A pencil here, a paper clip there - and pretty soon you're talking about real money. First Fidelity Bancorp., for example, had been spending about $5.5 million a year to stock supply cabinets at its more than 650 offices with such mundane items as pens, computer disks, and toner cartridges.

To save money, the Newark, N.J.-based bank in late 1992 turned to an outside firm to simplify its purchasing of office supplies. In the first year of its three-year contract with National Office Supply Co., South Hackensack, N.J., the bank says, it has saved nearly $1 million, or about 18%.

"It's streamlined purchasing tremendously," said Carol Paglione, vice president of office services at the $33.5 billion-asset bank. "Now we're able to focus our attention on other functions in purchasing."

Previously, supplies purchased from vendors were stored in a rented warehouse in North Jersey. Items were selected, packed, and shipped to bank locations as they were requested.

Now, requisition forms are faxed or mailed directly to National Office Supply, a division of Staples. Under the terms of the deal, routine office items are shipped where they are needed within a day or two.

That means First Fidelity no longer needs to stock supplies at its warehouse. "Now it's limited to just forms, envelopes, and brochures," said Ms. Paglione. "So we extracted, and were able to save, square footage there on what we rent."

The move also enabled two employees in purchasing to be redeployed to other areas of the bank.

First Fidelity's purchasing department, however, continues to oversee the invoicing process.

To keep a close eye on controlling costs, the bank also receives several reports from National Office Supply that monitor such things as inventory, year-to-date activity, and prices.

The bank also limits what personnel can order. "Rather than looking through their catalog of x amount of pages, we have select standards we want our branches and departments to order," she said.

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