Staples, a $23.1-billion-a-year office-supply chain, extensively uses statistical tools on its data warehouse information to create business intelligence. Alan Gordon, Director of Sales Forecasting, joined the company in 1993 when the company had 150 stores. His charge was to determine where to build new stores. Using a variety of programs from SAS (the leading provider of statistical tools within business intelligence software), Alan created a sophisticated system that evaluates 40 variables, including proximity to competitors and sales tax by zip code. Of the some 4,000 sites that Alan now targets each year, approximately 100 become a new store. That has translated into 950 new stores since his arrival.

Marci Lerner, Staples’ Vice President of Finance, also discovered the true value of statistical data-mining tools and business intelligence. Marci decided to use a suite of statistical tools provided by Hyperion Solutions. Using her new business intelligence, Marci gained valuable insights into not only the company’s financial situation but also how to display merchandise in the stores.

For example, Marci determined that Staples had been misusing its floor space. Typically, each store devoted a great deal of space to large items such as file cabinets, desks, and other furniture. It made logical sense because bigger items yielded better gross margins than pens and pencils. However, Marci’s analysis of Staples’ business intelligence pointed out that the costs of storage, distribution, handling, damage, and labor associated with large items made them less profitable than smaller, less space-intensive categories of office supplies. Because of that finding, Staples has decreased its furniture department in most stores, in favor of more room for labels, paper, desk organizers, calendars, and the like. This has helped the company grow its net income to the tune of 12 percent compounded over the last five years.