How buyers choose suppliers, measure performance

Quality and service are most important to buyers of copiers, MFPs and faxes when measuring performance

Staff -- Purchasing, 3/17/2005

Corporate buyers are happy with their office equipment suppliers.

Results of a new PURCHASING magazine survey show overwhelmingly that buyers are satisfied with the performance of their office equipment suppliers. Fewer than 30% of survey respondents say they are experiencing problems with suppliers of copiers, MFPs (multifunction products) and facsimile machines.

Quality and service are the two criteria deemed most important by purchasers when they measure the performance of office equipment suppliers. Of those responding to the survey, 61.1% say they track supplier quality, while another 61.1% say service is the metric they watch. Fifty percent of respondents also say that cost and reliability are significant factors in measuring performance. Another 22% say that they further measure a supplier's performance by availability/delivery factors—that is, a supplier's ability to provide their companies with copiers and MFPs when they need them.

When making a purchase, office equipment buyers have a wide selection of sources to choose from. They may acquire copiers, MFPs and facsimile machines direct from the manufacturer, through the dealer or value-added reseller (VAR) channel, office superstores or other retailers. Thirty-nine percent of respondents say they buy equipment through the dealer channel; 33% shop for MFPs at retail outlets; and 28% purchase direct through the manufacturer. Just 17% buy their office equipment through VARs.

PURCHASING magazine e-mailed the survey to 1,000 readers who have responsibility for the office equipment buy at their companies. Other respondents were directed to an online version of the survey through one of PURCHASING's electronic newsletters such as SupplyAlert.

Eighty-five percent of the survey respondents are involved in the office equipment buy at their companies. Their responsibilities range from determining requirements (4%) to negotiating contracts (24%) to managing supplier relationships (24%). Respondents also say they select products (4%), develop and issue requests for proposals (8%), and implement programs (4%).

At many companies, purchasing is charged with responsibility for the buy because of its expertise at managing costs and its ability to maintain a level head throughout the acquisition process. One respondent says that he's responsible for the buy "to maximize purchasing dollars." Another says he's there "to assure there's some control over these purchases." A third summarizes the thoughts of many respondents: "Purchasing's involved in the buy to ensure the appropriate piece of equipment is supplied to fit the purpose and not just because end users want it. We need to be aware of the total cost of ownership which includes consumables, paper, power (energy) and repair costs. As needs change, we need to ensure that we can move equipment around to other areas for the same reasons."

More than half (57.7%) of corporate buyers responding to the survey say their companies use cross-functional teams to select suppliers for the office equipment purchase. Other functional areas represented on the teams include information technology (56%), end user groups (43%), finance (31%), and management (25%). At some respondents' companies, marketing and facilities are also represented.

In the majority of cases, purchasing plays a leadership role on the teams, and is charged with steering the team to suppliers that have capability to provide copiers and MFPs that best fit end-user needs at low cost. "Purchasing finds out the requirements of the end user, selects the copier, negotiates the contracts and closes the deal," says one respondent. Another says that he "negotiates the agreement, then manages it for the units on the site." A third adds that he "facilitates, leads negotiations, writes the RFP (request for proposal), guides the evaluation process, and ensures that, throughout the process, the team meets legal and policy requirements."

When choosing a supplier for the office equipment purchase—as opposed to measuring performance, the importance of the different criteria changes somewhat. For supplier selection, 78% of respondents say the supplier's capability to manage total costs plays an important role in the decision. Others count quality (61%), service (55%) and availability/delivery (28%) as the criteria which deserves a second look.

Just one-third of corporate buyers responding to the survey say they have national agreements for office equipment. These agreements cover a number of sites located across the country. Most respondents say agreements they have negotiated with suppliers are for more than five sites. Typically, the agreements are for three-to-five years.

Implementing national agreements has its challenges, say buyers. These include getting support of end users at remote locations and ensuring that service levels are consistent from site to site. One respondent finds that is particularly challenging to "make sure that internal customers are satisfied that maintenance is done as needed and supplies are available as needed. They need to be properly ordered, from the contract holder and not from a telemarketing firm."

There are ways to manage these challenges. One respondent says his company issued a corporate mandate. Others say that frequent communication between sites is key to succeeding. Still others iron out issues with suppliers during contract negotiations. Another says that he works with the supplier "until they got it right at the locations that were not supported as well as others."

Still, office equipment buyers clearly see the advantages to having such contracts in place. A big benefit of having a national agreement is total cost reduction, say 83.3% of survey respondents. Having the contracts also helps enhance service levels (50%) and improve reporting on office spending (50%). Other reasons for negotiating the national agreements include streamlined internal efficiencies, improvements in availability and delivery, and more frequent technology updates.