20 to 35% savings lost due to poor output devices strategies

| 0 Comments
Office Printing.jpgThe 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

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

Career opportunites

Operations Manager

  • >500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
Our client within the FMCG industry with a ...More

Warehouse and Distribution Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
An exciting opportunity awaits for a Warehouse and ...More

Demand Planner

  • <500 000 Permanent
Get an opportunity to be part of one ...More

Procurement Manager

  • >500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
An opportunity for a seasoned Procurement Manager, who ...More

Industrial Engineer

  • >500 000 Gauteng Industrial Engineer Permanent Procurement Consultant
An exciting opportunity that offers extensive exposure on ...More

Deputy Director: Procurement

  • >500 000 Contract Procurement Management Procurement Officer / Specialist Western Cape
Department of Economic Development and Tourism:Procurement Specialist, Ref ...More

DEMAND PLANNING MANAGER

  • >500 000 Gauteng Operations, Planning & Inventory Projects / Category Management
(Total Cost to Company R750k – R900K) excluding ...More

GLOBAL SUPPLIER PERFORMANCE MANAGER

  • >500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
(Salary: R 1.3M –R1.5M, dependent on level of ...More

GLOBAL CATEGORY MANAGER

  • >500 000 Contract Gauteng Procurement Consultant Projects / Category Management
Total Cost to Company R1mil – R1.2mil excluding ...More

Project Manager

  • >500 000 Contract Procurement Management Projects / Category Management Western Cape
 Description:A well-known retail organization is looking for an ...More

PROCUREMENT ANALYST

  • >500 000 Analyst Gauteng Permanent Procurement Management
Description:A leading infrastructure development group with strong presence ...More

Commodity Manager: Fuels and Lubes

  • Commodities Gauteng Permanent Projects / Category Management
 Ensuring continuity of supply in line with business ...More

Senior Facilities Manager

  • >500 000 Commodities Gauteng Operations, Planning & Inventory Permanent
(Total Cost to Company R800K – R900K) Johannesburg Our ...More

ENGINEERING STANDARDS MANAGER

  • <500 000 >500 000 Gauteng Industrial Engineer Permanent Procurement Management
(Total Cost to Company R350K – R550K) JOHANNESBURGYou ...More

Supply Chain Analyst

  • <500 000 >500 000 Permanent Procurement Officer / Specialist Supply Chain Western Cape
(Total Cost to Company R350K – R550K)  SOUTHERN ...More

Security Manager

  • <500 000 >500 000 Gauteng Permanent Projects / Category Management Strategic Sourcing
(Total Cost to Company R350K – R550K) JOHANNESBURG This ...More

Demand Planner

  • <500 000 >500 000 Operations, Planning & Inventory Permanent Projects / Category Management
(Total Cost to Company R450k – R550k, dependent ...More

Procurement Specialist-Randburg

  • >500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
(Total Cost to Company R700k – R800k including ...More

Solutions Architect

  • >500 000 Gauteng Industrial Engineer Permanent Projects / Category Management
(Total Cost to Company R1.3Mil – R1.1Mil including ...More

MANUFACTURING MANAGER - OLIFANTSFONTEIN

  • >500 000 Gauteng Permanent Projects / Category Management
(Total Cost to Company R850k – R950K including ...More