Phillips execs embrace technology after division sale
Phillips Office Solutions is not just paper, chairs, copiers and desks.
CEO Peter Phillips also wants you to see the company's business in electronic document storage and smart whiteboards that immortalize impromptu diagrams and notes.
On Dec. 31, Dauphin County-based Phillips Office Solutions sold its office-supply division to Virginia-based Guernsey Office Products Inc. for an undisclosed price. The deal means Guernsey will retain the division's 76 employees working from Phillips' Lower Swatara Township headquarters.
Phillips will grow its document-management and office-interiors divisions, which executives said will provide solid growth for years to come. Peter Phillips, his brother and company President David Phillips, and Bill Shuey, president of document management, recently spoke about the changes.
Q: Was it a difficult decision to sell the office-supply division?
Peter Phillips: It was very difficult. Dave and I bought the business 28 years ago. Office supplies were a major part of the business back then and still are. And a lot of the employees we had were long-term employees that had 10, 15, 20 years with the company, or more. So there were a lot of relationships involved here, and that made it a lot more difficult.
What ultimately helped you make that decision?
Peter Phillips: We had seen some of this coming a long time. There's more and more consolidation in the office-products business. And so you have to become large.
The company that purchased (it) is from Virginia, and they're doing that. They're consolidating and acquiring other dealerships. They're willing to go out of state.
Our model is to serve southcentral Pennsylvania and the Baltimore area. Those are the markets we're interested in, and we didn't want to just go to other states and other regions to acquire volume.
Is the growth in document management and office interiors outpacing office supply?
Shuey: It's outpacing office supply, for sure. Year-over-year growth is a little over 14 percent in document management in some of the expansion categories. It's about 38 percent growth from prior year. We're seeing greater expansion in overall growth.
Another element, from returns, if we look at the three business units, look at the office-supply business, look at the office interiors and document management in that order, the returns you get are greater as you move from one to the other. … So we're investing not only in areas that are growing, but they're also showing promising returns on the bottom line that will fuel additional growth in expansion, etc.
How are you keeping on top of technology changes in document management?
Shuey: In the electronic content-management systems, it's largely personnel based, having the expertise. It ties in nicely with our management-network services so we can leverage into multiple categories. Obviously you talk about certification and knowledge in those areas, and that comes at a cost, so we're investing in personnel. ...
Some other areas you find success are helping people automate a workflow. Take a traditional (accounts payable/accounts receivable) process where you have a lot of people touching paper-based documents. Once you show them a more efficient way, ancillary opportunities will appear.
For example, they have a lot of history of paper-based documents that they want put into the system. We invest in scanning technologies to do the index, staff to provide those services. A lot of times, people will want to get rid of the paper documents, so we provide destruction in a responsible manner.
Has Phillips rebounded with the general economy?
Peter Phillips: We had seen the bottom around 2009, and we have seen an uptick in sales since that time. So the revenues are continuing to increase.
What's happening with the office-interiors division?
David Phillips: Sales are definitely increasing, but at a pretty modest rate. I think in this economy, furniture at times is considered a luxury. Unless you're adding people, do you really need to replace (furniture)?
We do see more and more companies, especially higher tech companies, look at replacing furniture now because they're really struggling to find the talent. I think the more progressive companies, if they want to hire good talent, they need to upgrade their spaces. If a young college grad, a highly sought-after individual has a choice, he's going to go to the cool workspace. That's helped fuel some activity.
The other things that we're doing — furniture, architecture and technology — are kind of blending together. … In the past, we never really sold architectural walls. We do now. Raised floors. Modular power systems. Acoustical solutions for sound masking and things like that. In the past, we were just furniture providers. We're trying to broaden the offerings that in the past we overlooked.
What's next for Phillips?
Peter Phillips: If you go back 10 years in document management, it was all about how many prints could we support for the client. We wanted them to print as much as possible.
Now we're going to clients and we're showing them how to reduce the number of prints as a way to save them costs. That's kind of shooting ourselves in the foot, because we're getting less prints, but we're adding value in other ways. That's the way we're going and it's how we'll get more customers: by showing them how to reduce their costs.
Meet the family
The Phillips family is originally from Lebanon. Peter Phillips' father bought the business in 1984.
About Peter Phillips — Peter, 55, lives in Mechanicsburg with his wife, Mary. He says the business is his main hobby, but has spent the past 20 years chasing the soccer games of his four children.
About David Phillips — David, 51, also lives in Mechanicsburg with his wife, Pam, and spends a lot of time chasing the soccer games of his two children. David spends his spare time bicycling and scuba diving.
About Bill Shuey — Shuey, 44, is from Harrisburg and lives in Linglestown. He and wife Jodi have three children. Shuey coaches junior lacrosse, races in triathlons and volunteers with the Cystic Fibrosis Foundation.