National agreements create uniformity and offer leeway

Industrial manufacturer leverages indirect spend

Staff -- Purchasing, 8/11/2005

The indirect sourcing team at Woodward Governor has a knack when it comes to executing the office equipment buy. The team collaborated recently with the company's information technology (IT) professionals to purchase office equipment, a project that resulted in a partnership with Sharp. Under the new agreement, the supplier is helping Woodward consolidate to multifunction products and create equipment uniformity.

Based in Rockford, Ill., Woodward Governor de-signs, manufactures and services energy control solutions. Its annual revenues are just under $800 million. The company's indirect sourcing team, which consists of six people responsible for global strategies and indirect buying for eight U.S. locations, is recognized by PURCHASING magazine as an MRO-buy champion.

Having completed a cost-per-page assessment, the indirect sourcing team decided to retire the company's fleet of printers, directing document output through multifunction products (MFPs), which are copier-based machines that print, scan and fax, as well as copy. In so doing, Woodward reduced its lease and maintenance costs for office equipment by 10-30%, says Masha Roberts, supplier manager. Maintenance costs are now less, she explains, because when the IT team needs to do initial troubleshooting, the machines are basically the same and brand uniformity helps streamline the process.

The indirect sourcing team wanted to standardize the types of machines it was buying. In an initial assessment through technical and financial evaluations, Roberts and IT professionals evaluated what they were paying per image. Ultimately they selected Sharp as their office equipment supplier, not only because the company is capable of providing MFPs at a lower cost, but also for its technology. It suits Woodward's needs, Roberts says, from the perspective of networking with its in-house system.

"Sharp's ability to network within our system as well as offer us a nationwide pricing program helped us leverage the office buy," she says.

The thinking behind the team's strategy for office equipment is to consolidate the company's purchase and provide choice for its locations. With the national agreement, the company as a whole pays one price for the machines it leases, and one price for all maintenance per page. Each location has the freedom to choose an authorized Sharp dealer in its area and work with it directly.

Centralizing the office buy across eight locations, however, has its challenges, says Roberts. The biggest is location buy-in. For instance, if one particular location always uses a different brand or type of MFP, indirect purchasers have to demonstrate to employees the company-wide benefits of buying a standard brand. On a larger scale, trying to retire printers and encourage people to use MFPs to print a document certainly alters people's behavior.

"My advice would be to do a very thorough assessment in the beginning and understand where you currently are and where you need to be," Roberts says. "And consolidation is not the answer for everyone. This is the commodity for which service is of a very important value and rarely do you have one company that can serve multiple locations nationwide."