Circuit City 2000 Annual Report Download - page 8

throughout the day as customer orders are received.
Europe
The Company has branch facilities in eight European countries and a central office near London, England to
direct their activities. The central office is responsible for marketing support, catalog production, financial reporting,
logistics and computer programming support. In addition, each European branch has a full service sales and
distribution center to process orders and reports to the respective country manager who has ultimate profit and loss
responsibility.
Suppliers
In North America, the Company purchases the majority of its products and components directly from
manufacturers, except for certain peripherals, software and hardware products which are purchased through wholesale
distributors. In Europe, products are sourced from a combination of local manufacturers and wholesalers. Substantially
all of the European catalog product content is sourced in Europe. No single supplier accounted for more than 10% of
Systemax's total purchases in 2000, 1999 or 1998.
Private label products are manufactured either by the Company or by third parties to the Company's
specifications. Many of these private label products have been designed or developed by the Company's in-house
research and development teams. See "Research and Development".
Management Information Systems
The Company operates information systems that allow centralized management of key functions. These include
communication links between distribution centers, inventory and accounts receivable management, purchasing, pricing,
sales and distribution, and the preparation of daily operating control reports which provide concise and timely
information regarding key aspects of its business. These management information systems enable the Company to
enhance its flexibility by promptly shipping customer orders (usually on a same-
day basis), responding quickly to order
changes and providing a high level of customer service. The Company maintains a database of over 50 million
customer and prospect names and keeps records of historical purchasing patterns in order to prompt sales personnel
with product suggestions to expand customer order values. In addition, the Company has developed a customer
prospecting function based upon geographic, economic and demographic data which enables Systemax to utilize its
information systems to maintain and expand its customer data files. These applications enable the Company to achieve
cost savings, deliver extensive customer service and centrally manage its operations.
Research and Development
The Company's research and development teams design and develop products for Systemax's private label
programs. The individuals responsible for research and development have backgrounds in engineering and industrial
design.
This in-house capability provides important support to the private label programs. Many of the Company's
private label products were designed or developed by an in-house research and development team. Examples of
products designed in-house include PC's, servers, furniture, ergonomic monitor support arms, printer and monitor
stands, wrist rests and other durable computer related products, storage racks and shelving systems, various stock and
storage carts, work benches, plastic bins and shop furniture. The Company owns the tooling for many of these
products, including plastic bins, computer accessories, furniture, and metal alloy monitor arms. See "Research and
Development Costs" in Footnote 1 to the Consolidated Financial Statements for further information.
Competition and Other Market Factors
PCs and Notebook Computers
The North American and European computer industries are highly competitive with many U.S., Asian and