The expenditure associated with document output devices is usually hidden and the dispersed nature of the various responsibilities and their expense allocations makes it difficult to calculate overall costs.
“However, once the costs are determined the commodity certainly sits above the radar,” Billy Bell of WD Bell Consulting tells SmartProcurement.
Furthermore, a slowed economy and the impact on the environment are significant enough to change a company’s attitude towards this facility, says Bell.
In 2010 Bell assisted listed institutions and large organisations to review and reconfigure their document output strategies. After finding significant financial and operational inefficiencies, he guided them to savings of between 20% and 35%.
“Opportunities exist in implementing new equipment; tracking volumes and management software, on-site technical support and setting realistic service levels (SLAs).”
He estimates that 95% of organisations operate their print commodity with fundamental inefficiencies:
Management focus
Most companies maintain a reaction-based approach owed to the commodity’s non-fundamental nature to business performance and the perceived size of the spend.
“While it is true that printing documents is usually not a core business, the commodity has a direct impact on the ability of the average employee to perform optimally.”
The printer-based and copier-based manufacturers merged their markets in the 1990’s with the advent of the multifunction devices. Surprisingly many companies maintain a legacy of separate strategies for copiers (procurement) and printers (IT), while the devices essentially perform the same function.
Lack of Expertise
Most companies focus solely on tactical and operational areas around the commodity: supplier, product and price. The strategic decisions (i.e. business relationship, risk analysis, management performance) have not been revisited since the early 1980’s.
Specific industry-based expertise not usually available within the organisation is required to enable strategic review. Understanding the complex nature of this environment will generally not be the focus of internal strategically capable people who would usually focus on business generation. The path to the consciously competent ability for decision empowerment is therefore a lengthy process.
Call for Independent Expertise
Industry expertise is required to update knowledge of strategic possibilities, products, suppliers, and to benchmark achievable efficiencies. However, independence is required so that the client’s objectives rather than the supplier’s are championed.
To determine your areas of inefficiency ask your role players the questions set out below. Unfavourable answers indicate that significant benefits would be achieved from a revised strategy.
Costs
1. What is the value of the total spend to maintain print, copy, fax and scan in your organisation?
2. What is the cost of an average page produced by your company including capital (rental and depreciation), support, paper, toners and inks?
3. Have you benchmarked your costs to the industry and other similar sized companies?
4. What is the value of consumables and paper in stock and what is the financial cost of this stock investment?
5. Do users keep spare toners in cupboards as well as the stock in the store?
6. What controls are in place to ensure each cartridge performs according to its yield?
7. Have you used your total spend to negotiate the most effective costs or:
a. Is equipment purchased on an ad-hoc “as and when you need basis” i.e. react when there are issues only?
b. Are there many different rental agreements that expire on different dates preventing a strong price negotiation
8. What is the spend for outsourced printing such as training manuals and could this be done in house?
9. Do you enforce duplex printing to save paper?
10. Do you understand the risks attached to the ability of your equipment to last the rental contract versus the settlement costs that will be incurred if they don’t last?
Management
11. Is there an authorised policy and procedure document to assist the management of the strategy to achieve uniformity and consistency and guide decision power?
12. The printer-based and copier-based manufacturers markets have merged, are they still separate in your company? Does IT look after the printers and Procurement the copiers? If so why are there two strategies for the same commodity?
13. Have you identified key performance indicators to gauge you internal strategy performance and your suppliers?
14. Do you monitor volumes to reduce abuse or misuse? What percentage of the monthly engine capacity are you utilising. Are there areas where you are under-utilising or over-utilising?
15. What controls over unnecessary colour printing do you have in place?
16. Do you load balance using utilisation reporting to ensure all equipment will run for the length of the contract?
17. Replacement strategy: What percentage of equipment is over three years old and do the increased running costs outweigh the cost of replacement?
Service and Support?
18. How is your service provider performing against the SLA in place?
19. Is the SLA response-based or resolution-based and what is the time allowance?
20. Do you measure the performance or rely on the service providers’ figures or user complaints?
21. Have extra devices been purchased due to poor service and support levels?
22. What leverage do you have over performance – penalties and breach?
23. If breach, do you still have to settle the rental contract making it too expensive?
Deployment and Optimisation
24. What is the ratio of users per device against Gartner’s 1:8 expectations?
25. What percentage of devices are networked and therefore manageable and available to other users?
26. Are devices “owned” by cost centres merely for the allocation of toner costs thereby reducing availability to other users and increasing device count?
27. When considering new equipment are the workgroup volumes identified to enable the best-fit selection of device against the usage of existing equipment?
Employee Productivity
28. Are you empowering your employee base to be efficient whilst interacting with the equipment:
a. Are they adequately trained to use the functionality such as scan to email instead of fax?
b. Is the equipment adequate for the specific workgroup’s business requirement?
c. Are there redundancy options when the usual workgroup device is not available?
29. Have you surveyed your employees to understand their frustrations?
SmartProcurement will present a two-day advanced course on the total cost of ownership (TCO) of Output & Print Strategy on June 7 & 8, 2011 in Gauteng and June 14 & 15, 2011 in the Western Cape. Contact Erieka Santos at events@smartprocurement.net for more information
