Picking and Choosing

How does Paramount pick up market share? By cementing new relationships, such as with Fred's Stores, a Memphis-based retailer with 530 stores in 14 states. Paramount executives call Fred's "our Wal-Mart" because it's their biggest set of stores run by one customer.

Fred's hadn't tried scan-based trading, Conforto says, "but we held their hand, and they've done a great job." Besides providing technical assistance and advice, Conforto recommended a former colleague whom Fred's wound up hiring to help with the work. "The partnership is deeper than 'here are some UPCs, now send us some money,'" Conforto says. Fred's has also become an important reference customer, opening doors for Paramount at other retail chains, he adds.

But technology isn't always the way to gain ground on Hallmark or American Greetings. Paramount's Pawtucket warehouse, for instance, is relatively low-tech. Boxes of cards sit in trays on slanted shelves, so that a new box will slide forward whenever an empty one is removed.

Warehouse personnel who fill orders get bonuses based on the accuracy of the card shipments they put together for customers. They face random checking of orders at the warehouse. But their work is even checked, automatically, at the cash register. An error caught at a customer's checkout lane can be traced to the individual who packed the order, through the carton's bar-code.

This system of rewards and verification is so successful that Paramount officials have grown skeptical of inventory management vendors promising performance improvements.

"We're close to 99% accuracy, and we can't justify the cost to pick up another half a percent," Choquette says. Paramount's Toronto warehouse, by contrast, has a more mechanized and automated order picking operation, and its performance metrics don't appear to be any better.

As Davison points out: "We love technology and we've made a lot of technology investment, but as a small private company, we've had to pick and choose."