Field Report: Office Supply Firm's Performance is a Work in Progress

Canadian firm Grand & Toy embraced operational performance management, but it lacked a clear strategy to bring the pieces together. A corporate reorganization now aims to put the horse before the cart.

Businesses cannot succeed through operational performance management alone. That much has been learned by Grand & Toy, a Canadian office supply chain and unit of OfficeMax. More than three years ago the Totonto-based firm launched performance management applications for product-sales analysis and budgeting, and it has since built applications for the supply chain, call centers, retail stores, CRM, commercial sales and vital accounts, among other areas.

Each project has yielded tactical benefits. The product sales analysis application, for example, lets the firm track buying patterns across its 70 retail stores and 21 commercial sales offices so managers can check their performance against forecasts and readjust their product mix -- on a daily rather than monthly basis -- in order to maximize sales.

Supply chain expense templates for the 10 distribution centers delivered daily reports on sales, margin, profit, return on sales, fill rates, operating expenses and warehouse productivity. The new reports provided much more granular and timely information than the monthly profit-and-loss statements previously used, enabling individual distribution center managers and the VP of supply chain to quickly respond and maximize efficiency on a day-to-day basis.

The Call Center performance application yielded a scorecard that tracks average speed to response, call service levels and abandonment rates, among other variables, and it has helped improve response times and order correction rates.

A CRM "Defector Detector" application raises a red flag when key accounts diverge substantially from their buying habits so sales people can make follow-up phone calls to investigate.

All of these applications were built on performance management software from Clarity Systems, and, indeed, the company's mastery of that software has enabled it to quickly launch new applications. But in the larger scheme, Grand & Toy lacked a clear corporate strategy, and despite incremental improvements in many specific areas, stiff competition from the likes of Staples and Corporate Express hastened a management shakeup in 2005.

"Our strategy up until last year was all over the map, trying to be all things to all people, using a number of different channels," says John Melodysta, Chief Administrative Officer at Grand & Toy. "In the last year we've had new management take over the company and they've built a much more well-defined and more aggressive strategic business plan… We've since structured around five business units that are stand-alone entities, and the value proposition is to help our customers manage their nonstrategic spend."

The company's new strategy prescribes a consultative approach, offering value-added services and working with customers to streamline purchasing by extending the relationship across all five product lines: office products, furniture, interiors, print and imaging products and services.

Grand & Toy is still in the process of aligning the performance management initiatives with the new strategy, but "most of the tactical applications we've built will fit in," says Melodysta, chief administrative officer of IT, Acquisitions and HR. "One of the advantages of corporate performance management [cpm] for us has been that it's quick to develop in that environment. I could see us expanding what we've already built across all five business units and adding something to report on whether customers are buying across a wider range of products."

As performance management gurus point out, it's best to start with a winning corporate strategy and then tie operational goals to that vision (see "Get With the Plan" and "Q&A With David Norton". In contrast, Grand & Toy led with tactical initiatives, but Melodysta says he has no doubts the company can leverage the investment.

"A lot of companies look at corporate performance management as a budgeting and reporting tool," he says. "We've used it for many different things. To us it's a development environment and a tool set, and we think it will make it that much easier to get in step with our new strategy."

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