left: Hooi Keat Loo, CEO of Pelikan International Corporation Berhad, and Hamelin’s Eric Joan

Analysis: Pelikan now part of Hamelin Stationery vendor tie-up creates €600 million office and school products supplier

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In mid-December, Hamelin confirmed it had closed the acquisition of fellow stationery manufacturer Pelikan. The news came shortly after the German competition authority had given its green light to the deal, first announced in June 2023. The transaction – the largest in Hamelin’s history – takes the France-based group to around €600 million ($660 million) in annual revenue, employing more than 3,000 staff around the world. It adds the Pelikan and Herlitz brands to sit alongside Hamelin’s current portfolio which includes Oxford, Elba and Unilux. Speaking to OPI, Hamelin CEO Eric Joan said it had taken longer than expected to receive the necessary approvals, but the proposed transaction had not required a more in-depth, two-phase investigation by the German regulators.

COMPLEMENTARY FIT Prior to the addition of Pelikan, Germany was already Hamelin’s second-largest market. It has now leapfrogged France into the number one spot, thanks to the approximately €100 million in sales generated in the country by Pelikan. That said, Joan stated there was very little overlap between the two companies, with Hamelin’s strength in books and pads complemented by Pelikan’s focus on writing instruments plus school and office accessories. The good fit between the two manufacturers was a major reason behind Hamelin’s move for Pelikan. It was something the France-based

group recognised some time ago, and Joan revealed the parties had been talking about a potential sale for around four years. COVID-19 got in the way, of course, but there were also other potential stumbling blocks, such as Pelikan’s ownership of the Falkensee distribution centre near Berlin. That facility was sold in 2021, in a transaction which also helped Pelikan reduce its debt. Eyebrows have been raised about the purchase price for Pelikan, with Pelikan International Corporation Berhad (PICB) – the company’s former Malaysia-based owner – highlighting an enterprise value of almost €190 million. For Joan, a more accurate figure – and the one the financial community should focus on – is the €136 million in cash Hamelin paid. Additional assumed debts relate to intercompany loans, affirmed Joan, and are not external financial liabilities. The €136 million layout represents an adjusted EBITDA multiple of around 6.5, which Joan described as a “much more reasonable deal” compared with the 9.6 figure touted by PICB. Hamelin used cash reserves and new loans to finance the acquisition. The CEO declined to specify the amount of debt Hamelin was taking on, but did admit the timing of higher interest rates was not ideal – but not something he can control.

The good fit […] was a major reason behind Hamelin’s move for Pelikan SYNERGIES When the purchase was announced, “considerable” synergies were referred to. A quick win would appear to be the cross-selling opportunities provided by both companies’ distribution networks. Pelikan, for example, has a strong presence in Latin America (Mexico, Colombia and Argentina) and Eastern Europe, where Hamelin is less active. On the flip side, the French group will be looking to grow Pelikan in European markets (the Nordics, the UK, France and Iberia). Joan also pointed to the “huge opportunity” in Africa, where both companies have a small presence. In terms of SG&A savings, Joan said it was too soon to comment. It will now be a question of getting to know Pelikan CEO Claudio Esteban Seleguan and his team and learning about the acquired business. At the same time, Joan knows he can’t take his eye off the ball running Hamelin and preparing for this year’s back-to-school season – especially after the challenges in 2023.

Staples Inc confirmed in late November that its systems had been impacted by a “cybersecurity risk”. There had been reports on various public forums the previous few days regarding issues with internal communications, call centres, online ordering, fulfilment centres, Quill and Staples Canada. “We took proactive steps in an effort to mitigate the impact and protect customer data. Our prompt efforts caused temporary disruption to the staples.com processing and delivering capabilities as well as to our communications channels and customer service lines,” Staples commented. According to Bleeping Computer, no ransomware was deployed in the attack, nor were any files encrypted. In 2020, Staples suffered a data breach due to a bug in an order tracking system, while sister company Essendant was severely disrupted by a ransomware attack in 2023.

New look for ADVEO

Norway-based Flokk has agreed to buy US commercial furnishings manufacturer Stylex for an undisclosed sum. Founded in 1956 by the Golden family, Stylex generates annual revenue of about $50 million. Its headquarters and production facility are located in Delanco, New Jersey, while it has showrooms in New York and Chicago. The acquisition of Stylex will take Flokk’s sales to around $400 million and strengthen its position in the US, which is now its largest market by some margin. The European group said this latest transaction – which is expected to close by the end of January 2024 – complements its other US brand, 9to5 Seating, acquired at the end of 2019. Stylex, led by CEO Bruce Golden, will continue to operate independently as a brand within the Flokk portfolio.

From left: Flokk CEO Lars Røiri with Bruce Golden

Xerox to slash jobs

Xerox has announced a restructuring programme that includes reducing its staff numbers by around 15%. Described as an “evolution” of the Reinvention plan revealed last October, Xerox is adopting a new operating model and organisational structure that will result in around 3,000 people leaving the company in the coming weeks. Changes include: simplification of the print portfolio and more use of partners to go to market; the creation of a Global Business Services unit to drive companywide efficiencies; and a greater focus on IT and digital services.

London Stationery Show changes hands for 2024

Max Publishing has acquired the London Stationery Show from Ocean Media Group. The Stationery Matters publication and National Stationery Week brand are also included in the deal. Ocean Media had acquired the show in 2016 from its founder Chris Leonard-Morgan’s LMC Media company. The London Stationery Show 2024 will take place as planned from 14-15 May at the UK capital’s Business Design Centre. Chantelle White has joined the Max Publishing team from Ocean Media to continue as its Event Manager.

January/February 2024

ADVEO France has unveiled a new corporate identity that, it says, better reflects its values. The wholesaler and reseller network organisation revealed the refreshed logo at its 2023 annual conference and vendor expo in November of last year. At the same time, it affirmed a set of four new values: proximity, audacity, resilience and innovation. The first letters of these spell out the French word ‘pari’ which, in this context, can be roughly translated as ‘challenge’ or ‘commitment’. Earlier in 2023, ADVEO acquired office superstore chain Top Office to complement its Plein Ciel, Calipage and Buro+ networks.

Flokk to acquire Stylex

NEWS

Staples confirms hit from cyberattack

NEWS

Analysis: Investor calls for ODP split

EXTRACTS FROM THE AREX LETTER

Hedge fund loses confidence in the company’s four business-unit strategy The ODP Corporation (ODP) shareholder AREX Capital Management has called for the company to be broken up. In an open letter to the reseller’s board, AREX said ODP should rekindle the spin-off of its consumer-facing Office Depot retail business (a project that was abandoned in 2022) and sell or shut down its Varis B2B procurement platform. The investment firm, which owns about 1% of ODP’s common stock, said it was compelled to publish the letter following conversations that left it “concerned the board and management do not feel the appropriate sense of urgency to promptly take the necessary steps to maximise shareholder value”. Arex’s plan for ODP would result in existing shareholders owning two new companies: RemainCo, consisting of ODP Business Solutions and distribution arm Veyer, and NewCo, comprising the Office Depot retail network and e-commerce site. The plan assumes Varis is sold in its entirety for $150 million – roughly half of the capital invested as of the end of 2023.

No more time should be wasted […] continuing a very expensive hope-based strategy with Varis

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ADDING SHAREHOLDER VALUE According to AREX, this new structure would imply an equity value of around $3.2 billion by the end of 2025, with ODP’s shares trading at 62% above the current level. In addition, it suggested a leveraged $875 million share buy-back programme which would add a further 28% to the share price (see graph). “The steps we have outlined should generate significant value for shareholders, far greater than what the company is likely to deliver in any version of the status quo,” AREX stated in its conclusion.

ODP potential upside from AREX’s plan

We believe […] the results of the past few years strongly suggest that solid execution and ongoing share repurchases are insufficient to create meaningful and sustainable value for ODP shareholders. Too many investors simply think of ODP as a challenged brick-and-mortar retailer, and this misperception will likely persist for as long as Office Depot contributes a meaningful portion of the company’s EBITDA, regardless of management’s efforts to tell its story better. It is our understanding that a sale announcement [of Office Depot] was imminent before market volatility in June 2022 scuttled the deal. […] Market conditions today are dramatically improved, and the separation benefits the company itself previously enumerated are as relevant today as they have ever been. In fact, there is no compelling reason to maintain the existing corporate structure, and the process of executing on a tax-free Office Depot spin-off should begin immediately. Varis’ results to date have been unambiguously disappointing as evidence of commercial progress has been sorely lacking and milestones have continuously been pushed out. It is time to change course. […] The company should immediately explore the divestiture of at least a majority stake in Varis. […] If no third parties are willing to invest capital into or acquire Varis at any price, that […] would provide clear evidence of the need to immediately shutter it. Simply continuing the status quo at Varis is unacceptable. It added: “No more time should be wasted exploring whether the four business-unit framework might ultimately resonate with investors or continuing a very expensive hope-based strategy with Varis.” The investment firm threatened to “consider taking additional steps” if the board did not “act decisively to unlock this value for shareholders”. In a brief response, ODP acknowledged receipt of the letter, but did not comment on its contents. Meanwhile, in early January, it was revealed the cooperation agreement between ODP and leading shareholder, HG Vora, had ended. This agreement – in place for three years – had provided the reseller with certain provisions against a hostile takeover. With these now gone, the door might be open for AREX to force the ODP board’s hand.

Sweden-based B2B distributor OptiGroup has expanded into the German market by acquiring leading regional supplier Top Service, a distributor of tabletop products, food packaging, and cleaning and hygiene supplies. Established over 30 years ago by Andreas Zapp, Top Service has grown to generate €25 million ($27.5 million) in annual revenue and is a significant supplier to the hospitality industry in Bavaria. “The acquisition of Top Service is in line with OptiGroup’s international growth strategy to consolidate the large, highly fragmented and attractive European B2B distribution market, estimated at approximately €150 billion for [our] key segments,” OptiGroup stated. “The entry into the German market is key in pursuing this strategy which includes highly selective add-on acquisitions to develop [our] business portfolio towards leading positions in attractive market segments in Europe. Germany remains a priority market for all of OptiGroup’s core segments.” Zapp and the management of Top Service will stay on at the company. The business will become part of OptiGroup’s Facility & Safety business area and continue to operate under its current brand. The deal is expected to be finalised in the first quarter of 2024. The news came just a couple of weeks after OptiGroup bought Van den IJssel, a Dutch full-service distributor of workwear and safety solutions to industries such as construction, manufacturing and offshore. Founded in 2003 by entrepreneur Berry van den IJssel as a promotional gifts business, the company today employs 45 people and generates annual sales of around €9 million. The acquired business will form part of OptiGroup’s Safety unit in the Benelux, together with AllSafety. The day-to-day operations of Van den IJssel will remain under the leadership of the existing team.

Australian dealer acquires

NEWS

More M&A for OptiGroup

From left: John Donaghy and Jeff Houseman

Australian independent dealer Discount Office National has bought a fellow Sydney-based reseller. Discount purchased York Stationers, a dealer with retail and B2B operations which serves customers in and around Sydney’s central business district. The deal comes after York founder Jeff Houseman decided to retire and marked Discount’s second acquisition in 2023. Managing Director John Donaghy – a well-known figure in the Australian business supplies industry – said at least two further purchases are planned in the next 12 months.

Rocada and Maul sign sales and distribution agreement From left: Marc Roca and Stefan Scharmann

Viking opens new customer service centre

January/February 2024

European reseller Viking is making good on its promise of getting closer to its customers. The RAJA-owned business has announced the opening of a new customer service centre in the Belgian town of Tongeren. The team – which will serve 30,000 Belgium-based clients in Flemish, French, English and German – is sharing the location with RAJA’s existing packaging operations in the country.

European vendors Rocada and Maul are partnering to sell and distribute each other’s products. Effective January 2024, Maul has become the exclusive distributor for the Spain-based company’s product range in Germany. This totals around 80 SKUs which will be marketed by the Maul sales team. In addition, other items can be shipped directly to customers from Rocada’s warehouse in Spain. In both cases, invoicing will be handled by Maul. Rocada, meanwhile, will represent Maul in the Spanish market. This, Managing Director Marc Roca told OPI, will complement his company’s office furniture products. His counterpart at Maul, Stefan Scharmann, added: “With Rocada’s products, we are taking the next step in growth. Our new logistics centre [in Michelstadt] was the prerequisite for this. The larger storage space that has been available since September allows us to accommodate additional attractive products.”

NEWS www.opi.net 10

Office furniture giants talk up office return trends

When leading workplace furniture companies MillerKnoll and Steelcase reported their quarterly earnings in December, they both focused their messaging on improving margins against a backdrop of, generally speaking, challenged top lines. They also provided some commentary on return-to-office trends. Steelcase CFO Dave Sylvester commented: “We remain optimistic about the growing number of companies in the US that are emphasising physical presence in their offices for a minimum number of days per week, as we believe it has positively impacted order levels over the past three quarters in our business.” The vendor’s CEO Sara Armbruster said orders in the large corporate segment have been “strengthening” in

the past year, adding: “Customers are looking to invest in spaces that solve a host of needs, such as providing places to focus, collaborate, build social connections and foster well-being.” Armbruster elaborated that two of the most important factors influencing clients’ purchasing decisions are innovation and sustainability, providing some examples of recent product launches by Steelcase. Sylvester said the momentum at large customers is expected to continue into 2024, while the education vertical – particularly in terms of classroom furniture – is doing well. Meanwhile, at MillerKnoll, CFO Jeff Schutz explained confidence was being bolstered by forward-looking demand indicators, including project funnel activity and a “notable increase” in requests for project pricing and mock-up builds. This was despite year-on-year revenue at the company’s Americas Contract division falling by more than 10% in the most recent quarter. CEO Andi Owen referred to a “lot more momentum around getting people back together”, adding: “I think return-to-office is absolutely picking up.” One trend that was highlighted was the downsizing of real estate portfolios, with the move into smaller spaces triggering more project work.

ACCO to close US facility

Developments at Büroring

ACCO Brands has announced a cost-saving plan in relation to the closure of a manufacturing plant in the state of New York. In a regulatory filing, the company confirmed it will shut down its site in Sidney which makes and distributes dated and planning products. The manufacturing activities will be relocated to an external supplier while the distribution function will be transferred to ACCO’s Booneville facility in Mississippi over the next 12 months. The Sidney location – which employs around 300 staff – is slated to close by the end of 2024. ACCO owns the facility and will therefore look to sell it. However, it said current property market conditions make any future sale date uncertain. The total cash outlay related to the closure is expected to be $13 million. This includes around $9 million in staff termination and benefits, and about $1 million for the start-up of production with the third-party supplier.

There have been several bits of news from German dealer group Büroring in recent weeks. Firstly, the relationship between Büroring and EK Retail is set to evolve in 2024. In the first quarter, Büroring’s central billing function will be transferred to EK’s ZR platform. This move, said the organisations, will have benefits in terms of both performance and cost efficiencies. Büroring confirmed that other services, such as purchasing, the central warehouse, sales, marketing and IT, would continue to be handled by its own staff. The second development was the announcement of a strategic partnership between Büroring and print/IT dealer group WinWin Office Network. This collaboration will allow members of both organisations to pool resources in areas such as buying, leasing, training and logistics. In addition, both WinWin Office Network and Büroring have been unveiled as members of a new alliance focused on the printing and document management segments. The other two parties involved are commercial print group RGF and IT/print management firm LKS Group. Finally, in early January, WinWin Office Network’s board member and spokesperson Frank Eismann was appointed co-Managing Director at Büroring, responsible for sales and marketing. Working alongside Kai-Uwe Heuer, Eismann will also be the group’s Frank Eismann external spokesperson.

ACCO appoints director ACCO Brands has named Beth Simermeyer as the latest addition to its board of directors. She will serve on two committees: Finance and Planning, and Nominating, Governance and Sustainability. Manutan subsidiary names MD Manutan has hired Claudine Banzet as Managing Director for its Papeteries Pichon school and educational supplies business in France. She succeeds Thierry Cappé who has moved to Collectivités, Manutan’s French public sector division. New MD at Staples Benelux Staples Benelux owner 123inkt has named Albert Zwart (left) as Managing Director, succeeding George Steur. Zwart will also continue as Managing Director of 123inkt’s managed print services unit 123zakelijk. Staff changes at TD SYNNEX The newly created COO position at TD SYNNEX has been given to Patrick Zammit (left), formerly in charge of operations in Europe and Asia-Pacific Japan. Also, current President of TD SYNNEX Americas, Michael Urban, is set to leave the tech distribution giant at the end of February. Additional role for Langvad Schäfer Shop VP of Operations Christian Langvad has been appointed Managing Director of Schäfer Shop Logistics Services. He will also continue to lead the Operations department.

Senior appointment at HSM America HSM of America has named Pete Trethaway as National Account Manager. He brings more than 30 years of B2B selling experience to the role, having previously worked for Brother and Casio.

Just as this issue of OPI went to press, it was revealed that UK dealer services group Nectere was experiencing financial difficulties. According to reliable sources, Nectere stopped delivering to end-user customers on 20 December and did not pay dealer partners for the final month of 2023. Main wholesale partner Spicers – which signed a major five-year agreement with Nectere less than a year ago – also halted supplies due to credit concerns. Spicers’ parent company OT Group had injected a significant amount of capital into Nectere last July, thereby becoming a minority shareholder. In November, it appointed Adam Noble as Nectere’s Executive Chairman, with former Sales Director Adrian Reid rejoining shortly afterwards as Managing Director. In a statement, OT Group confirmed “substantial challenges” at Nectere which “require immediate attention”. It added that it was waiting for an update from Noble and his management team.

TOPS becomes Linc distributor

US stationery and office supplies manufacturer TOPS Products has confirmed it has entered into a distribution agreement with Indian writing instruments giant Linc. TOPS is now the exclusive North American distributor for the Indian company’s Pentonic brand of pens.

Staff shuffle announced at HP North America

HP Inc has appointed David Lary – previously General Manager of US Consumer and Supplies Sales – as VP Print Category for the North American market, effective 1 February. Tami Beach was named VP of Consumer Channel Sales, while former CMO Antonio Lucio rejoined the company as Global CMO & Corporate Affairs Officer. David Lary

Tami Beach

Antonio Lucio

January/February 2024

Cartridge World assigns CMO Cartridge World America has selected digital marketing entrepreneur Grant Gooley as CMO. Gooley is the founder of the MyPortal marketing agency and, more recently, MyPortal Virtual Assistants.

Nectere in trouble

NEWS

ON THE MOVE

NEWS

IN BRIEF

UK economic activity has stagnated and is struggling to achieve escape velocity […] Tighter monetary policy means the economy is trying to venture ahead but with the handbrake of higher interest rates holding it back Barret Kupelian, Chief Economist, PwC UK

Epson achieves EU green energy target Epson has reached its goal of 100% renewable electricity usage across its European operations. The milestone is part of the print OEM’s target to become carbon negative and underground resource free by 2050.

77%

Percentage Canadian fi of US and rm organisatio s that say nal c is a key ben ulture e of on-site w fit ork

£743,000

Average cost of a print-related data breach

PICTURE OF THE MONTH

Amazon requests FTC lawsuit to be dismissed

Amazon filed a motion asking that the Federal Trade Commission’s (FTC) antitrust lawsuit against the retailer be dismissed, arguing there is no evidence that its activities have harmed consumers. The FTC’s claim alleges Amazon engaged in “punitive and coercive tactics” to maintain various retail monopolies.

First AI laws set in motion The European Parliament and EU member states have reached a provisional agreement on the Artificial Intelligence Act, following talks between 6-9 December 2023. The draft regulation is the first-ever dedicated law on AI. It aims to ensure AI systems are “safe and respect fundamental rights and EU values”.

¥290 trillion

Amount Japan’s Green Growth Strategy is expected to add to the economy annually by 2050

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New York: best city for talented workers

A study by CEOWORLD ranked New York as the leading city worldwide for attracting and nurturing a talented workforce. Cities were evaluated across criteria which include job growth, education attainment, regional competitiveness and migration patterns.

GREEN THINKING

Clorox reveals barriers to eco-conscious cleaning

CloroxPro published its 2023 Clean Index which highlighted the key challenges in the cleaning industry. These include reasons for not choosing eco-conscious cleaners and disinfectants, despite 75% of respondents saying these products are important to use. The main explanations cleaning professionals give for not adopting environmentally friendly cleaners are increased cost (78%), uncertainty of cleaning effectiveness (67%), compromised efficiency of cleaning (58%), limited product availability (56%) and a preference for using traditional solutions (52%). CloroxPro said ready-to-use green cleaners “can be as affordable and effective as traditional products”. Also, purchasers should look for solutions that display the EPA Safer Choice or Design for the Environment logos. As regards qualities professionals look for in planet-friendly cleaners, the top choice (82%) was ‘killing germs effectively’.

TCO discovers ‘green’ IT trends

TCO Development has reported a 26% increase in TCO-certified products during the first two years of the current certification generation, compared with the previous version. The certification body’s CEO Sören Enholm noted the fastest growing category has been headsets, up by 850%. The two largest categories, computer displays and notebooks, grew by 24% and 49%, respectively, over the same timeframe.

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ODP achieves SBTi validation

The ODP Corporation has earned validation from the Science Based Targets initiative (SBTi) for its Scope 1, 2 and 3 greenhouse gas (GHG) emissions targets. ODP’s goals include a commitment to reduce absolute Scope 1 and 2 GHG emissions 46.2% by 2030 from a 2019 base year. Additionally, the reseller has pledged to reduce its Scope 3 emissions from downstream transportation and distribution, and use of sold products 55% per US dollar value-added by 2030 from a 2019 base year. Further to its own SBTi programme, ODP has promised 75% of its suppliers by spend (for purchased goods and services) will have their own science-based targets in place by 2027.

Messe Frankfurt receives CSR certification

Trade show organiser Messe Frankfurt has passed the audit for the internationally recognised Eco-Management and Audit Scheme (EMAS). Adopting the system means committing to recording environmental aspects and conforming with green laws. To meet the requirements, Messe Frankfurt drew up an environmental policy and set targets. One of these included the ambition to be climate neutral at its Frankfurt base by 2040.

‘Role model’ Schneider wins sustainability award

Schneider has been recognised by the German Sustainability Award Foundation (DNP) in the office supplies and promotional products category. With 100% in-house production in Germany and 93% of purchased materials coming from Europe, Schneider was described by the DNP jury as a “role model” for sustainable change. Meanwhile, fellow German writing instruments vendor Stabilo picked up a Silver award in the same category.

SMALL TALK

A FRESH PERSPECTIVE James Rodgers took over as CEO of leading US dealer organisation Independent Suppliers Group on 1 January 2024. He spoke to OPI Talk during the transition period in Q4 last year The transition period… James Rodgers: The timing from a business point of view was absolutely perfect. We’ve had a couple of board meetings, Industry Week, the OPI Global Forum and ISSA North America all in the period of a few weeks. This has created a great opportunity for me to get out and, in a short amount of time, meet with our members, key suppliers and industry affiliates. It’s allowed me to really become immersed in the direction of the business and get a sense of where we are headed.

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ISG’s strategic direction There is not much I can divulge at this point, and we are certainly in the early stages. But we want to look at areas such as talent, technology, diversification and industry affiliations to take us to the next level.

Initial impressions The first thing I noticed was the team. From top to bottom, we’re incredibly strong and driven. When you look at our executive leadership, there’s a tremendous amount of experience, which is key. Something I picked up on right away is how everybody is extremely close to our members; every decision is made with them in mind – an incredible asset to us. From the standpoint of having productive and strong relationships with our suppliers, we’re in a great position. We’re growing in strategic categories such as jan/san and MRO. This will help our members diversify and excel in these adjacencies.

James Rodgers

With my jan/san distribution background, I believe I have a good perspective on the opportunities in that channel and I hope to share with our members where they can capitalise on those opportunities. A near-term win, for example, might just be creating connection points – reintroducing ISG or individual members to certain suppliers. In addition, we are fortunate to have a progressive, eager and supportive board which wants to make some bold moves. Its members can really put on their IDC and ISG hats and think beyond the borders of their own market to make sure we’re in a position to help bolster all our dealers’ businesses.

We want to look at areas such as talent, technology, diversification and industry affiliations to take us to the next level Priorities after 1 January 2024 I’m an eager kind of guy and if I see something which piques my interest, I want to go after it. However, I recognise that, because of the size and diversity of our membership, I’m going to have to temper myself a little bit – and this is what I promised everyone at Industry Week. As such, I really want to get out and learn from our members, suppliers and affiliates what addresses the needs of the broadest spectrum of all constituents.

Background to the transaction Ken Sweder: With both ourselves and Envoy being very acquisitive in the past few years, we tended to bump into each other quite a lot which gave us the chance to get to know the company and its culture. When FEMSA made its announcement, we saw it as a natural opportunity to do something disproportionally transformational in the industry. There are always some regulatory issues that have to be dealt with but we were incredibly fortunate the time between signing and closing – which can create some uncertainty – was relatively short. Now we can very quickly start thinking about how we’re going to operate as one. We actually call it ‘winning as one’. Competitive overlap Everyone at BradyIFS and Envoy has come in through different doors with all the acquisitions. Yet, we all believe in the power of one, that we are better together than alone – we have voted for that with our careers and our companies. I believe we have become adept at going from a competitive situation to becoming family and building trust. Collectively, we still only have a small amount of total market share today. There is so much we can go after to capture and grow over time, so it isn’t just about one or two areas where BradyIFS and Envoy compete today. In fact, when you look across the whole of the US, we are very complementary, with BradyIFS a little more weighted on the West Coast and Envoy in the East. It really is a good fit.

Ken Sweder

We are not going to take our foot off the gas; if anything, we will be even more acquisitive Continued M&A We are not going to take our foot off the gas; if anything, we will be even more acquisitive now we have a good ‘mousetrap’. We have been successful at finding great partners and integrating them. Why wouldn’t we keep that going? Distributors view us as having one of the more sustainable models in our space. They can see how they could fit in, improve their digital and supply chain capabilities, and provide a better experience for their customers. Shareholders I’m very proud and grateful to be associated with Kelso, Warburg Pincus and FEMSA. They’re awesome capital partners and very like-minded in terms of what our vision is and what we can achieve. FEMSA staying as a minority shareholder was an incredible sign of confidence and to see its ongoing support is a real positive.

January/February 2024

What comes next? We’ve created some teams and been able to get a number of different workstreams going. They’re looking at areas such as what we want to aspire to, the culture, the M&A platform and, most importantly, how we create and continue to create something that customers value. BradyIFS has done 18 full ERP system integrations – Envoy is very similar. Therefore, we have the playbook and the toolkit along with the right investment and commitment to grow. We will start a new workstream around branding which will hopefully allow us, over time, to get to one integrated brand. Therefore, as we continue to acquire and bring our organisations together, we can have one name that resonates across both businesses.

Specific initial goals It’s early days, but we want to get the best assortment for our customers and create a cohesive and integrated digital solution. We see a lot of cross-selling opportunities across jan/san, foodservice and packaging – this will be one core element of our thesis, to ensure our customers have access to roughly 100,000 products. Clients want one way of operating, one system and one digital platform. Through winning as one, we will simplify our network, nationalise our assortment and enable our systems to ‘speak’ with each other. The result will hopefully be a much more comprehensive and compelling customer proposition.

James Rodgers & Ken Sweder

The recent merger of BradyIFS and Envoy Solutions has created a $5 billion distribution giant in the US. OPI Talk spoke to the combined organisations’ CEO Ken Sweder

SMALL TALK

WINNING AS ONE

BIG INTERVIEW

SCALING FOR

the future After a huge amount of work – and financial investment – Codex Office Solutions is set for a big year ahead

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atrick Murphy took over the reins at Codex Office Solutions – an Irish B2B provider of office supplies and services – in 2019. Since then, he’s built on the solid base his father, company founder Brendan Murphy, created and his predecessor Siobhan O’Connor advanced. The ongoing success of Codex has little to do with the proverbial ‘luck of the Irish’ and everything with the CEO’s passion for the business and a desire to continually invest in it – for the benefit of both its customers and staff. OPI’s Heike Dieckmann travelled to Dublin on a cold winter’s day in December to find out more about the reseller – the undisputed market leader in this thriving European country which, remarkably, remains strangely off the radar for many.

OPI: Let’s start with your career background. The fact you’re leading a family business typically suggests a certain amount of longevity in our sector. Patrick Murphy: Yes and no. I’ve been involved in the company since I was a teenager, doing stuff that teenagers do to earn some extra cash or help out – filing, shredding, stacking shelves, you name it. This later expanded to driving a van, working in credit control, etc. Over time, I’ve been exposed to every part of the business – I know it inside out. My educational background is actually in the sciences – I did a degree in biochemistry at Trinity College in Dublin. I loved all aspects of that, but after working in the pharmaceutical industry following my studies for a bit, I knew it wasn’t the career for me. That was in 2010. My wife and I travelled the world for a bit and I thought about what to do next. At some

stage after I had returned, I was talking to my father – Brendan Murphy, the founder of Codex – and he said there were a number of projects he’d like me to get involved in. What this ultimately meant was that I did an MBA while being a Sales Manager at Codex for a few years, concentrating on these projects. When I completed the MBA in 2014, I became Director of Operations. My father took a step back from the day-to-day running of the business in 2015. This is when Siobhan O’Connor was brought in as CEO. Four years later, Siobhan left and I assumed the role. OPI: An interesting time to be in charge – just as the Brexit scenario unfolded in the UK and not that long before COVID hit. PM: It’s certainly been busy and I’m grateful for what had been put in place that made Codex a sustainable, profitable and really well-run business. Of course, I was keen to put my own stamp on it. We moved to a new ERP system in 2020, which tested me to my limits. It took us a year to bed that in, but it’s been a great long-term investment which set us up well for the future.

BIG INTERVIEW Patrick Murphy

A massive amount of our growth has come from expanding the products and services we offer to existing customers COVID, of course, was a challenging time for everybody, but I’m really proud of how we’ve come through it, keeping everyone employed and on the payroll throughout. We are very much on the right side of things again now.

OPI: What does Codex look like now? PM: We have 90 staff in total and, as regards customer demographics, cover the length and breadth of Ireland. We have 18 vans in our fleet, based in Dublin (province of Leinster), Galway (Connacht) and Cork (Munster). Our main hub is definitely Dublin, but we’re expanding our presence in Connacht and Munster. Out of our entire staff, we have 18 sales team members out on the road every day, a number we’ll be increasing this year. This is hugely important in order to expand our regional presence and recruit new customers. A massive amount of our growth has come from expanding the products and services we offer to existing customers. 2024 is going to be a bit different: we’re keen to grow our market share and coverage and bring in new clients.

January/February 2024

OPI: Can you give a glimpse into your financial performance? PM: Our biggest year ever before COVID was 2019 when we did €30 million ($32 million). It dropped to €28 million in 2020 and €25 million in 2021. Initially during the pandemic, we received a lot of business from people migrating home – big one-off orders from customers getting their home offices set up. This certainly bumped up the figures, as did a huge uptick in demand for products in facilities management (FM).

2021 was a bit more of a reality check. We had an extended lockdown in Ireland and the sales growth in FM and hygiene products couldn’t be maintained. But we got back on track and had a successful year with €33 million in 2022. Last year was even better with €36 million. So overall, a 20% increase on pre-COVID levels which is fantastic to see.

Patrick Murphy BIG INTERVIEW www.opi.net 20

OPI: What’s your product history and how has this evolved over time? PM: My father started with just office supplies back in 1979. Codex now has five divisions: office supplies, FM, print & design, furniture and technology. Print & design and furniture is where we’ve been growing the most in the last few years and these two segments combined account for just over 30% of our revenue, fairly evenly shared. FM is 20% and technology 10%, so office supplies remains the biggest chunk with 40%. But while it’s our largest category still, it’s also the one that’s steadily declining. As such, we need to closely look at where the growth is and put some resources and investment behind it. We’ve learnt the hard way that you need to take your time, build the strategy and invest – again and again. Furniture is a good example of this. In 2019, this segment was €2 million but then we became the victim of our own success for a while. We couldn’t get enough product out of the door because we didn’t have the right infrastructure or the right teams in place.

It’s a good problem to have, but it’s made us realise that, to grow, you need to invest – in the salesforce to get more business, in our fleet and installations teams, etc. Nationwide. We are aiming for €40 million in sales this year across the business and are planning to ramp things up further in all categories. OPI: How much has the acquisition of DB Office Supplies added to the top line? PM: It’s completely outside the figures I’ve mentioned as it happened quite recently. DB is an extra million roughly. OPI: There have been a few acquisitions over the years which could be regarded as major milestones. PM: Yes, we’ve bought several operators, the major ones being Axis Office Products in 2015 and Staples Advantage in 2019. The Staples business has also given us a partnership with Austria’s PBS Holding. As a result, we are now servicing PBS’s global contracts in Ireland. It’s been good messaging for us – a local, family-owned business with the ability to service global contracts.

OPI: Talking of government business, you lost a big contract in 2014, a hefty part of your revenue at the time. You’ve since won it back I believe, but is it a case of putting too many eggs in one basket? PM: We lost that contract because there was a change in how it was run in order to limit the amount of business any one supplier could hold. Of course there’s the argument that not all orders should be given to just one company, I get that. However, I do have a problem with how the contracts are awarded sometimes. We work hard on building into our proposition – and investing in – aspects like service, sustainability and our community. And then the tender is 100% based on price. I know it’s a minefield and a difficult thing to do because it’s so hard to quantify factors like a potential contractor’s environmental credentials and impact. It’s easier to go with the pricing side of things as it’s essentially totting up a spreadsheet at the end of the day.

We work hard on building into our proposition [...] aspects like service, sustainability and our community

OPI: Is the corporate world different as regards the race to the bottom? PM: A bit. Whether it’s competitive pressures or a desire to ‘do the right thing’, we are beginning to see that it’s less about price and more about service, sustainability, etc. Don’t get me wrong, we’re strong on price – we have to be as a market leader – but ESG in its broadest form is hugely important for Codex. . OPI: Tell me a bit more about your efforts. I think you are Planet Mark certified? PM: Yes, we partnered with Planet Mark at the end of 2021 and have made fantastic progress since. Our packaging is 100% recyclable and we’ve seen major reductions in areas such as electricity (19%), gas (54%) and waste (14%). Our dedicated sustainability team is responsible for developing initiatives to mitigate our environmental impact in all aspects of the organisation. With an aspiration to reduce the volume of unsellable or discarded goods, we partnered with Charity Retail Ireland in 2022. This has helped us to stop any waste from fit-out projects going into landfill – desks and chairs, for example – and instead being reused. We are aiming to achieve carbon neutrality by 2030, with a complete fleet of electric vehicles by 2026 – we currently have four. By 2032, 100% of products sold by Codex will be fully recyclable. From a customer perspective, the topic doesn’t come up in conversation too regularly, but I’m convinced it will in the future, so we’re playing the long game and carry on doing what we feel is right. OPI: What about the bigger ESG picture? PM: I’d say we had a bit of a scattergun approach in the past, but are getting very strategic about it now. We are engaged with the Dublin City University Access to the Workplace programme and the Open Doors Initiative which support disadvantaged students and promote greater inclusion and diversity, respectively. We also have a dedicated charity partner, Barretstown, to which we donated over €30,000 in 2023 (€25,000 in November alone, as pictured on page 22). Barretstown is this awesome camp for children with serious illnesses. It has all the medical facilities on-site – fairly local to us – providing them with what they need while still letting them just be kids. It’s not merely handing over a cheque though. We work with the senior management

January/February 2024

As for putting all eggs in one basket, this was probably true ten years ago when we had one huge government contract on office supplies. Now we have them for several categories. One of our biggest successes last year, for example, was the amount of government business we won in print. Overall, there’s currently a healthier distribution of contracts, so if you lose

one, there are still others. That’s where diversification has been paying off for us.

BIG INTERVIEW Patrick Murphy

OPI: You’ve just alluded to customers. Who do you deal with? PM: It’s pretty much a 50/50 split between the private and public sector. Overall, we have a good grip on corporate Ireland through the acquisitions we’ve made, through relationships and the excellent service we’ve been providing over the years. At about 40% of the total, most of our private sector business is in larger corporates; the remaining 10% are SMEs – we’re still refining our strategy to go after the space that small, regional dealers typically occupy. In government business – the other 50% – we are particularly big in the health service and in higher education, namely universities. Based on 2022 figures, we’re the largest B2B provider of business supplies in Ireland – 32% bigger than anyone else in the market – so we feel there’s no opportunity we can’t go for.

Patrick Murphy BIG INTERVIEW

team and encourage our employees to get involved, volunteering at the camp as part of their working hours. We very much believe in the importance of supporting both our own staff as well as the wider community we serve.

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OPI: Codex has won several awards for being an outstanding employer. PM: Yes, we have been a ‘great place to work’ since 2019, and in 2023, were excited to also be recognised as one of Ireland’s best managed companies. All in all, I feel we comprehensively achieved what we set out to do: to be a fantastic employer. We carry out a survey every year, involving all staff. We ask them 100 questions about how they feel we are doing as a place to work which then gives us a trust score. In 2019, the overall score was 65% which was pretty good. We’re now up to 78% – because we act on the responses and strive to become better. This could be in terms of flexible working and work/life balance, professional development, education and training options and facilities, or simply ‘nice to haves’ such as a gym. All this creates trust and engagement. I like to be surrounded by people who want to work here, who love what they do and see the point of doing their absolute best – for themselves and the company they work for. This, in turn, generates amazing business results.

OPI: Have staff numbers changed since you took charge? PM: Not hugely – we’re up about 10%, but we also have incredible longevity among existing employees. The average tenure is nine years and we have some members of staff who have been with us for over 40 years. What’s changed is the calibre and variety. We didn’t have a dedicated marketing department five years ago, for instance – now it’s a team of five. The senior management team comprises seven core functions with a section head for each: sales, marketing, HR, customer service, IT, finance and supply chain. Every single individual constantly looks at processes: how

can we make ourselves more efficient, better use technology or applications to make life easier for our customers? This trickles through to all corners of the company. Optimisation helps with everything we do: every tender, every sales conversation with a customer. And then we have a team in place for proper execution and backup. I’m extremely proud of what we’ve achieved. We also have amazing In my view certainly, I’m working with the best people in the industry. OPI: Let’s move outside the organisation. VOW has been your wholesale support for a long time. How is that working out? PM: Yes, we’ve been with VOW Ireland – with Ashley Burke in charge – for many years, having switched from Spicers. We have an excellent and very transparent relationship with Ashley. Both parties realise that, for one of us to be successful, the other has to be too, so it’s a real partnership with a genuine desire to support each other. The worst thing you can have with business partners – suppliers or whatever – is point scoring. There shouldn’t be a winner or a loser. With VOW, we have the right balance. OPI: How much of your spend goes through VOW? PM: About 60% in total and 90% of our day-to-day office supplies business. OPI: This leaves a substantial 40% from categories like FM, technology, print and furniture that you buy elsewhere. VOW as well as other wholesalers have been accused of being slow to bring on board new ranges, being stuck on office supplies instead – a declining category we all know. PM: I think there’s a certain naivety sometimes as to how easy it is to go out and eat somebody else’s lunch. If you’re venturing into unknown territories, the chances are you come up against specialists in those segments. Codex is the market leader in office supplies. We know this space inside out. But we too have been overly confident in terms of thinking

OPI: Do you work with any of the other wholesalers in our space? PM: Not really. We are very VOW loyal from an OP point of view, with the exception of receiving some support from local suppliers for products which uniquely address the Irish market. Very little spend goes through a Spicers or an Exertis. All that said, my door is always open to hear what is on offer in the marketplace. OPI: Let’s talk about the competition. VOW’s parent EVO obviously has a couple of competitors under its umbrella – Complete and Banner. Is there a clash? PM: ‘We avoid the conflict’ is probably the best way of putting it. Banner won the government EOS contract, for instance – it’s not one we saw value in.

Overall, we don’t see that player in tendering projects here. Banner Ireland is very small compared to us and doesn’t go for the big government contracts as EVO would typically assume us winning with VOW in this space. As for Complete, we’ve never come across this operator here. OPI: What about OfficeTeam and Office Depot as part of OT Group? PM: OT Group is a sizeable player – about 40% the size of Codex I believe – but the focus has so far been on the UK, that’s my reading of the situation. We haven’t seen an impact yet.

BIG INTERVIEW Patrick Murphy

how easy it is to get into new ranges. You need long-term plans, resources and a lot of commitment. Just throwing a bunch of new products into the marketplace will not necessarily be an instant success. We had that experience with VOW and our furniture programme – we weren’t commercially successful with our offering. We have a different preferred supplier for this category now and with Edit Office we are winning furniture contracts. As I mentioned, it’s one of our fastest-growing segments now. We were very open with Ashley and the team about this. It goes back to what I’ve just said – you both have to be successful to make it work, there can’t be a winner and a loser.

OPI: Lyreco can never be underestimated. Nor can Amazon, of course. PM: Lyreco is certainly our main competitor in the B2B space. Our core differentiator is the flexibility that comes with being locally owned, thus being able to react more readily to local demands. This has worked for us over the past five years and seen us take significant market share from Lyreco during this period. We don’t try and compete in the same space as Amazon and prefer to put our efforts into areas which will give us the best returns on our endeavours. OPI: Finally, Viking, now part of RAJA: is it becoming more of a threat again? PM: There’s increased sharpness around the messaging and we definitely see its presence. But our customer bases are not really overlapping, as Viking sits more comfortably in the smaller SME space.

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Patrick Murphy BIG INTERVIEW

PM: From an office supplies point of view, it’s been handled extremely well by Ashley at VOW, so we’ve felt very little pain. That’s the main link to the UK we have. The rest of our supply chain is predominantly local or in continental Europe. There’s always been a bit of reticence by companies in the UK talking to us. We certainly haven’t had our doors beaten down by distributors, resellers or manufacturers wanting to engage. Maybe they don’t see the Irish market as an opportunity.

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OPI: What a different picture for Codex: from being overshadowed by the globals in their heyday to now being the market leader by some distance… PM: I remember talking to my father about it years ago. He made the bold decision to compete with the globals, while other dealers gave up to a degree, left the big business to them and instead went for ‘small and local’. My father didn’t. He always believed in what value Codex could provide to some of the bigger contracts. So he went out and competed – won some, lost some, but he went head-to-head with the multinationals. Most importantly, he never dropped his dedication to investing in the business, improving service and nurturing customer relationships. He clearly made the right decision and I want to follow his path – the finer details of running a business may have changed, but the core values behind what we’re trying to achieve have absolutely not.

OPI: Have the other, more local dealers you refer to survived? PM: Some have, others haven’t. Lots of Irish dealers out there are doing great things and plenty of progress is being made at a regional level. Our focus isn’t to compete with them but to go after big corporate Ireland and win the top 1,000 accounts in the country. OPI: It seems ages ago, but what impact has Brexit had on your relationships with UK firms – VOW being one of them?

OPI: Do you get more knocks on the door from operators in continental Europe? PM: A few more. It’s more convenient for an Irish business to go to mainland Europe to widen the supply chain than deal with Brexit, that’s for sure. But as I said, 60% of our spend is through VOW, so the scope is limited. The rest is mainly sourced from Irish companies. We’ve got ambitious plans, however. The strategy is to grow to €50 million over the next three years – €40 million plus in 2024. It’s a realistic target, but it requires a broader supply chain and this is something we’re spending a lot of time looking at right now. OPI: Are acquisitions part of the plan? PM: Not in terms of the revenues we think are reasonable to achieve this year, ie €40 million. Are we looking for acquisition opportunities in general? Absolutely. That said, the main aim in 2024 is to paddle our own canoe, be proud of all the things we’re doing well, push that message out to the marketplace and look for new business.

We’re always open to opportunities [...] The door is wide open – for pretty much everyone If acquisitions came our way on top of this, yes, it would be fantastic to get to the €50 million sooner rather than later. We’re always open to opportunities – talking to local dealers about their exit strategy or with manufacturers or suppliers that are looking to partner with somebody for a new product or service. The door is wide open – for pretty much everyone. OPI: Finally, do you have any expansion plans? Northern Ireland perhaps? PM: Our attention in 2024 will be on the Republic of Ireland. Then it could absolutely be the island of Ireland, so Northern Ireland may appear on the horizon at some stage. But it has to make sense and not just be a vanity project.

SPOTLIGHT

TAKING stock

Members of the OPI Advisory Committee give their views on 2023 and their predictions for the year ahead – by Andy Braithwaite

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his time last year, the consensus was that 2023 would be a year of two halves, particularly in the US, with a challenging first six months, then making way for a recovery in Q3 and Q4. It didn’t quite work out like that. As Mark Leazer, Executive Director of US-based AOPD, states: “The year 2023 started off with great promise, only to fizzle out somewhat in the second half.” He points to macroeconomic conditions such as a looming recession and economic uncertainty as well as other trends, including stimulus funds starting to dry up and the slower-than-expected return to the office in some parts of the country. On a more positive note, vertical markets including healthcare and the public sector were still strong, with the latter boosted by category expansion and more projects moving forward post-pandemic. Corporate buyers have also been regaining control over renegade spend by their users. Long overdue requests for proposals are going out and corporate business is being awarded again, which is good news. Essendant President/CEO Harry Dochelli says the industry faced both challenges and opportunities in a dynamic and hard-to-predict business environment last year. “We saw market headwinds across many of our categories, with e-commerce essentially flat and commercial demand showing decline. Amazon Business made more inroads with resellers towards its goal of $100 billion in sales,” he notes.

BRIGHT SPOTS Nevertheless, Dochelli also calls out some bright spots. “CEO confidence is up slightly while the economy points to steadying interest rates and higher consumer confidence and retail sales. OP continues its multi-year

decline, but jan/san and other categories show resiliency and growth potential.” At Avery, CEO Mark Cooper says 2023 was better than expected. “After a prolonged period of inflation and supply chain chaos, we finally saw this ease during the year and the recession we were often promised did not materialise,” he affirms. “We saw encouraging signs in parts of our business, fuelled by more people travelling, attendance at live events, the return of conferences and conventions, and the continuing rise in online shopping. However, the big return we have yet to see is that of in-office working,” he adds.

Amazon Business made more inroads with resellers towards its goal of $100 billion in sales In Europe, for Interaction Managing Director Jan Van Belleghem, last year actually got off to a strong start. He saw double-digit growth for the Q-Connect brand in the first six months, partly due to better availability of copy paper. However, things slowed down from Q3, with growth falling back into the single digits. At leading Danish reseller Lomax – which had a record 2023 – CEO Kenneth Borup notes several trends that impacted the industry. These included: high interest rates which reduced customer appetite for investments, particularly in the furniture category; price-setting turbulence as a result of the changing inflationary environment, something e-commerce players have been able to handle in a more agile way than contract resellers; and work-from-home (WFH) not being the drag on office suppliers once feared as customers come to terms with new patterns of working.

2024 could be the year of distribution breakthroughs

POTENTIAL US ELECTION IMPACT 2024 is an election year in the US, of course, and the way things are shaping up, it could be a period of political turmoil. It will be interesting to see what impact the election has on world oil prices, for example, while Guernsey suggests a defeat for the Biden administration could result in more federal government workers returning to the office. Geopolitical tensions in Europe and the Middle East continue to be a concern in 2024. Van Belleghem says he is keeping a close eye on container traffic trends from Asia as carriers divert ships from the Red Sea. This situation is exacerbating the delays in world shipping already impacted by the Panama Canal drought. Therefore, the possibility of supply chain disruption rearing its ugly head again in 2024 is a real one. Busy industry leaders will undoubtedly have many and varied topics on their radar screens in the year ahead.

January/February2024

MAKING AGGRESSIVE MOVES For industry icon Dave Guernsey, until more people return to the office, “not much will change for those of us providing workplace supplies”. He predicts flat demand with ongoing sectorial decline in OP, but suggests that dealers “follow the money” by targeting local government and schools. He further argues that “moving aggressively into adjacent categories is an absolute must for independents” – and not just into “convenience” segments such as janitorial. “Breakroom, done big, will be critical; project furniture is necessary, but not just transactional

deals. Bold moves may be necessary if dealers are to fully recover to the pace of 2019 revenues,” he asserts. Peter Damman, Non-Executive Director at European wholesaler soft-carrier is another who believes 2024 will be a continuation of 2023. “The traditional supplies market is not getting bigger, so fighting for share will continue for some time and more players will disappear,” he predicts. “However, the trend of consolidation and companies dropping out also has a positive effect. Fewer players on the market provides greater stability, so those remaining can still earn a good living.” Damman argues that the balance of power has shifted to the supplier channel in recent years, with manufacturers able to select who they sell to and not forced to use “classic” distributors. He expects to see more “forward integration movement”, with vendors buying distributors, resellers or e-tailers so they can have more control in terms of reaching end users directly. He adds: “It is remarkable we have not seen any Far East producers coming to Europe and trying to set up their own distribution networks. To me, that is a missed opportunity for these manufacturers and I suspect it will just be a matter of time [before they arrive].” For Lomax’s Borup, the likelihood of falling interest rates will result in a rejuvenation of large investment projects, reversing the challenges of 2023. He also says the business products industry will need to “adopt and embrace” AI, which he sees as a “key strategic area” for this year.

SPOTLIGHT 2024 Predictions

WHAT’S TO COME? Against this backdrop, what could be in store for the business supplies industry in 2024? Dochelli believes we will see many of the same market trends at play, with e-commerce continuing to grow in importance in line with changing demographics and expectations. “As an industry, there remain new and value-add solutions we can bring to the market which support our customers and the growth of our business,” he states. For Essendant, this means areas such as supply chain optimisation and investing in new technologies and tools that support commerce in the digital age. The march of technology will certainly be a key driver, according to AOPD’s Leazer. “Technology, in general, will keep dealer principals up at night, figuring out how to keep up,” he notes. “Developments in AI systems, including more seamless integration with customers, suppliers and even fellow dealers, will dominate boardroom conversations.” He also believes these conversations could relate to distribution. “In my view, 2024 could be the year of distribution breakthroughs because costs to serve must come down. Customers are demanding efficiency due to Amazon and other e-tailers. It may not have to be same- or next-day delivery, but buyers want to receive goods ordered when and where they choose – with tracking information and a picture of [the package] lying on reseller’s receiving dock or their own porch steps.” With this in mind, Leazer questions whether models such as DoorDash and Uber could gain traction in business delivery for WFH, or even if traditional office supplies resellers may start making central site locker deliveries to cater to hybrid workers.

FOCUS COP28 was a chance to find out which countries are serious about climate action – and which aren’t. Unsurprisingly and unfortunately, there were still several displays of the latter – by Kate Davies

Tick tock, TICK TOCK

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he United Nations Climate Change Conference, or COP, takes place every year and brings together country leaders, climate scientists, executives, activists, indigenous peoples and journalists to address the ongoing crisis of our deteriorating environment. On the surface, it’s the perfect setting to make real progress towards a better future. In reality, the two-week event has been accused of hypocrisy, inaction and false promises. That’s not to say some meetings haven’t been meaningful. In 1997, COP3 formed the Kyoto Protocol which committed industrialised economies to “limit and reduce” greenhouse gas (GHG) emissions. At COP21 in 2015, 196 parties adopted the Paris Agreement to hold the global average temperature increase to below 1.5°C above pre-industrial levels. Despite these successes, experts say countries aren’t doing enough to limit the dangerous warming of the planet. A report commissioned by the COP27 and COP28 Presidencies and UN High-Level Climate Champions stated: “We are far behind on climate action globally […] because the world is not investing sufficiently, and too much of the investment is still misdirected. Investment in fossil fuel production and power generation continues to outstrip what is being invested in renewable power.”

NOW OR NEVER At COP28 – held from 30 November to 12 December 2023 in Dubai – it was crunch time for world leaders to work together and commit to ending fossil fuels’ chokehold on the energy market. It was also the first ever global stocktake for countries to evaluate where we are on track to meet the goals of the Paris Agreement and where we’re not. From now, this stocktake will take place every five years to inform the next round of climate action plans.

Investment in fossil fuel production and power generation continues to outstrip what is being invested in renewable power Although the resulting climate summit agreement didn’t include an explicit strategy to reduce fossil fuel usage, it did call on all nations to “transition away” from them to avert the worst effects of climate change. The urgings of 130 countries to include stronger language such as phasing out or phasing down of fossil fuels were unsuccessful, but it’s still been dubbed a “landmark deal” in the 28-year history of climate negotiations. While the absence of US President Joe Biden and Chinese President Xi Jinping from

Global temperature reached 1.4°C above the pre-industrial baseline in 2023 Source: World Meteorological Organization

BEST FOOT FORWARD The conference seemed to start positively as COP28 President Dr Sultan Al Jaber spoke with a deep sense of urgency in his opening address. He said: “We know that the road we have been on will not get us to our destination in time. The science has spoken. It has confirmed that the moment is now to find a new road. “I ask you to start this COP with a different mindset. I ask you to adopt a different way of thinking and to be flexible […]. So, let’s work efficiently, agree on the agenda and move to text – quickly.” However, comments made by Al Jaber on 21 November and reported by the Centre for Climate Reporting sang to a different tune. The article claimed the President had said there was “no science” behind calls for a phase-out of fossil fuels. Al Jaber – who is also the CEO of the United Arab Emirates’ (UAE) national oil and gas company, Adnoc – has faced scrutiny over his commitment to sustainability before. Despite coordinating the global deal to transition away from fossil fuels, he plans to continue with his oil company’s record investment in oil and gas production.

Regardless of the controversy surrounding the COP President, delegates did put their best foot forward at the start of the conference and agreed to formally establish a ‘loss and damage fund’ on day one of COP28. A group of countries said they would contribute varying amounts to support vulnerable societies dealing with the aftermath of climate change. Simon Stiell, United Nations Framework Convention on Climate Change (UNFCCC) Executive Secretary, stressed the number of people hit by global warming will continue to grow until bold action is taken. “This year has been the hottest on record for humanity. So many terrifying records were broken. We are paying with people’s lives and livelihoods. Science tells us we have around six years before we exhaust the planet’s ability to cope with our emissions, before we blow through the 1.5°C limit.”

FOCUS COP28

COP28 raised concerns about future climate commitments from the world’s two largest GHG emitters, both have subsequently voiced their support either personally or through one of their representatives. Developing countries and climate justice activists, meanwhile, have said the agreement fell short of what was needed for emissions reductions. The Alliance of Small Island States criticised the document as a “litany of loopholes”, adding that they were out of the room when the final text was agreed. Furthermore, the International Energy Agency has concluded that the pledges so far will not keep the world on a trajectory within the 1.5°C temperature rise.

Investing in gender equality can reduce GHG emissions up to 15% by 2050 Source: UN Environment Programme

January/February 2024

CARBON COLONIALISM Even though the early ‘loss and damage fund’ was somewhat of a breakthrough, countries in need were still left disappointed by a lack of new financial commitments. A carbon credit boom could channel money towards poorer countries with smaller carbon footprints and higher financing needs. An exposé in the Financial Times suggested the money would help developing countries address the effects of increasingly extreme weather and temperature changes. However, hopes of finalising a deal on carbon trading mechanisms were quickly dashed when Al Jaber revealed talks had failed to agree on a regulatory framework for carbon credits. This leaves it until COP29 in Azerbaijan in November this year to resume, and hopefully conclude, discussions which benefit countries in need. Although carbon credits are clouded in controversy, they intend to allow corporations and some countries to offset GHG emissions through projects that claim to absorb CO2. But the absence of regulations has caused problems. Consistent accounting standards that measure and monitor how effectively pollutants are being captured are crucial, as is a coherent pricing system.

COP28 FOCUS

CONTRIBUTIONS – LOSS AND DAMAGE FUND ($ MILLION) Japan

$10

Canada

$11

Source: Natural Resources Defense Council

$17

Ireland

$27

$50

Germany

$100

UAE

$100

France

$109

Italy

$109 20 40 60 80 120 According to Reuters, the100 current cost of buying credit in the carbon market is around $6-$8 per ton. Meanwhile, economists Joseph Stiglitz and Nicholas Stern have claimed the price of carbon worldwide needs to be between $50-$100 per ton by 2030 to meet the Paris Agreement. The practice has also been labelled as a new form of neo-colonialism, with wealthier countries given an incentive to hoard land with carbon offsetting potential. Additionally, it’s yet to be seen whether it will impact poorer nations’ economic development.

Now all governments and businesses need to turn [...] pledges into real-economy outcomes, without delay ON THE ROPES On the last day of the conference, the debate over the exact terminology attached to fossil fuels in the agreement raged on for almost 24 hours after the scheduled end. The draft text, published on 11 December, was rejected because it didn’t include the strong language on phasing out non-renewable energy which scientists and civil society groups had called for.

Representatives from the US, the EU and climate-vulnerable countries like many in Africa and the Pacific Islands issued warnings over the draft deal, deepening international division with oil-producing countries. The push to phase out oil and coal certainly incensed oil cartel OPEC, whose members – including COP28 host UAE – openly argued that the focus should be on reducing emissions, rather than going after the sources which cause them. A leaked letter from OPEC, dated 6 December, had urged its members to reject language targeting fossil fuels. The letter reportedly said: “It seems that the undue and disproportionate pressure against fossil fuels may reach tipping point with irreversible consequences, as the draft decision still contains options on [their] phase out.” Responding to the draft text’s oversight of non-renewable energy usage, former US Vice President and Climate Activist Al Gore shared on X (formerly Twitter) that it read “as if OPEC dictated it word for word. It’s deeply offensive to all who have taken this process seriously”. Fortunately, delegates saw sense and the text was revised to benefit the future of the planet rather than OPEC’s bottom line. IT’S A START If we are to have any chance of holding the increase in the global temperature to well below 2°C above pre-industrial levels, as agreed under the Paris Agreement, collective action was a necessity at last year’s COP. And although the conference didn’t prove to be the deafening trigger it could have been to end our reliance on fossil fuels, it was the first time the summit took explicit aim at their use worldwide. Stiell summarised the next step for signatories perfectly in his closing speech, commenting: “This outcome is the beginning of the end [for fossil fuels]. Now all governments and businesses need to turn these pledges into real-economy outcomes, without delay.”

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THOUGHTS FROM OUR INDUSTRY...

tinue t businesses need to con COP28 highlighted tha We . ion act aningful climate to step up and take me , and ortant to our customers imp is ility know sustainab are int tpr foo n bo car ir the those who want to reduce that reflect their values. rs aile ret h wit ing pp sho conception that it costs There’s a common mis cts, or sell sustainable produ more to act sustainably ’t esn do It re. mo y pa uld sho and therefore consumers have to be this way. s g Director, Officework Sarah Hunter, Managin

The decision by world leaders at COP28 to red uce our reliance on fossil fuels is groundbreaking, but turning that wish into something tan gible will be the true ga uge of whether we have taken a significant step toward s mitigating climate change. For many organisation s, the desire to take act ion has always been there but too often the knowledg e isn’t available. Our sustainab ility work will turn 18 this year and we want to share our learni ng to help others reduce their Scope 1, 2 and 3 emissions. Simone Hindmarch, Ma naging Director, Comm ercial

CATEGORY UPDATE

PUTTING

pen to paper

The writing instruments category has been under severe pressure over the past year, but is positively reacting to new trends – by David Holes

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he economic environment has been challenging, with 2023 another year blighted by turmoil. GFK data, for instance, shows the writing instruments market in Europe declined 5.7% by volume over the past 12 months. Faced with the rising cost of living, consumers are learning to spend less, reduce their purchasing frequency, make what they have last longer or simply use up existing inventory. In addition, businesses are increasingly looking for reliable, longer-lasting products available at affordable prices.

UNCERTAIN TIMES Ewoud Bosch, VP Business Unit Office & Industry Supplies at German manufacturer edding, admits that operating in this category is currently tough, with geopolitical and economic uncertainty heaping a huge amount of pressure on the market. “High inflation and interest rate hikes make it difficult for companies to invest and consumers are wary of spending their money,” he says. “For us, this means difficult times for our B2B and B2C businesses. Sales are still at a good level but we are seeing a squeeze on volumes. “Looking ahead, it seems that although inflation will decline further in 2024, interest rates will remain high, perpetuating the present negative investment climate which will continue to impact our business.

Nevertheless, we have prepared for this and are still targeting growth in 2024.” Astrid Canevet, Senior Communications Manager for Europe & Asia Pacific at French vendor BIC, adds that market conditions mean consumers now prioritise value for money more than ever. They are constantly on the lookout for promotional offers or bigger value packs to optimise their budget. “Thankfully, stationery is still one of the segments where you can combine joy and utility at a reasonable price,” she comments. Holly Baum, Director of Sales for Office Products at BIC in the US, confirms these buying trends, with the rise of hybrid and remote working also altering purchasing patterns: “Although you might expect lessening demand in the workplace leading to a requirement for smaller pack sizes, we’re actually seeing the opposite, with increased interest in bulk buying, especially for pens. Our newly launched 500-count Round Stic pen has become a very popular item for offices and schools looking to remain stocked up on core supplies.” At Pilot Corporation of Europe, Brand Communication Coordinator Cécile Poirot-Crouvezier highlights the fact that in times of uncertainty branding plays a more important role than usual, with consumers seeking the comfort of products they know and regard as a safe investment.

Innovation from Pentel

High inflation and interest rate hikes make it difficult for companies to invest and consumers are wary of spending their money

A CHANGING LANDSCAPE It’s widely acknowledged that the amount people write and their consequent need for writing instruments has declined over the years. Ken Newman, Director of Marketing at Zebra Pen Corporation in the US, refers to a customer evolution: “We have identified two distinct types of consumers in this category. “The Core Essentialist is driven by a specific, utilitarian need while the Creative Essentialist focuses on expression and colour. The market needs an equal balance of products to appeal to both audiences.” Craik strongly advocates traditional writing instruments and points out that, despite extensive digitisation, most people still reach for a pen when they want to express ideas and emotions: “Realistically, who would be happy to receive an SMS or WhatsApp message rather than a romantic Valentine’s Day card or a handwritten, thoughtful message on Mother’s Day?”

BIC’s temporary tattoo markers

January/February 2024

SHIFT IN EMPHASIS The combination of current market realities and changing consumer priorities has, in fact, prompted a different focus at edding, as Bosch explains: “The group has ambitious plans ahead. By 2026, we will undergo a strategic transformation from a profit-orientated company (for-profit) to a purpose-orientated company (profit-for), with environmental and social sustainability at its core. “We want to completely reimagine our business activities. A stable economic foundation is no longer a company objective per se; instead, we will view it as a starting point that allows us to help preserve a future worth living in. By ‘profit-for’, we mean that profit is not a goal in itself, but rather a means to an end which then allows us to fulfil our social responsibility. To achieve this, we have set ourselves a series of internal economic, social and sustainability goals.” Another significant development for the company is the extension of its social impact partnership with B-Corp company share. From 2024, edding assumes sole responsibility for the sale of share’s entire stationery product range across Germany and Austria, with every product sold then funding an hour’s teaching for children in Uganda. Through this initiative, the vendor expects to provide five million school lessons for children over the next three years. BIC is also responding to consumer calls for companies to operate in a more eco-friendly manner. Says Canevet: “Consumers want to shop ‘better’ and more responsibly, which means buying products with a lower ecological impact and, ideally, produced locally. These are areas where we are very strongly positioned,

with 24 manufacturing sites across four continents and a philosophy of manufacturing near the final consumer. That said, while people want more sustainable options, they’re not necessarily willing to pay more.” With sustainability in mind, consumers now fully expect all packaging to be recycled/ recyclable as a matter of course, notes Craik: “Having achieved this, as a company we are moving onto the next level. Considerable interest is being shown in our Eco96 Energel pen, for example, which is made from 96% post-consumer waste – the plastic waste we all put in our wheelie bins. In addition, these pens are refillable, making them a fully environmentally-friendly solution.”

CATEGORY UPDATE Writing Instruments

As such, the company will continue to invest in its new brand signature initiative ‘Write Your World’ to emphasise the importance of handwriting. 2024 will also see Pilot investing in a new promotional film. Feedback OPI received from the UK and Ireland is more positive. Graham Craik, Director of Sales at Pentel for this region, refers to modest growth over the past 12 months, especially in the B2C area, with retail and e-commerce sales growing significantly. He says that this has predominantly been driven by new product launches in 2023.

Writing Instruments CATEGORY UPDATE www.opi.net 34

Handwriting also remains an important part of everyday life, from jotting down notes, to more serious journalling and artistic activities. And, says Baum, there are industries where handwriting remains crucial: “One area of focus for us is healthcare, a vertical which has remained strong post-pandemic and where we are doing lots of tailored marketing. The BIC 4-Colour pen, for example, has proved to be a particularly popular tool among medical staff and we have expanded our offerings in this brand accordingly. “In addition, with the demand for sustainable products remaining high, our Ecolutions line of sustainable writing instruments continues to be a focus. We also launched a new mechanical pencil this year, the BIC Break-Resistant, which features a specially formulated lead that is 75% stronger for less breakage and uninterrupted writing. This product solves a common complaint users have with mechanical pencils and we are receiving excellent feedback.” Pilot is expanding its range with two further products for 2024. The first is the new Acroball 1000, a ballpoint pen with a tungsten carbide tip and quick-drying oil-ink that ensures it glides smoothly across paper. Secondly, there will be an updated FriXion Zone erasable gel rollerball pen. Retractable and refillable, the cartridges it comes with contain a black ink that is 30% darker and which will last 40% longer. Craik believes that Pentel’s ability to buck declining sales trends is down to innovative product launches tapping into consumer needs. He explains: “Our latest Mattehop gel pen, for example, is great for writing on photos or glossy paper and looks like matte plastic when dry. We’ve also extended our ever popular Pentel brush pen ranges, including twin-tip versions, plus added new on-trend colours. “At the end of last year, we introduced our Floatune range, a rollerball with clever technology – a dual ball tip that reduces friction and increases ink flow to give a really smooth, flowing writing experience. There are more product launches scheduled for 2024, keeping Pentel at the forefront of writing instrument innovation.” NEW MARKETS While iconic products such as the Cristal pen and Tipp-Ex Easy Correct remain top sellers for BIC, other items gaining popularity include colouring and felt tip pens – particularly among parents driven by a growing desire to encourage their children to engage in creative projects away from digital screens. The European branch of the company has actually reframed its writing instruments

Pilot’s new Acroball

category as ‘Human Expression’, to tap into opportunities that extend beyond handwriting. As Canevet explains: “With our Bodymark temporary tattoo markers and the acquisitions of the Inkbox and Tattly tattoo brands, we are developing our skin creative offers which have seen a lot of momentum. “Along with the Rocketbook digital notebooks, we have also acquired the French start-up Advanced Magnetic Interaction, a small company specialising in augmented interactive technology. It’s known for the creation of the ISKN Repaper digital tablet, which allows users to capture paper writing and drawing in an electronic format. This venture will allow us to further strengthen our R&D capabilities in digital technology.”

Handwriting […] remains an important part of everyday life, from jotting down notes, to more serious journalling and artistic activities

Trendy glitter-effect pens from edding

Always looking out for trends that offer target group-specific products with significant potential, edding’s Bosch explains: “Glitter-effect items are particularly popular among the younger cohort and we have addressed this by introducing a range of high-quality colour and brush pens – products aimed more towards females, aged 15 to 35.” There’s no doubt that the writing instruments sector is going through a tough period at present, with this year likely presenting further challenges. But companies are gearing up to weather the current economic woes – while still launching new products and taking their CSR responsibilities seriously – with the hope of better times ahead.

CATEGORY UPDATE

Learning LESSONS

The education sector – broadly speaking – is performing well, with governmental priorities and increased category funding boosting growth across key global markets – by David Holes

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he pandemic served as a catalyst for change in education, with a swift transition towards digital learning solutions. Schools and universities, teachers and students quickly had to embrace online platforms, e-learning tools and virtual classrooms. While ensuring learning continuity during challenging times, COVID also created specific opportunities within the sector. The category is now being prioritised by many governments, with increased investment in technology infrastructure, teacher training and resources all strengthening it.

POSITIVE VIBES To tap into this burgeoning market, Portugal-based Bi-silque created an entirely new entity. Known as Bi-Bright, it was set up specifically to navigate the complex landscape of procurement processes and ensure that educational institutions acquire the best resources and services available. As Marketing and Product Manager Sandra Gomes explains: “We have a thorough understanding of the requirements and regulations associated with this sector. This has enabled us to streamline the procurement process for dealers and wholesalers. Having specialised local partners is crucial to achieving success; by keeping a watchful eye on the evolving needs of institutions, we have managed to identify solutions and opportunities that align with their goals.

“The division dedicated to public tenders was particularly active last year due to the growth of funds in this category, which were targeted towards digital devices such as interactive flat panels and computers as well as furniture. Looking ahead, this sector is positioned for continued growth, with a drive towards the digitisation of learning and the implementation of dynamic classroom layouts.” The narrative of governmental focus and increased funding is echoed by Lawrence Savage, Marketing Manager for ExaClair in the UK: “This segment continues to grow at a steady pace for our group and has a heavy influence on the stationery market in general. In the UK alone, the number of student enrolments has increased by approximately 4% over the past five years, reflected by a rise in government investment, which totalled 4.2% of total GDP in 2022-23. “As educational establishments continue to modernise, the growth in digital and remote learning means that, to succeed, suppliers must offer a comprehensive product offering in order to maximise sales potential.” DYNAMIC AND EVOLVING It’s a similar story in Australia, says Craig Matthews, Head of Procurement and Merchandise at Office Brands, where he describes the marketplace as dynamic and exciting. The dealer group has witnessed an uptick in sales over the past year, with growth opportunities driven by remote learning needs

THE US PICTURE Elsewhere in the world, in Ohio in the US, John ‘Skip’ Summerville, CEO at furniture manufacturer Regency Global Sourcing, confirms that educational products account for around 25% of the company’s total sales. That said, revenues suffered a dip in 2023, compared with the previous year. He puts this down to the federal injection of an additional $32 billion into the sector in 2022, which was not subsequently repeated. Summerville describes the ‘back to dorm’ period when students return to campuses as particularly influential; the average undergraduate spend then is over $1,200, with a proportion of this going towards furniture and storage solutions.

This sector is positioned for continued growth, with a drive towards the digitisation of learning At High Point Furniture Industries (HPFI) in North Carolina, VP of Marketing Tom Carrigan says that schools and particularly higher education establishments are feeling the need to compete with other institutions to attract the best students. As such, they are looking to suppliers to help them step up their game. The education vertical is easily HPFI’s largest sales channel. It has remained strong over the past 12 months and is expected to continue to grow throughout 2024 and beyond.

Bi-Bright by Bi-silque

TECHNOLOGICAL TRANSITION Charles Forman, COO of Independent Suppliers Group, concurs that the mainstream education market continues to be strong. There is, he says, an urgency to promote

post-pandemic academic recovery which is driving an uptake in new forms of EdTech, with a distinct focus on student-centred learning. However, he also cautions that this particular sub-category remains extremely fragmented, with the majority of vendors selling direct to school districts. The equipment that supports EdTech is becoming increasingly user-friendly and flexible, he adds: “EdTech will continue to drive innovation as teacher shortages worsen and innovative learning methodologies become mainstream. AI will also start to play a larger role in assisting students when deciding the learning process that suits them best. “Technological advances aside, we can’t gloss over the fact that the 2021 State of Our Schools Report revealed the country is underinvesting in educational buildings and grounds by $85 billion each year. There is still much that federal government needs to do to address this lack of funding, especially in economically disadvantaged districts.” Indianapolis-based ClassKit also paints a somewhat less rosy picture. ClassKit is a software company that supplies dealerships with the technology to capture the market for educational products listed on the ‘parental supply lists’ sent out by schools. President Jan Kilies says sales have been in a ‘holding pattern’ over recent years and blames the effects of ‘Bidenomics’ which have put a dent in the funds available from his core audience – the parents. “The rising prices of every item included in our ‘Kits’ makes sales a more difficult proposition, even though purchasing one would ultimately save families time and money.”

January/February 2024

DIGITAL DRIVE In terms of specific product preferences, Bi-Silque’s Gomes observes that institutions are focusing their purchases on any tools which can help with organisation, support studying or promote literacy – technology and the embracing of all things digital are key. This is seen as vital, not just for enhancing the efficiency of classroom instruction, but also for preparing students for the digital age they will encounter when older. She explains: “Laptops empower students with access to information, interactive learning resources and collaborative platforms, thereby promoting critical thinking and problem-solving skills. Interactive panels, on the other hand, transform traditional teaching methods into immersive and interactive experiences, catering to diverse learning styles. “The demand for digital assets in schools is on the rise as educators recognise the

CATEGORY UPDATE Education

that have ensured digital resources are more important than ever. “Our members have had to adapt to meet these new demands and it continues to be a learning experience for our business,” he asserts. “We see a promising future – the adaptability of this market is one of its strengths, and we’re thrilled to be a part of the journey.”

Education CATEGORY UPDATE

Education is more than just a market for us; it’s a commitment to shaping a brighter future need to equip students with the technological fluency essential for success in the 21st century. Moreover, these tools bridge the gap between theoretical concepts and real-world applications, nurturing a generation of tech-savvy learners ready to navigate the challenges of our digitised society.

As technology continues to expand in classrooms and training facilities, the landscape of teaching methodologies is undergoing a transformation, giving rise to innovative products. “Beyond the essential components like touchscreen laptops and tablets, there is a growing demand for other resources. These include lockable charging stations, hybrid devices seamlessly integrating the analogue world with technology, and adaptable anti-clutter chairs for flexible and dynamic learning spaces.” Office Brands’ Matthews agrees the EdTech sub-category has become a rising star, offering huge possibilities from personalised learning experiences to innovative classroom tools. However, he cautions that the challenge lies in ensuring equitable access to these technologies for all, regardless of the socioeconomic status of the learner. He adds: “Education is more than just a market for us; it’s a commitment to shaping a brighter future. We see this sector as a critical pathway to expanding our reach and making a meaningful impact in the local community.”

ADVANCING DIGITAL PROCUREMENT IN EDUCATION

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OPI speaks to Chun Jiao, Head of Education for Amazon Business in the UK and Ireland, who makes the case for digital procurement as a means of overcoming some of the obstacles in the education sector.

OPI: What do you see as the current main challenges for this category? Chun Jiao: The education sector is navigating challenging budget constraints and regulatory pressures, forcing academic institutions to balance cost-cutting with meeting stringent standards. Despite needing to do more with less, the top priority remains ensuring students have access to vital supplies for enriching their learning. To alleviate the burden on educators, there’s a need for a streamlined digital procurement strategy which prioritises efficiency, manages expenses effectively, and allows teachers to channel their energy into inspiring students, instead of grappling with [frustrating] purchasing complexities. OPI: How can digital procurement help achieve these aims?

CJ: A huge part is making sure procurement tools work hard for all involved. Those with capabilities such as automated approvals and consolidated invoicing don’t only lessen the burden on educators, but also help the procurement and finance teams. If they can set up tools that ensure guidelines are followed, with admin carried out automatically, they can spend more time on strategic initiatives which make sure budgets are used effectively. OPI: Roughly what savings can be made? Do you have any examples of where schemes have been successfully implemented? CJ: Recent studies by consultancy firm 4C Associates show that digitising public sector procurement processes can enable organisations to cut costs by up to 30%. One example is the collaboration between Amazon Business and the Yorkshire Purchasing Organisation, a consortium of public bodies in that county. This tech-enabled partnership provides a practical cost-cutting solution for firms, allowing customers

to access a credit facility if they’d rather pay on invoice and unlocking a new level of financial control. OPI: How do you see purchasing developing in the future? CJ: Faced with all of the challenges I mentioned, the education sector needs to be able to adapt swiftly. Embracing digital procurement tools and partnerships will become crucial in achieving this. By taking a proactive approach, institutions can shift their focus away from purchasing challenges and redirect it towards what truly matters – educating the next generation.

CASE STUDY

CHANGING education needs

CoLab is the result of research that empowers shared learning and collaboration in the education sector

he way we learn, in education and throughout our lives, plays a crucial role in shaping who we are, how we develop and how we work. It shapes our attitudes, beliefs, values and skills which, in turn, influences our behaviour, decision-making and problem-solving abilities. As a rule, creative, collaborative and adaptable learning leads to personal and professional growth, while rigid, linear and didactic experiences can impede our ability to learn and adapt. For anybody selling into the education space, there is a minefield of information out there that can be difficult to find, navigate and implement.

NEXT-GENERATION PRIORITIES Research for CoLab began before the pandemic and concluded in 2021/22. Pearson Lloyd and Senator engaged teachers, faculty, students, architects, designers, procurement and facilities managers as well as the Trent

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RESEARCH RESULTS Drawing on synthesised insights from two years of primary research into global pedagogy trends, CoLab is the outcome of a project between London, UK-based design agency Pearson Lloyd, and global workplace furniture manufacturer, The Senator Group. Although Senator is predominantly an office furniture manufacturer, with Pearson Lloyd’s help, it wanted to explore emerging

higher-education models and changing approaches to work – and the equipment needed to address those needs. As James Knight, Head of Sales – Education at Senator, says: “We often hear that senior people in traditional organisations are struggling to engage Gen-Z in the workplace. We need to understand the changes in how education is being delivered to realise new ways of collaborating with younger generations. Of course, most senior staff will remember a completely different learning experience from the one they are expected to manage now. “Our research has revealed the need to replace outdated desk-bound dynamics, creating instead future-facing furniture systems for classrooms and workspaces that nurture social and interactive learning and work.”

Source: Pearson Lloyd

CASE STUDY CoLab

Institute for Learning and Teaching (TILT) at Nottingham Trent University. The broad idea was to look at the changing landscape of higher education. It quickly became clear the furniture in use in learning environments, often coming from the hospitality and workplace sectors, didn’t support the requirements of staff and students. The profound shift caused by COVID also highlighted that the traditional principles of formal learning – lengthy in-person lectures and campuses filled with classrooms – are under threat. Lectures became almost wholly remote and digital, with students only coming together in the common spaces to work collaboratively. Curricula are further being designed with much more group work built into the learning process, with smaller groups collaborating in adapted classrooms, for instance. This more informal teaching helps students engage and feel more comfortable, which leads to deeper learning and better retention and use of information. Says Tom Lloyd, co-founder of Pearson Lloyd: “Hybrid learning, ie a mix of digital and physical, has been accepted as the norm. This allows campuses to become vibrant, interactive, social spaces that build a sense of community and draw students in.”

library, atrium, corridor or common room to encourage students and teachers to engage in open discussion and collaboration after more conventional and formal teaching.” There are other considerations, including ergonomics and the omnipresent need for connectivity. Sit, stand or perch options are as important as integrated power-distribution systems. CoLab’s multi-posture design supports a variety of positions and movements while, because of power running through the central seating spine, workspaces are no longer tied to floor-box layouts.

Our research has revealed the need to replace outdated desk-bound dynamics

Tom Lloyd

January/February 2024

INTELLIGENT SPACES In collaboration with TILT, Pearson Lloyd identified the need for an informal, multi-modal and multi-posture tech-enabled learning space – the ‘café classroom’. This new environment can be used for both formal learning and informal peer-to-peer collaboration, without the need to reconfigure the space. It leads to greater efficiency in the use of space and the ability to activate redundant classrooms. Lloyd elaborates: “CoLab creates agile, adaptable spaces for dynamic learning, socialising and collaborative work. The modular furniture design provides freedom and flexibility to reconfigure environments to meet the changing needs and modalities of groups, unlocking real estate potential by enabling the intelligent use of space. “By offering multiple relaxed and informal learning environments such as creative hubs, quiet nooks, social labs and team touchdowns, the classroom is expanded beyond the conventional siloed four walls – into the café,

SUSTAINABILITY CONCERNS Environmental concerns are a huge topic for this demographic. CoLab is created in accordance with circular design principles, ensuring each component product in the system can be easily repaired or replaced when damaged. Exposed fixings promote ease of assembly and simple on-site part replacement. Finally, because no composite materials are used, any parts that do reach end-of-life can be recycled. The future of all industrial design must be framed from the outset with a sustainability and circularity mindset. The ability to reduce embodied CO2 and maximise the lifespan of products is not particularly technically challenging, according to Lloyd, but requires a shift in priorities across the commissioning and supply chain to make positive change. “The university sector is a highly competitive global marketplace. Innovation and radical change are taking place across all aspects of the education experience, but furniture provision has, to date, not kept pace. The research into CoLab identified key alterations that, when implemented, can unlock new teaching and learning experiences. Early market feedback has been unanimously positive,” he concludes.

ADVERTORIAL

Finding growth

IN DIGITAL

As businesses navigate the challenges of global online commerce and adapt to diverse buyer preferences, Balance stands as a trusted partner in managing the full B2B transaction cycle

ayment technology is a vital part of B2B trading. OPI speaks to Bar Geron, CEO of financial solutions firm Balance, about the company’s role in this area, and the challenges and solutions associated with scaling digital payments.

playing a pivotal role in maintaining cash flow for procurement. Therefore, bringing this capability online with the help of payment technology is a necessary step in the adoption of B2B online trade.

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OPI: Please tell me a bit about Balance and what it does. Bar Geron: Balance serves as a digital payment system catering to a diverse range of B2B businesses, including distributors, marketplaces and supply chain entities. The platform facilitates seamless transactions by providing digital payment solutions and credit terms, ensuring that businesses can effectively grow and scale their customer base.

OPI: Is B2B payment technology a core focus for business leaders? Should it be? BG: In this era of prolific online purchasing, it has become more crucial than ever. One common misconception is viewing payments as a mere ‘add-on’ to the overall experience. Because digital transformation and commerce are still transitioning into B2B, business leaders vary in their education around the importance of this topic. But increasingly, more are aware of the need to move from traditional offline methods to efficient online payment capacities. While in B2C, a one-click checkout can be a flashy feature to embed, in B2B, credit terms are not a luxury but a standard expectation,

Bar Geron

OPI: Are there any absolute ‘must-have’ features in your view? You already referred to credit terms… BG: Critical features in B2B digital payments definitely include net terms, a non-negotiable aspect of trade relationships. However, transitioning this process online poses challenges due to its manual nature. Flexibility in supporting various payment methods is also crucial, as businesses must adapt to the diverse preferences of their customers. A noteworthy trend is the shift from traditional methods, such as cheques and credit cards, to Automated Clearing House (ACH) payments. According to PYMNTS, 42% of retail firms in the US are anticipating a reduced reliance on cheques, accompanied by corresponding declines in debit card (42%) and cash (20%) usage. This industry-wide transition is reflected in our proprietary data. We have actively assisted numerous companies in migrating from credit cards to ACH, resulting in an average reduction of processing costs by 50%. It’s important to recognise that the challenge of digitising B2B payments extends far beyond the acceptance or collection of payments. Every step in the payment process,

OPI: Are there any potential pitfalls to be cautious of? BG: It’s important to understand there are varying levels of digital maturity among business buyers. Forcing buyers into unfamiliar processes jeopardises relationships and trust. Therefore, finding a flexible system that accommodates both offline and online payments is essential.

OPI: B2B marketplaces are an ever-growing component of global commerce. What are the challenges in this context? BG: B2B marketplaces, regardless of their specific model – single creditor or marketplace – encounter numerous obstacles. Where sellers and buyers engage directly in agreements, the marketplace operator serves as the facilitating intermediary and collects a commission. The main goal here is to ensure smooth and self-serve trade between all parties involved. In this way, marketplaces provide value buyers and sellers can’t get elsewhere. Buyers can easily access the required terms from every supplier on the marketplace. They should be able to apply for credit, check their limit and make payments with terms effortlessly. For third-party sellers, it’s crucial for the platform operator to streamline onboarding processes and provide them with instant payouts. This requires verifying in real time the identity of sellers, conducting due diligence, and then providing them with timely payment so they can truly benefit from a marketplace model, taking more orders from more buyers. When marketplaces are involved in paying out suppliers or holding funds, they must adhere to compliance regulations. This can incur costs in terms of resources, time and legal considerations. Additionally, most marketplaces lack financial expertise, making payments and financing a complex task that diverts attention from their key business function. Outsourcing this aspect to a partner not only relieves them of this burden but also allows them to concentrate on what they do best – growing their business.

Scaling [online payment] technologies globally presents multifaceted challenges OPI: What’s your specific customer focus? BG: We specialise in aiding medium-sized to enterprise-level distributors, wholesalers and marketplaces. Whether they require a comprehensive solution or just start with basic processing needs, our platform is designed to meet their growing demand for online payment solutions as they scale. One of our advantages is our flexibility and modularity, allowing merchants to find a solution that aligns with their specific position. Whether it’s omnichannel support or very specific needs, we offer a tailored approach. Our platform is particularly well-suited for customers that value the ability to gather insights and visibility into every payment activity and status. This flexibility is especially crucial for distributors managing large customer bases with frequent purchases. Staying on top of these transactions is essential for merchants. Simultaneously, we cater to merchants that understand the importance of providing tools

OPI: How easy or difficult is the scaling of online payment technologies in terms of wider, cross-border reach? BG: Scaling these technologies globally presents multifaceted challenges. The inherent costs and operational overheads associated with underwriting at a scale to support vast online transactions are significant hurdles. Our own survey indicates that only 16% of B2B sellers find it ‘very easy’ to offer payment terms in new countries, emphasising the need for innovative solutions and partnerships. The top challenges include managing compliance, enhancing buyer payment experiences, and meeting regional buyer preferences.

January/February 2024

and visibility to their clients, empowering them to monitor invoice status and explore various payment options.

ADVERTORIAL Balance

from initiation to reconciliation, plays a role in streamlining the overall experience. For example, effectively following up with the buyer until the invoice is settled contributes significantly to maintaining healthy cash flow. Automatically reconciling payments is another essential step, ensuring accuracy and transparency in financial transactions and reduced AR overheads. In terms of compliance, businesses are increasingly seeking to outsource money management tasks. The complexities of compliance and overhead management can be overwhelming, and companies prefer to entrust these responsibilities to specialised platforms like Balance. By delegating, they can focus on their core operations, confident that they adhere to regulations without getting entangled in the intricacies of money movement.

RESEARCH

Where are WE HEADED?

he world around us is changing fast – and so is the business and workplace supplies sector. But where exactly are we going? The answer to this quite simple question is surprisingly complex, with demand for products our industry provides now subject to a dazzling array of disparate forces. These include stagnating and recovering economies, changing workforce sizes and characteristics, the rise (and fall?) of hybrid and agile working, the decline of desktop printing, and the continued importance of the internet and digitalisation.

• Economy • Population and labour force statistics • Company size and activity • Homeworking • Office spaces • Office equipment • Internet & cloud usage • E-commerce • Sustainability

Demand for products our industry provides [is] now subject to a dazzling array of disparate forces

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PROVIDING ANSWERS The Business & Workplace Supplies Industry To 2028 is the latest research report by Martin Wilde Associates (MWA), published in association with OPI. It addresses all of the above scenarios and combines key demographic trends, economic forecasts and insights from industry leaders – all essential for any organisation’s strategic planning. The first half of this timely resource book comprises 26 tables giving information and commentary on demographic and other market driver data for four major markets – Germany, France, the US and the UK. Covered are trends to 2028 on these topics:

The Business & Workplace Supplies Industry To 2028 is now available to purchase for £950 (approximately $1,200). It can be ordered at www. opi.net/2028report

WHAT DOES IT ALL MEAN? The second half of the report investigates how prevalent trends are impacting seven specific product categories: paper and paper-based stationery; other traditional stationery; ink, toner and printers; office furniture; office machines; cleaning products; and catering supplies. It identifies any other drivers affecting these segments, and provides forecast tables predicting the growth – or decline – in demand for each through to 2028. It further highlights any sub-categories which are expected to outperform and underperform against overall category demand during this period. Results are based on recent and up-to-date – Q4 2023 – commentary given by approximately 20 senior sales executives from key industry operators companies in the aforementioned regions. The Business & Workplace Supplies Industry To 2028 also pinpoints opportunities for potential new products and services in the different categories. It finally provides expert advice from a range of industry practitioners on how to implement successful diversification in each sector.

EVENT

OPI PARTNERSHIP 2024 PREVIEW

MEET, GREET and GROW

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ow in its tenth year, OPI Partnership is back for resellers and manufacturers from across Europe to come together to build and strengthen relationships. The event will, once again, be held at the popular Hotel Okura in Amsterdam, the Netherlands, this time from 11-13 March 2024. With the macro landscape still in flux, meeting platforms such as Partnership have never been more crucial to prepare for and secure the future. Despite COVID becoming a lesser obstacle, other issues have risen to the surface. Persistent inflation has fuelled wage increases and roused concerns of recessions in key economic engines like Germany. On the back of high inflation, there’s also a risk of consumer demand decreasing, the manufacturing sector contracting and the economy slowing down. As a result, organisations must step outside of their comfort zone and be proactive about making progress. Whether it’s through investigating different verticals or approaching new end customers, Partnership is the place to be to safeguard your company during unsteady times. “It’s an opportunity to meet with both vendors and competitors to understand the market from different perspectives,” comments Andrea Kenna, Director of Merchandising & Product Marketing at Viking.

MAXIMISING TIME The calendar of any decision-maker in our industry is sure to have few blank spaces, making face-to-face conversations with multiple parties almost impossible – and certainly incredibly time-consuming. OPI Partnership offers a rare chance to hold at least ten strategic and constructive meetings with senior decision-makers in just two days.

Europe’s best and most forward-thinking resellers and manufacturers are paired up in one convenient location for high-level – and confidential – one-hour meetings that run throughout the course of the event. There are also numerous networking opportunities during breakfast, lunch and coffee breaks as well as evening functions such as the always well-attended European Office Products Awards (see ‘2024 EOPA’ below) presentation dinner. Exertis Supplies Commercial Director Raj Advani notes: “OPI Partnership gives me the chance to meet key decision-makers from various businesses and have meaningful conversations in one place. To get the same level of engagement elsewhere, I would have to travel to different countries or people would need to visit me, but I couldn’t do it in two days.”

It’s an opportunity to meet with both vendors and competitors to understand the market from different perspectives OPI CEO Steve Hilleard adds: “This unique event enables the senior management of Europe’s leading resellers to meet our industry’s key manufacturers in one place over a 48-hour period. It is simply the fastest and most cost-effective way to identify and leverage opportunities with the biggest players on the continent.” NEW EXPO FEATURE To provide extra value, Partnership EXPO has been added to the agenda for 2024. Designed as ‘drop-in’ sessions running throughout the event, attendees can discuss a range of topics in the field of online technology. Partnership EXPO represents an opportunity to engage in conversations with innovative service providers about how to maximise your company’s digital potential.

2024 EOPA

The European Office Products Awards (EOPA) will be presented at a special celebration dinner during the second night – 12 March – of OPI Partnership. For the 23rd year, the awards will highlight and reward the most exceptional products, companies and people in our sector. While OPI Partnership delegates are automatically enrolled, others interested in attending the EOPA dinner should contact Lisa Haywood at lisa.haywood@opi.net or visit opi.net/eopa2024

5 MINUTES WITH...

CAREER Q&A How would you best describe your job? As Analytics Specialist at Stinson’s, I manage our contracts and pricing programme. I utilise reporting to support our sales and purchasing teams as well as marketing initiatives.

Alicia Kolbus Where would you most like to visit? I love travelling and have been to a few amazing places like Machu Picchu and Croatia. My family is originally from Sicily and I’d like to explore where they came from. What is your life philosophy? My grandpa would always say: “Nothing is impossible.” He taught me that the right mindset was the most important thing when approaching a problem.

Alicia Kolbus, Stinson’s

What’s one goal you hope to accomplish in the near future? I’m looking forward to buying my first home within the next year.

Any previous roles you’ve learnt from? I was a waitress during my high school days; it instilled in me a real appreciation for anyone who is working in customer service.

Do you have any bad character traits? My family would say I can be stubborn but at work we call it ‘pleasantly persistent’. If you could change one thing about yourself, what would it be? Be two inches taller.

Machu Picchu

Any weird food combinations you love? I’m team pineapple on pizza. What skill would you like to master? My mum has a real talent for knitting and crocheting. She makes beautiful blankets and other gifts that people treasure. Although I’m not bad at it, I don’t have the patience to complete a project yet, but I’m working on it. What’s on your bucket list? Hot air balloons used to fly over the home where I grew up in Southern California – I’ve wanted to ride in one ever since.

Yosemite

mily The Kolbus fa

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Croatia

If you weren’t in your current position, what would you do instead? I have a Master’s degree in history of art so I would probably work at an arts non-profit. For now though, I volunteer at arts organisations.

Your best piece of advice to someone new to the business supplies industry? Try and join a peer group either in your community or the industry to ‘workshop’ your problems and gain insight from others. If you could change one thing about the sector, what would you choose? It’s not unique to our industry but I see so much waste in packaging. I know there isn’t an easy solution but if I could snap my fingers and fix it, I would. What’s your favourite ‘office product’? Purple ink pens. I still write handwritten to-do lists, so I’m constantly going through them.

The 23rd European Office Products Awards

PRESENTATION DINNER TUESDAY 12 MARCH 2024 HOTEL OKURA, AMSTERDAM

We invite you to join colleagues, customers and friends for an unmissable night of networking and celebration.

Book your tickets now at www.opi.net/EOPA2024 or email awards@opi.net for more information Sponsored by:

FINAL WORD CYBERSECURITY

in the age of AI

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rtificial intelligence (AI) is becoming a cornerstone of business innovation. It was certainly a hot topic at the last OPI Global Forum in Chicago (see Event, OPI December 2023, page 54). Speaking with several business leaders, many were keen to start or develop their leverage of AI. All were concerned about the potential security challenges. Like all technology-based solutions, there is a critical need for robust cybersecurity measures. Businesses recognise that, while AI can drive efficiency and competitive advantage, it can introduce unique challenges too.

WHAT TO WATCH OUT FOR Three key areas of cybersecurity should be prioritised when investing in and implementing AI systems. Firstly, data security and privacy. AI systems’ value increases when access to vast amounts of data is enabled, which often includes sensitive information. Protecting this data against unauthorised access and ensuring compliance with data protection regulations such as GDPR is critical. Encryption, access controls, training and regular audits are essential tools in safeguarding data integrity. The second area of concern is system vulnerabilities. All technology solutions can have inherent vulnerabilities. These may be exploited by malicious actors to manipulate AI behaviour or outcomes. Regular security assessments, including penetration testing (technical security) and vulnerability scanning, are crucial to identify and mitigate these risks. This has been highlighted in recent examples of ‘prompt injection attacks’ where the attacker tries to elicit unintended responses from AI systems. Lastly, ethical AI use cannot be overstated. Ensure your AI systems are designed and used in a manner that respects privacy and prevents biases. Unethical use of AI can lead to reputational damage, legal complications and potentially make businesses a target for activist threat actors. Once systems are in place, it’s vital to mitigate ongoing cyber risks with specific cybersecurity services (monitoring/testing/

fixing). These should evolve to address AI’s unique challenges. It includes specialised training for staff, implementing specific security protocols, and engaging in active cyber threat intelligence pertaining to AI systems. Collaboration between AI and cybersecurity teams is another important component – siloed approaches are typically detrimental. Ensure that your developers and cybersecurity teams work together and embed security into the AI development lifecycle. Staying abreast of regulations and standards is also crucial. The legal frameworks governing AI’s use will change. Your organisation must be compliant with all relevant laws and standards and be prepared to adapt to new regulations as they arise.

Jim Wheeler, Head of Cyber EMEA, Infosys Consulting

Fostering a culture of security and ethical AI use will result in significant competitive advantage CONTINUOUS LEARNING AI and cybersecurity are both rapidly changing fields. Investing in continuous learning and development, staying informed about the latest trends and threats, and regularly updating your AI systems and security measures are essential practices to keep your business ahead in the digital landscape. AI will be a potent tool for enhancing cybersecurity, so this is something to perhaps invest in. AI-driven security systems can predict and neutralise threats more efficiently than traditional methods. The intersection of AI and cybersecurity is an ongoing journey, requiring constant vigilance and adaptation. However, fostering a culture of security and ethical AI use will result in significant competitive advantage that every business looks forward to.