In terms of sophistication, the company's customer purchasing setup pales in comparison with its inventory-control system. Corporate Express wants to fill orders from inventory. But too big a cushion in the warehouse erodes the bottom line; so, too, does too little inventory, which may require the company to fill gaps in customers' orders by paying top dollar to local wholesalers. "Every night," says Bouska, "the computers look at everything in inventory. They try to make sure we don't run out of things -- but not at any price. We stock only as deep as is cost-efficient."
To maintain an optimal level of inventory, the computer system analyzes past purchasing patterns and future demand in a fast-growing market. It must factor in a large number of variables, including seasonality of orders, discounts offered by manufacturers, and free freight granted by manufacturers as part of special promotions. "Maybe we should overstock in some cases," says Bouska, "because the free freight will more than make up for the overstocking." The computer system figures out the answer and then acts on it, perhaps ordering 10 gross of pencils for delivery to the warehouse at exactly the time inventory is projected to reach perilously low levels.
In a business of pencils and pens -- no less than in a business of selling jet aircraft, as Boeing does in the same city -- managing the details well makes all the difference. In three years, sales for the Seattle operation of Corporate Express have almost doubled, and its operating margin has gone from just above breakeven to more than 10%.
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So confident is rysavy of his ability to improve the margins of the companies he buys that his pace of acquisitions is likely to quicken in the next few years. The company expects by the end of 1995 to have acquired, at a cost of $130 million, 25 companies, representing revenues of $500 million.
The pursuit of acquisitions as a growth strategy poses its own unique challenges, of course. Analysts confirm that none of Rysavy's acquisitions since 1988 have blown up in his face. The company admits that some employees of the target companies resist change and others lose their jobs, but Rysavy says that the Corporate Express model is demonstrably so much better than whatever the acquirees were doing that most people go along enthusiastically.
Analysts praise Rysavy for recruiting new talent for his management team and for delegating tasks well before he has to. Even so, control over an expanding empire has eluded many entrepreneurs. That risk seems heightened in the case of Corporate Express as it moves overseas and imposes its business model on acquisitions that are out of sight and operating in different business cultures. This year Rysavy bought a majority stake in the largest office-supply company in Australia, and he expects to make acquisitions in Europe soon.
That expansion abroad comes just as competition grows more intense at home. Corporate Express and its four biggest competitors for corporate business -- Boise Cascade, Office Depot, Buhrmann-Tetterode, and Staples -- control less than 15% of the market, and all are busy buying small suppliers, which is likely to drive up acquisition prices in the future. Many hundreds of small, inefficient players will either fold or sell out over the next five years. Eventually, the big companies like Corporate Express will begin bumping into one another as they compete for the most lucrative corporate accounts. Price wars could ensue.
Despite those risks, Wall Street has been eager to finance the company's expansion. Corporate Express made its initial public offering in September 1994 and returned to the markets twice this year to make additional offerings, raising more than $500 million in all.
Rysavy owns about 3.3 million shares of the 50 million outstanding, worth roughly $70 million in early October. The financial markets clearly value his company-building expertise, but the opportunity existed for thousands of office-supply companies years before Rysavy came to the United States or even learned to speak the language.
It took Rysavy's fresh eye to see it.
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Stephen D. Solomon is an associate professor of journalism and mass communications at New York University and was formerly a senior editor at Inc.
RESUME
JIRKA RYSAVY
Corporate Express, Broomfield, Colo.; founded in 1986
$621 million in 1994 revenues; $5.2 million in pretax profits
Born: Czechoslovakia, 1954
Parents: Father, civil engineer; mother, educational researcher
Education: Master's in engineering, Technical University of Prague, 1983
First Job: Print-shop worker in Boulder, Colo.; compensation, $3.35 an hour. Hired immediately after arriving in United States and just before starting first company.
Other Experience: Former hurdler in international track events
Other Companies Started: Transecon, distributor of recycled products; and Crystal Market, natural-foods retailer -- both in mid-1980s
Role as CEO: "You can't afford to say you like this role or that role; it's important for the CEO to keep changing. You have to keep taking responsibilities and passing them out."
Failures: Didn't compete in Olympic Games; track career stymied by injuries.
Family: Single; lives on 80-acre forested tract in mountains above Boulder
Heroes: None
Hobbies: Sports; meditation; pursuit of spartan life in mountain home (only available water must be fetched from spring, even in winter; often cooks and sleeps outdoors)
Quote: Rysavy traveled world with little money, sleeping on park benches and befriending strangers. "I went to so many countries without money. I didn't speak the language; I couldn't go to a hotel; I was dependent on myself. I learned that you can always start from scratch again."
