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OfficeMax Has Turnaround Plan

OfficeMax released details of its “Turnaround Plan for Higher Performance” this month following an earlier January announcement that the company is closing 110 underperforming stores.

The plan, which comes amid calls by some OfficeMax investors for the sale of the company, was developed over the past several months via a broad-based review of all operations.

For 2006, the main thrust of the plan is to improve the company’s supply chain and information systems; improve operating performance in the retail and contract businesses; and improve financial performance through a combination of cost-saving initiatives and the allocation of capital for growth.

Specifically, OfficeMax is developing a single supply chain supporting both its retail and contract segments. Goals for 2006 included improved SKU management, heightened forecast accuracy, expeditious replenishment, better product transition, improved inventory accuracy and enhanced supplier performance, the company said.

Complementing these supply chain initiatives are a range of major IT actions including consolidating two core data centers into one; investing in the e-commerce platform; launching a common platform for in-store kiosks and, the company’s retail Web site; and integrating systems to utilize contract distribution centers to augment retail store replenishment.

Underpinning these initiatives will be upgrades to the inventory management system that will enhance store-level and item-level forecasting and provide better reporting and visibility across the supply chain.

On the retail side, initiatives include merchandising strategies intended to expand the company’s small business customer base; grow its print and document services business; drive incremental sales from the OfficeMax ink refill program; and improve category management. The company will cut costs through store labor and management programs, as well as advertising and marketing efficiencies.

These initiatives will coincide with the previously announced closure of 110 of its 927 domestic stores during the first quarter and the opening of as many as 70 new “Advantage” prototype stores in high-growth markets.