Circuit City 2002 Annual Report Download - page 7

items, large furniture and large industrial items shipped directly by the vendor) within one or two business days of the
order date.
The Company provides extensive technical support to its Systemax brand PC customers. A database of
commonly asked questions is maintained and is available to technical support representatives, enabling them to respond
quickly to similar questions. The Company conducts regular on-site training seminars for its sales representatives to
help ensure that they are well trained and informed regarding the Company's latest product offerings.
Distribution Centers
North America
The Company operates out of multiple sales and distribution facilities in North America. Certain of these
facilities are linked by a wide area network management information system. In the event of adverse delivery
conditions, such as bad weather at a location, the Company can shift inbound calls and/or order fulfillment and
shipping to an alternative location. Management believes this provides Systemax with important operating flexibility
and protection from possible sales interruptions for its North American businesses.
Europe
The Company has sales and/or distribution facilities in eight European countries and a central office near
London, England to direct their activities. The central office is responsible for marketing support, financial reporting,
logistics and computer programming support.
Suppliers
The Company purchases the majority of its products and components directly from manufacturers and wholesale
distributors. Substantially all of the products offered in the Company's European catalog is sourced in Europe. For the
year ended December 31, 2002, Tech Data Corporation accounted for 14.7% of the Company's purchases. For the year
ended December 31, 2001, Tech Data Corporation accounted for 15.1% and Hewlett Packard Company accounted for
10.5% of the Company's purchases. No single supplier accounted for more than 10% of Systemax's total purchases in
2000. The loss of any of these vendors, or any other key vendors, could have an adverse effect on the Company.
Certain 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 management information systems, which the Company has customized for its use. These
systems support telemarketing, marketing, purchasing, accounting, customer service, warehousing and distribution, and
facilitate the preparation of daily operating control reports which provide concise and timely information regarding key
aspects of its business. The Company maintains databases containing 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 employs 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. The Company also operates telecommunications systems to support its sales, customer service and
technical support operations. Elements of the Company's telecommunications systems are integrated with the
Company's computer systems to provide timely customer information to sales and service representatives. The
Company believes that its information systems enable it to promptly ship customer orders, respond quickly to order
changes and provide a high level of customer service and support.
The Company's success is dependent in large part on the accuracy and proper use of its information systems,
including its telecommunications systems. The Company expects to continually upgrade its systems to more effectively
manage and improve its operations and customer databases.