On the front lines - use of desktop technology at OfficeMax and Barnes Group - Desktop Management: Untying the Knots

Chief Executive, The, Nov, 1995 by Peter J. Aitch

INFORMATION IS POWER. BY GIVING THAT INFORMATION SHAPE, DESKTOP TECHNOLOGY CAN ADD STRENGTH. BUT ONLY IF YOU KNOW WHAT YOU'VE GOT, WHERE TO FIND IT, AND HOW TO USE IT. HERE'S HOW TWO CEOS HAVE MARSHALED THE FORCES OF DESKTOP TECHNOLOGY.

"STREETFIGHTERS IN BLUE SUITS" Michael Feuer, Chairman, President, and Chief Executive, OfficeMax

As co-founder of the OfficeMax chain of office-supply superstores, Michael Feuer, 50, has been at the center of one of retailing's great success stories. In just seven years, Feuer has grown the Shaker Heights, OH-based company from start-up to a $1.84 billion corporation with nearly 400 outlets across the country. OfficeMax is now the second largest of the "big three" office-supply superstores, ranking slightly below Office Depot and above Staples in number of stores.

In 1994, OfficeMax went public, raising $678 million in the largest initial public offering in retailing history. The move left the company with "one of the strongest balance sheets in our industry," says Feuer, and gave it financial independence from Kmart, which had held a 93 percent interest in the company for several years. Today, Feuer is still opening new stores and venturing into new arenas such as office furniture, printing services, and an OfficeMax Online shopping service.

From the beginning, the company has invested in information systems to help it respond to market changes "in days and weeks, not months and years," says Feuer. The company uses desktop systems - including PC-driven point-of-sale systems and hand-held computers carried by store employees - as front-line sensors in a companywide information system Feuer calls "the backbone of our business." Here, Feuer discusses OfficeMax and how it has managed the use of technology - particularly desktop technology.

On the management of information: Our use of desktop systems is based on the idea that information is power. We capture everything at the store level and make it available to every one of our management people. It gives us all the critical numbers we need to run and understand our business - everything from gross sales and margins down to the SKU level in a given store.

Many people know how to get information, but few know how to use it. Our system also gives us the ability to slice and dice information and use it to make decisions, and then put those decisions into effect. For example, we not only can see if demand for a new item is building faster than expected, we also can use the system to quickly put more merchandise behind that launch. So we've set this up to harness information and translate it into results.

On thriving in a rapidly changing environment: We are what I call "street fighters in blue suits." We are in a commodities business, where a lot of people are going to arrive at the same answer. The important thing is to get there first. So we have to be opportunists. The information from our system gives us the power to jump on new opportunities and to take care of problems before they get out of hand. That's important. There is nothing wrong with having problems - everybody has them. But there is something wrong with having a problem and not knowing about it.

Every morning, like it or not, our management gathers at 8:30 in our war room for what we call our 10-minute drill. We have five huge monitors on the wall; we go into our systems and can instantly see the good, the bad, and the ugly about the business. By the end of the drill, we have an action plan in place. I am convinced you can get an extra couple percentage points in comparable store sales, year to year, by having the information to be on top of the game and having the power to respond quickly.

On making personal computers personal: Two years ago, I knew nothing about actually using a personal computer. But given the importance of the technology around here, I decided to learn. Now I'm probably as proficient as anyone in management here, if not more so. I have a PC in my office and one in my home, and I carry a little laptop with me. If I'm in Hong Kong or New York or wherever, the first thing I do in the morning - after I have a cup of coffee - is plug the computer into a phone line.

An interesting effect of this is that I've become the standard for what is expected of management - when the CEO gets behind this, the troops tend to follow quickly. Our managers use this system. In fact, every morning, there's now a kind of good-humored race where people see who gets their hands on the day's information the fastest, even before our regular morning drill.

On avoiding the trap of "technology for technology's sake": Obviously, we are not afraid of new technology - but we also aren't in the computer R&D business. We don't hesitate to cut projects that aren't meeting specific goals. I am not a big believer in warm and fuzzy - I like things to be extremely tangible.

At the same time, however, I'm often the person saying, "Let's take this project to the next step, and let's look at other ways to add better systems and better controls using the system." I would rather spend six figures for a new system one time than to add 100 people forever. Our general administrative costs are the lowest in our industry and among the lowest of any category-killer retailer, because we have chosen to use technology to capture the information and give it to us in a usable manner, instead of having a lot of clerical help and redundancy.