Fireman's Fund takes a new approach to copier purchase
Staff -- Purchasing, 10/21/2004 2:00:00 AM
When Bob Talbott came on board at Fireman's Fund Insurance Co. about three years ago, one of the first things he did as vice president of supply management was put together a staff of skilled purchasing professionals. Charged with responsibility for creating a strategic sourcing operation where there wasn't much of one before, Talbott was looking for individuals who "understood that supply management is a service organization to the balance of the business and that there is a professionalism and discipline that goes along with this that needs to be instilled in everything we do."
One of his new hires was James P. Kley, senior director of purchasing. With 25 years of purchasing experience, Kley is now responsible for acquiring such goods and services as office equipment and supplies, hardware and software and transportation. Fireman's Fund spends $1 billion annually on contracted goods and services.
Using a seven-step strategic sourcing process that addresses total cost of ownership (TCO), the new supply management organization quickly renegotiated some agreements with suppliers of such goods as office supplies and cellular telephones. "In the past, others in the company may have looked to purchasing as an organization that cut costs by any means," says Talbott. "We needed to establish ourselves as an organization that seeks the highest level of value at any means."
At the same time, centralizing management of the company's copier fleet helped improve service levels to employees, among other benefits. Now, Kley and his team are in the midst of developing a new copy/print/fax output strategy that provides one clear, consistent standard across the company that will help its real estate group with planning as Fireman's Fund grows and changes over the years. The strategy also promises to provide consistent output quality across the organization, and to reduce total costs by 25%.
Headquartered in Novato, Calif., Fireman's Fund Insurance is a property and casualty insurance company that provides personal, commercial, marine, excess and surplus lines and agribusiness insurance products nationwide. It has 65 operating offices in 28 states.
Setting strategy
As part of the three-pronged strategy, Kley and his team are working in partnership with representatives of the company's real estate and information technology (IT) groups to ensure they are installing a copy/print/fax infrastructure that's appropriate for the business. The strategy which takes a TCO approach, also consists of introduction of emerging copy/print/fax technologies. TCO entails costs of such elements as paper, maintenance and distance traveled by the supplier to service the equipment.
"Our strategy takes into consideration corporate agreements we currently have in place for multifunction products (MFPs) and our business plan which includes the strategy of our real estate group," says Kley. "We've worked to understand our copy/print/fax output requirements based upon empirical data, and are looking to match the appropriate equipment to the scenario."
As leases of office equipment currently installed at Fireman's Fund come due at the beginning of 2005, Kley and his team figured timing was right to attack the copy/print/fax output buy. Once they determined the company's monthly volume, they became aware that Fireman's Fund's cost per copy was significantly higher than the industry benchmark. They also want to take advantage of new MFP technology while the company refreshes its fleet of employee workstations.
"The solution we're deploying is multifaceted," Kley says. "It's hard to legitimize a full-service copier in a location that doesn't have the volume. What we will do there instead is provide different technology, that is, an MFP that not only copies but is also connected to the network."
Flexibility is one of the criteria that Kley and his team are considering as they go through the supplier selection pro-cess, which includes use of a rigorous prequalification tool. "We need flexibility within our lease so that our supplier can accommodate us whether we are consolidating offices in one city or expanding in another region."
Once the new agreement is in place, Kley and team will keep close tabs on supplier performance, looking to the provider to manage the company's copier fleet and make recommendations to keep costs in line while optimizing its infrastructure. They will also regularly track services levels such as hardware availability and quick maintenance turn around.
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