To cut copier costs, benchmark suppliers
By Susan Avery -- Purchasing, 2/12/1998
Buyers can help to lower costs of purchasing copiers by setting performance benchmarks for suppliers before the selection process, says Jeffrey A. Smith, director of consumer services at Buyers Laboratory Inc. (BLI), Hackensack, N.J. At BLI, Smith works with corporate buyers to develop strategies for purchasing copiers through The Buyers Alliance, a consulting service offered by the company.BLI is an independent office equipment testing company founded in 1961 by the late Arthur Kallet, a co-founder and director of Consumers Union, publisher of Consumers Report magazine. Technicians at BLI routinely test copiers, facsimiles, and multifunction products for reliability and overall performance. The company began The Buyers Alliance in September 1994, at the request of its customers.
From his discussions with buyers, Smith, who has 12 years experience working in the national sales operation of a large copier manufacturer, says there needs to be fundamental changes in the way companies purchase office equipment. "Buyers routinely tell me they are getting the best possible price on the copiers they purchase. Yet, when I ask what they are spending, about 80% to 90% have no idea."
With the help of The Buyers Alliance, Smith estimates that buyers can reduce costs of purchasing copiers by perhaps as much as 40% to 50%.
Considered one of a company's largest fixed expenses (after property and personnel), copier costs often are ignored. "That's because they are not a high-tech product," Smith says, "and are not all that exciting to talk about. Plus, most people hate their copiers and the situation is viewed by many as hopeless."
Typically, a company spends roughly 3¢ to 4¢ per copy, although Smith says it's possible for buyers to negotiate lower rates. Still, he warns that buyers should not be fooled into thinking that a lower cost per copy is necessarily better. "A contract that states a buyer is paying 1¢ per copy, yet guarantees an outrageous amount of copies, means that buyer may be paying as much as 11¢ per copy if his company's volumes are not that high."
One typical problem Smith encounters is buyers focusing their energies on comparing capabilities of one copier model to another, often using a supplier's own criteria for doing so. "With 16 sales people touting the advantages of doing business with them, it's nearly impossible for buyers to evaluate criteria on a level playing field."
Suppliers should not be involved in establishing the key criteria for the purchasing decision, Smith says, suggesting buyers take advice of suppliers with a grain of salt. "In many cases, buyers cannot help but be subtly influenced by the barrage of information provided by suppliers." That's why it's important to establish benchmark criteria before meeting with them.
Instead Smith recommends buyers concentrate on mapping document flow within their organizations (to help determine accurate copy volumes) and on developing a favorable contract with a copier supplier. The contract is the key element of the whole process. "It must contain specific steps for handling problems that may arise," says Smith. "Consequences of a bad contract may be an intolerable situation that the buyer cannot get out of."
To establish benchmark criteria, buyers should be communicating with one another. "Yet, buyers often don't make the time to talk to each other," says Smith. "What buyers should be spending on copiers depends on the size of their companies and the volume of impressions users are making." (Many large companies produce 50 million impressions or more per year .)
Volume multiplied by per-copy charge results in an accurate counting of what companies are paying for copiers. Per-copy charges should include service fees, hardware-related expenses, and cost of supplies. Typically, paper costs are not included.
Cost-per-copy charges
Corporate buyers, in effect, are not purchasing office equipment at all; in most cases, they are leasing it. Typically, a large corporate buyer's contract for copier use is with a manufacturer through its national account program. Service is performed by one of the manufacturer's dealers or branches as specified in the contract.
Another increasingly common way buyers "acquire" copiers is through cost-per-copy programs with manufacturers, which include fees for dealer service and support.
Benchmark criteria, which Smith suggests buyers write into requests for proposal (RFPs), are guidelines a copier supplier must meet. The proposal package should state specifically what the buyer is looking for in a supplier. Of the RFPs he's been asked to review, Smith says, many "are not tough enough. Mostly, they're superficial, and many times outdated, and relatively easy for suppliers to adhere to."
An obvious benchmark is price. Buyers need to determine a fair cost per copy, ensuring that the supplier makes a reasonable profit. To do this, buyers need to do a bit of research. Other companies similar in scope (number and size of office locations, volume of copies generated at each location) should be paying a similar price.
"To arrive at a true cost-per-copy figure, volumes have to be accurate," Smith says. "In determining price, buyers have a right to demand an accounting from suppliers. Copier manufacturers may overestimate volume."
Another benchmark is equipment uptime. Typically, a standard contract will exclude preventive maintenance. Smith suggests buyers include in the contract a clause that equipment must be up and running a certain percentage of the time. "The ins and outs of how this is defined is crucial. One simple question to ask is: Should the copier supplier be guaranteeing uptime of 90%? Or 98%? One standard is easy to live up to. The other is more costly."
Other benchmarks may include response time. Some companies, Smith says, have service personnel located onsite. Yet another benchmark is upgrade/downgrade privileges. This clause, he says, is crucial in an era of downsizing and upsizing.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
