March 1, 2005
A furniture manufacturer gets into the business of helping companies avoid waste.
Alice Bieneman, an interior designer contracted to Evanston Northwestern Healthcare (ENH), in suburban Chicago, can outfit a new medical office from her desktop. Her employer dictates the colors and surfaces she can use, but Bieneman controls the installation. Using a database that looks and works a lot like Amazon or eBay, she selects furniture from ENH’s stock, in remote warehouses. Bieneman wastes less time, her colleagues in warehouses waste fewer trips, and ENH wastes less inventory—all thanks to PinPoint, a software program from Iowa-based furniture manufacturer Allsteel. “If I’m trying to create a certain look and I have products available in standard finishes,” she explains, “I can put that in a cart and quote [a price for] the balance.” Bieneman estimates that in 2002—the year it adopted PinPoint—the health-care company saved as much as a million dollars by avoiding redundant purchases.
It might seem counterintuitive for a furniture maker to help a business find old pieces in its inventory, but Allsteel sees it as a way to remain relevant even to corporate clients who aren’t making new purchases. The service provided is invaluable to companies rearranging offices so often that tracking what they own becomes a daunting task. Furniture manufacturers call this emerging field “asset management,” which evokes spreadsheets rather than armrests—and that’s no accident. Their prospects improve if they can keep collecting revenues even when their goods go into storage.
“Customers are looking for solutions—ergonomics, standardization, green initiatives,” says Karen Olderog, Allsteel’s vice president of corporate accounts. Allsteel made its name over nine decades by making sturdy, adaptable furniture—it bills itself as the inventor of the lateral file. The company entered asset management in 2000 at the request of a huge financial services customer it refuses to name. Larger rivals Steelcase and Herman Miller had been selling their customers asset-management software since 1994, but Allsteel upped the ante by designing its program to be what Olderog calls “furniture agnostic.” Though Steelcase and Herman Miller now sell tracking software that can monitor any manufacturer’s furniture, Olderog claims these rivals started their asset-management services as ways to track their own goods. PinPoint’s appeal lies in its ability to account for anything a company wants to—be it a carton of audited financial statements or the CEO’s favorite desk chair—an approach that is becoming the industry standard.
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So far, says Allsteel business manager Peggy VanZandt, the company has sold the software as part of a larger contract to three customers: the huge financial services corporation, ENH, and the California Highway Patrol, each of which operates with its own unique bureaucracy and occupies lots of distinct offices. VanZandt says Allsteel originally considered selling the software for about $20,000 with a monthly service fee of under $300. In the end it decided to also offer its customers the option to load the cost into a larger contract. Allsteel sent representatives to walk through each customer’s inventory, bar-coding every item to create a database that would let managers search by color, fabric, or brand. “We took care when building the database behind the bar code,” VanZandt says. “Now a facilities manager will be able to easily drill through items as opposed to doing a search that returns two hundred items.”
The fact that a global financial services company asked Allsteel to create such a program signals a startling lapse. Executives from such companies talk to investors about spending forecasts and predict their earnings down to the penny. But they often can’t keep tabs on what’s in their warehouses—and many don’t bother to try. Walter Munroe, who manages workplace services for Steelcase’s giant customers, says the market for asset management is still so small that he focuses more on selling the idea than on fighting to prove that his software outperforms Allsteel’s. “Even if they have twenty warehouses,” Munroe says, “many companies are philosophically—and misguidedly—not interested in asset management.”
But if that’s true, why doesn’t Allsteel just push ever more new furniture? “For firms with a lot of change and a lot of assets that can be in several different places, I see [asset management] growing,” Olderog says. According to her, Allsteel markets to industries where changes in technology, global competition, and regulation monkey with projections. These businesses want to control their capital investment in the future, even if they can’t list their fixed assets today.
Knowing what all their warehouses contain also encourages companies to think more richly about how their work environments should look. “Typically a customer’s evolution is: asset visibility, then elimination and consolidation, and then the creation of corporate standards,” Olderog says. That process can make clients vigilant about consistently appointing offices with coherent designs. Once they know, for example, how many blue Trooper chairs they have, they can budget to keep everything on display above a threshold level of wear-and-tear. With Allsteel’s Web site, a designer like Bieneman can instantly nix torn or faded pieces, perhaps flagging them for refurbishment or resale. The system encourages managers to develop rules governing a company’s aesthetic and to establish procedures for recycling or selling furniture that no longer makes the grade.
Steelcase’s Munroe says his company’s tracking software helps an image-conscious global bank keep nearly new furnishings in all its offices. But PinPoint allows furniture dealers and installers into the discussion about what looks too old. According to VanZandt, each of the three PinPoint contracts allows an unlimited number of people to surf the inventory database. Mike Dulen, president of a firm called Corporate Installations, has that privilege for ENH. He says managers using PinPoint ask as many questions as hobbyists trolling for gems on eBay: “They know what they spent on a piece, what shape it’s in, and when to get rid of it. That was not easy to know before.”
So PinPoint and programs like it can foster dialogue among experts about how to combine, reuse, resell, and dispose of any furniture. For instance, one feature of the program alerts managers when the cost of storing an item exceeds its value. This can keep furniture prominent in the minds of managers who aren’t buying much of it. Herman Miller’s Doug McCoy says tech outfits that added workstations headlong in the 1990s have scaled back. But Olderog says that asset management rewards firms when they’re adding offices and when they’re shutting down sites. “If everything they have is capitalized, they’ll look at everything,” Olderog insists, meaning that companies that track their furniture are more likely to treat goods as part of their net worth rather than as expenses that diminish their profits. Allsteel helps ensure this is true by using PinPoint to monitor, among other things, unfulfilled purchase orders.
Another critical discussion among corporate executives involves the cost and consequence of disposing of used material. While it’s hard to gauge how much an asset-management program can keep out of landfills, the PinPoint model certainly helps corporate buyers think about how to reuse goods. “When you look at what we save in materials because we’re not having a manufacturer build something new,” Bieneman says, “the value to the corporation is tremendous.” Olderog notes that PinPoint lets managers from one of the client’s divisions “reserve” an unused piece of furniture from another division—possibly saving that item from a premature death. The capacity to reuse and recycle improves when big companies embrace a strategic approach to what they own. Munroe says Steelcase has started recycling programs for customers. “We grind stuff up with a network of recyclers and get seventy to eighty dollars a ton for steel,” he says.
Of course, when accountants at HQ can weigh scrap revenue against the cost of storage, even the coolest visual idea can fail to win corporate support. That can mean less latitude for interior designers. “I think there is a bit of a loggerhead between designers and [purchasing managers],” Munroe says. “Designers want to fulfill more than Dilbertville cube densities.” Confident in PinPoint’s flexibility, Olderog takes a different tack. “Once a designer has listened to what a company’s needs are, which could be months of work, the corporate standards make the needs visible,” she says. “A designer may say we’re going to use this particular type of chair in blue in all administrative and task-oriented areas. Once we can make that visible, we’re carrying out the designer’s and customer’s solution.”