computer products, copier supplies, laser printer parts
DESCRIPTION
COMPUTER PRODUCTS, COPIER SUPPLIES, LASER PRINTER PARTS. PRESENTATION PREVIEW. I. Overview. II. Office Products - Stats and Facts. III. Technology Supplies – The Unique Characteristics. IV. The Traditional Contract Evaluation Process. - PowerPoint PPT PresentationTRANSCRIPT
COMPUTER PRODUCTS, COPIER SUPPLIES, LASER PRINTER PARTS
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PRESENTATION PREVIEW
V. Recognizing “Blind Spots” in Traditional Contracts
II. Office Products - Stats and Facts
III. Technology Supplies – The Unique Characteristics
IV. The Traditional Contract Evaluation Process
VI. An Alternative Contract Evaluation Approach
VII. Next Steps – The Discovery Process
I. Overview
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Overview
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WHO WE ARE
1. Laser Printer Parts & Imaging Supplies Distributor
2. Privately Owned
3. 1,400 Employees – Small Business
4. Financially Stable
* Fiscally Responsible
* Appropriately Financed
5. $20 Million Inventory
6. Technology Focused
7. Highly Valued Relationships
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We align ourselves with manufacturers who represent the industry leaders in technology and market dominance.
PRODUCT LINES
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Office Products:
Stats and Facts
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OFFICE PRODUCTS
Traditional Supplies:
• Writing Utensils (Pens, Pencils)
• Folders / Binders
• Staples / Staplers
• Clips / Clamps
• Envelopes
• Stick-On Notes
• Tapes
• Writing Pads
Technology Supplies:
• Printer / Fax Supplies
• Magnetic Media (Back Up Tapes)
• Copier Supplies
• Printer Ribbons
• Computer Accessories
• Labels / Transparencies
SIMPLE DEFINITIONS
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OFFICE PRODUCTS
Technology Supplies NOW = 50%+ of Total Office Supply Spend
1990’s
55 %
45%
2010
45 %55%
1980’s
75 %
25%
Technology Supplies Spend
Traditional Supplies Spend
THE SPREAD
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OFFICE PRODUCTS
BUT Technology SuppliesBUT Technology Supplies Make Up Greater Expense
Traditional Supplies
Technology Supplies
Annual Spend per Employee
$150
$300
$450
$600
$750
$900
$1,050
Traditional Supplies Offer More Line Items
35
Traditional Supplies
Technology Supplies
0
5
10
15
20
25
30
40
Line Items Offered (in 1000’s)
THE SPEND
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OFFICE PRODUCTS
7 % CAG$
Technology Supplies
Technology Supplies Is Growing Expense – Avg. 7% Growth Annually
Traditional Supplies Is NOT Growing Expense – Avg. 0% Growth Annually
CAG = Compounded Annual Growth
0 % CAG
Traditional Supplies
$
THE EXPENSE GROWTH
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OFFICE PRODUCTS - THE SPEND, Case Study
Company: Fortune 100 Publishing Company
Employees: 175
2 Office Supply Contracts: • Traditional Supplies Vendor - 200 core items
• Technology Supplies Vendor – 80 core items
Technology SuppliesTraditional Supplies
Office Products Total Spend
$105,000 $130,000
THE SPREAD, THE GROWTH
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OFFICE PRODUCTS - THE SPEND, Case Study
Company: Fortune 1000 Bank
Employees: 52,000
4-5 Office Supply Contracts:• Traditional Supplies Vendors – 2000 core items managed
• Technology Supplies Vendors – 500 core items managed
Technology SuppliesTraditional Supplies
Office Products Total Spend
$6,500,000
$7,500,000
THE SPREAD, THE GROWTH
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Technology Supplies:
The Unique Characteristics
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TECHNOLOGY SUPPLIES
Rapidly Changing Costs …
At home, we expect and see technology products like
(Televisions, DVD Players, Stereos, and Appliances) to drop in price over time.
At the office, shouldn't we expect the same from technology products
like (Back-up tapes, Copier Supplies, and Laser / Ink Jet Supplies)?
UNIQUE CHARACTERISTICS
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TECHNOLOGY SUPPLIES Rapidly Changing Costs …
If (You) the consumer are not seeing price reductions from your technology supplies distributor (Vendor), your vendor’s margins (Profit) are going up over time as your prices stay the same.
Conclusion:
Fixed Pricing = Increasing Vendor Margins =
Lost Consumer Savings Opportunity!
UNIQUE CHARACTERISTICS
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TECHNOLOGY SUPPLIES
MEDIA BRAND TYPE 3-09 3-10 Price % Change HP 4 mm 120 M $3.72 $3.58 -4%IBM DAT72 $18.95 $14.95 -27%Imation DLT IV $52.00 $29.80 -74%Imation LTO 2 $69.95 $50.15 -39%Maxell DVD-R $1.50 $1.02 -47%
OEM PRINT BRAND TYPE 3-09 3-10 Price % Change Xerox Toner 6R926 $71.05 $60.39 -15%Xerox Toner 6R903 $49.35 $41.95 -15%HP Paper Q1785A $23.19 $20.29 -12.5%OKI Drum 42126604 $78.10 $63.45 -18.8%OKI Drum 42126601 $96.20 $69.35 -27.9%
* Prices based on standard market wholesale costs
Rapidly Changing Costs …
UNIQUE CHARACTERISTICS
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TECHNOLOGY SUPPLIES
$
40
50
60
70
80 Customer Price
Fixed
03 -2008 03 -2009
Rapidly Changing Costs … One Product At A Glance Item: Imation LTO 2 (Magnetic Media)Distributor Cost (03-09): $69.95 / per crtg.Distributor Cost (03-10): $50.15 / per crtg. (-29%)Contracted Sell Price: $71.00 / per crtg. (Contracted – Fixed Sell Price)
40
50
60
70
80
$
Distributor Profit
Increasin
g
03 -2008 03 -2009
+ 29%
UNIQUE CHARACTERISTICS
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Alternative Products Can Provide 30% - 55% Savings Without Sacrificing Product Performance !
TECHNOLOGY SUPPLIES
Alternatives to OEM Products Include …
- Compatible Products (Xerox for HP)
- Remanufactured Products (Premier for HP)
- Other OEM Products (Sony for Fuji)
Several Alternative Product Options
UNIQUE CHARACTERISTICS
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TECHNOLOGY SUPPLIES
Several Alternative Product OptionsUNIQUE CHARACTERISTICS
Savings % Over OEM
OEM Brand 100 Series 200/500 Series
Brother 32% 45%
Canon Fax 28% 50%
HP 43% 56%
IBM/Lexmark 51% 63%
Imagistics 55% 65%
Panasonic 42% 52%
Sharp 40% 40%
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TECHNOLOGY SUPPLIES
SavingsRealized
$400,00028%
Several Alternative Product OptionsCase Study: Fortune 1000 national bank with 900+ locations
Annual Technology Supplies Spend
$200,000
$600,000
$1,000,000
$1,400,000
$1,800,000
Year 1 Year 2
$1.8 Million
$1.4 Million
UNIQUE CHARACTERISTICS
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Traditional Contract Evaluation
Process
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THE TRADITIONAL CONTRACT“The One Source Solution” Evaluation Process• Evaluate entire office product line at same time
same way• Combine traditional supplies & technology supplies
Traditional Supplies
45%
Technology Supplies
55%
EVALUATION
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THE TRADITIONAL CONTRACT
The Traditional Process
1) Submit (RFI) Request for Company (Vendor) Information
2) Submit (RFQ) Request for Quotation - Top Moving Products
3) Establish “Critical Vendor Requirements”• E-Commerce Ordering Capabilities • National Distribution
• Large Inventory (high fill rates) • Manufacturer Relationships
• Financially Sound • General Infrastructure/Support
4) Request “locked in (guaranteed) pricing” for 1-3+ years
5) Re-Evaluate Pricing as Needed
EVALUATION
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Recognizing “Blind Spots” in a
Traditional Contract
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RECOGNIZING THE CONTRACTThe Traditional Contract Problems
• DOES NOT account for rapidly dropping technology
supplies cost.
• DOES NOT provide cost savings plan.
• DOES NOT target the significant spend area (technology
supplies).
In brief, the traditional contract DOES NOT recognize the
uniqueness oftechnology supplies.
BLIND SPOTS
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SUPPLIER CONFLICT
5%
10%
15%
20%
25%
30%
Average Margins
Traditional
Supplies
Technology
Supplies
25% +
17%
5%
10%
15%
20%
25%
30%
Average Cost-To-Do
Contract Stationer
Independent I.P. Dealer
19%
12%
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RECOGNIZING THE CONTRACT A thoughtful, well negotiated Technology Supplies
Contract must be developed (independent of the Traditional Supplies Contract)...
Traditional Supplies
45%
Technology Supplies
55%
… with a vendor capable and willing to manage the uniqueness of a Technology Supplies Contract.
BLIND SPOTS
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Alternative Contract Evaluation Approach
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THE ALTERNATIVE CONTRACT
The Alternative Process Create Two Separate Contracts & Manage To The Uniqueness
Of Each
Traditional SuppliesContract
1) Establish “Vendor Critical Requirements”
2) Submit RFQ – “Request for Quotation”
3) Request FIXED Pricing Plan
4) Redevelop Contract YEARLY
Technology Supplies Contract
1) Establish “Vendor Critical Requirements
2) Submit RFQ – “Request for Quotation”
3) Request PERPETUAL Pricing Plan
4) Review Contract QUARTERLY
EVALUATION APPROACH
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THE ALTERNATIVE CONTRACT
Key Concept – “Real Time Pricing”
“Real Time Pricing” occurs when a distributor receives
a price decrease and the distributor passes a price
decrease from manufacturer to the consumer.
Example: Manufacturer drops prices to distributor by 10%, so the distributor (Vendor) drops prices to consumer
(You) by 10%
EVALUATION APPROACH
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THE ALTERNATIVE CONTRACT
20
30
40
50
60 Customer Price
$
03 -2008 03 -2009
“Real Time Pricing” Applied
One Product At A Glance
Item: Imation DLT IV (Magnetic Media)Distributor Cost (03-09): $52.00 / per crtg.Distributor Cost (03-10): $29.80 / per crtg.Contracted Sell Price: Decreases by 39% over Time
20
30
40
50
60 Distributor Profit
03 -2008 03 -2009
$
Decreasing Fixed(-39%)
EVALUATION APPROACH
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THE ALTERNATIVE CONTRACTKey Concept – “Product Watchdog”
“Product Watchdog” occurs when the dealer researches
the technology supplies market, looks for
cost-saving options and alternatives,
and informs the consumer
of these options.
Result: Consumer (You) benefit through new cost saving options available in market.
EVALUATION APPROACH
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THE ALTERNATIVE CONTRACT
Key Concept – “Product Watchdog” One Product At a Glance
Toner Cartridge:
OEM (HP) Item: C4127X $104.77 / each
Compatible (Xerox) Item: 6R926 $65.26 / each – 38%
Compatible (Premier) Item: 200-27X $48.10 / each – 54%
$0.00
$0.01
$0.02
HP Xerox Premier
Cost perPrinted page
EVALUATION APPROACH
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The Traditional & Alternative Contract Compared
THE ALTERNATIVE CONTRACTEVALUATION APPROACH
Need Characteristics
Traditional Contract Solution
Alternative Contract Solution
Vendor Critical Requirements Met Yes Yes
“One Source Solution” Yes No
Perpetual Competitive Pricing No Yes
All Savings Opportunities Realized No Yes
Frequent (Quarterly) Reviews No Yes
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TECHNOLOGY SUPPLIES
• Full Imaging Supplies Product Offering 5,000 Items
• Field Rep And Customer Service Support
• Complete Monthly Reporting
• Quarterly Rebates On 15% + Margin
• 99.9% Order Accuracy & 98% Same Day Fill Rate
• Auto Product Substitution – On Approval
• 100% User Product Satisfaction
CUSTOMER PROPOSITION