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COMPUTER PRODUCTS, COPIER SUPPLIES, LASER PRINTER PARTS

COMPUTER PRODUCTS, COPIER SUPPLIES, LASER PRINTER PARTS. PRESENTATION PREVIEW. I. Overview. II. Office Products - Stats and Facts. III. Technology Supplies – The Unique Characteristics. IV. The Traditional Contract Evaluation Process.

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COMPUTER PRODUCTS, COPIER SUPPLIES, LASER PRINTER PARTS

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  1. COMPUTER PRODUCTS, COPIER SUPPLIES, LASER PRINTER PARTS

  2. PRESENTATION PREVIEW I. Overview II. Office Products - Stats and Facts III. Technology Supplies – The Unique Characteristics IV. The Traditional Contract Evaluation Process V. Recognizing “Blind Spots” in Traditional Contracts VI. An Alternative Contract Evaluation Approach VII. Next Steps – The Discovery Process

  3. Overview

  4. WHO WE ARE • Laser Printer Parts & Imaging Supplies Distributor • Privately Owned • 1,400 Employees – Small Business • Financially Stable • * Fiscally Responsible • * Appropriately Financed • $20 Million Inventory • Technology Focused • Highly Valued Relationships

  5. PRODUCT LINES We align ourselves with manufacturers who represent the industry leaders in technology and market dominance.

  6. Office Products: Stats and Facts

  7. OFFICE PRODUCTS SIMPLE DEFINITIONS • TraditionalSupplies: • Writing Utensils (Pens, Pencils) • Folders / Binders • Staples / Staplers • Clips / Clamps • Envelopes • Stick-On Notes • Tapes • Writing Pads • TechnologySupplies: • Printer / Fax Supplies • Magnetic Media (Back Up Tapes) • Copier Supplies • Printer Ribbons • Computer Accessories • Labels / Transparencies

  8. Technology SuppliesNOW = 50%+ of Total Office Supply Spend OFFICE PRODUCTS THE SPREAD 1980’s 1990’s 2010 25% 45% 55% 45 % 55 % 75 % Traditional Supplies Spend Technology Supplies Spend

  9. Annual Spend per Employee Line Items Offered (in 1000’s) 40 $1,050 35 $900 30 $750 25 20 $600 15 $450 10 $300 5 0 $150 Traditional Supplies Technology Supplies Traditional Supplies Technology Supplies Traditional Supplies Offer More Line Items BUT Technology Supplies Make Up Greater Expense OFFICE PRODUCTS THE SPEND

  10. Traditional Supplies 0 % CAG $ CAG = Compounded Annual Growth OFFICE PRODUCTS THE EXPENSE GROWTH Traditional Supplies Is NOT Growing Expense – Avg. 0% Growth Annually Technology Supplies Is Growing Expense – Avg. 7% Growth Annually Technology Supplies 7 % CAG $

  11. OFFICE PRODUCTS - THE SPEND, THE SPREAD, THE GROWTH • Case Study • Company: Fortune 100 Publishing Company • Employees: 175 • 2 Office Supply Contracts: • Traditional Supplies Vendor - 200 core items • Technology Supplies Vendor – 80 core items Office Products Total Spend Traditional Supplies Technology Supplies $105,000 $130,000

  12. OFFICE PRODUCTS - THE SPEND, THE SPREAD, THE GROWTH • Case Study • Company: Fortune 1000 Bank • Employees: 52,000 • 4-5 Office Supply Contracts: • Traditional Supplies Vendors – 2000 core items managed • Technology Supplies Vendors – 500 core items managed Office Products Total Spend Traditional Supplies $7,500,000 Technology Supplies $6,500,000

  13. Technology Supplies: The Unique Characteristics

  14. UNIQUE CHARACTERISTICS TECHNOLOGY SUPPLIES Rapidly Changing Costs … At home, we expect and see technology products like (Televisions, DVD Players, Stereos, and Appliances) to drop in price over time. At the office, shouldn't we expect the same from technology products like (Back-up tapes, Copier Supplies, and Laser / Ink Jet Supplies)?

  15. Conclusion: Fixed Pricing = Increasing Vendor Margins = Lost Consumer Savings Opportunity! TECHNOLOGY SUPPLIES UNIQUE CHARACTERISTICS Rapidly Changing Costs … If (You) the consumer are not seeing price reductions from your technology supplies distributor (Vendor), your vendor’s margins (Profit) are going up over time as your prices stay the same.

  16. TECHNOLOGY SUPPLIES UNIQUE CHARACTERISTICS Rapidly Changing Costs … MEDIA BRANDTYPE3-093-10 Price % Change HP 4 mm 120 M $3.72 $3.58 -4% IBM DAT72 $18.95 $14.95 -27% Imation DLT IV $52.00 $29.80 -74% Imation LTO 2 $69.95 $50.15 -39% Maxell DVD-R $1.50 $1.02 -47% OEM PRINT BRANDTYPE3-093-10 Price % Change Xerox Toner 6R926 $71.05 $60.39 -15% Xerox Toner 6R903 $49.35 $41.95 -15% HP Paper Q1785A $23.19 $20.29 -12.5% OKI Drum 42126604 $78.10 $63.45 -18.8% OKI Drum 42126601 $96.20 $69.35 -27.9% * Prices based on standard market wholesale costs

  17. TECHNOLOGY SUPPLIES UNIQUE CHARACTERISTICS Rapidly Changing Costs … One Product At A Glance Item:Imation LTO 2(Magnetic Media) Distributor Cost (03-09):$69.95 / per crtg. Distributor Cost (03-10):$50.15 / per crtg. (-29%) Contracted Sell Price:$71.00 / per crtg. (Contracted – Fixed Sell Price) Customer Price Distributor Profit 80 80 + 29% 70 70 Fixed $ Increasing $ 60 60 50 50 40 40 03 -2008 03 -2009 03 -2008 03 -2009

  18. TECHNOLOGY SUPPLIES UNIQUE CHARACTERISTICS Several Alternative Product Options Alternatives to OEM Products Include … - Compatible Products (Xerox for HP) - Remanufactured Products (Premier for HP) - Other OEM Products (Sony for Fuji) Alternative Products Can Provide 30% - 55% Savings Without Sacrificing Product Performance !

  19. TECHNOLOGY SUPPLIES UNIQUE CHARACTERISTICS Several Alternative Product Options

  20. $1,800,000 Savings Realized $400,000 28% $1.4 Million $1,400,000 $1,000,000 $600,000 $200,000 TECHNOLOGY SUPPLIES UNIQUE CHARACTERISTICS Several Alternative Product Options Case Study:Fortune 1000 national bank with 900+ locations Annual Technology Supplies Spend $1.8 Million Year 1 Year 2

  21. Traditional ContractEvaluation Process

  22. THE TRADITIONAL CONTRACT EVALUATION • “The One Source Solution” Evaluation Process • Evaluate entire office product line at same time same way • Combine traditional supplies & technology supplies Traditional Supplies 45% Technology Supplies 55%

  23. THE TRADITIONAL CONTRACT EVALUATION The Traditional Process • Submit (RFI) Request for Company (Vendor) Information 2) Submit (RFQ) Request for Quotation - Top Moving Products • 3) Establish “Critical Vendor Requirements” • • E-Commerce Ordering Capabilities • National Distribution • • Large Inventory (high fill rates) • Manufacturer Relationships • • Financially Sound • General Infrastructure/Support • Request “locked in (guaranteed) pricing” for 1-3+ years • Re-Evaluate Pricing as Needed

  24. Recognizing “Blind Spots” in a Traditional Contract

  25. RECOGNIZING THE CONTRACT BLIND SPOTS • The Traditional Contract Problems • DOES NOT account for rapidly dropping technology supplies cost. • DOES NOT provide cost savings plan. • DOES NOT target the significant spend area (technology supplies). • In brief, the traditional contract DOES NOT recognize the uniqueness of • technology supplies.

  26. SUPPLIER CONFLICT TraditionalSupplies ContractStationer 25% + Technology Supplies 19% Independent I.P. Dealer 17% 12% AverageMargins Average Cost-To-Do

  27. RECOGNIZING THE CONTRACT BLIND SPOTS A thoughtful, well negotiated Technology Supplies Contract must be developed (independent of the Traditional Supplies Contract)... … with a vendor capable and willing to manage the uniqueness of a Technology Supplies Contract. Technology Supplies 55% Traditional Supplies 45%

  28. Alternative ContractEvaluation Approach

  29. Traditional Supplies Contract Technology Supplies Contract 1) Establish “Vendor Critical Requirements” 1) Establish “Vendor Critical Requirements 2) Submit RFQ – “Request for Quotation” 2) Submit RFQ – “Request for Quotation” 3) Request FIXED Pricing Plan 3) Request PERPETUALPricing Plan 4) Redevelop Contract YEARLY 4) Review Contract QUARTERLY THE ALTERNATIVE CONTRACT EVALUATION APPROACH The Alternative Process Create Two Separate Contracts & Manage To The Uniqueness Of Each

  30. THE ALTERNATIVE CONTRACT EVALUATION APPROACH Key Concept – “Real Time Pricing” “Real Time Pricing” occurs when a distributor receives a price decrease and the distributor passes a price decrease from manufacturerto the consumer. Example: Manufacturer drops prices to distributor by 10%, so the distributor (Vendor) drops prices to consumer (You) by 10%

  31. THE ALTERNATIVE CONTRACT EVALUATION APPROACH “Real Time Pricing” Applied One Product At A Glance Item: Imation DLT IV (Magnetic Media) Distributor Cost (03-09): $52.00 / per crtg. Distributor Cost (03-10): $29.80 / per crtg. Contracted Sell Price: Decreases by 39% over Time Customer Price Distributor Profit 60 60 50 50 $ $ 40 40 Fixed Decreasing (-39%) 30 30 20 20 03 -2008 03 -2009 03 -2008 03 -2009

  32. Key Concept – “Product Watchdog” “Product Watchdog” occurs when the dealer researches the technology supplies market, looks for cost-saving options and alternatives, and informs the consumer of these options. THE ALTERNATIVE CONTRACT EVALUATION APPROACH Result: Consumer (You) benefit through new cost saving options available in market.

  33. THE ALTERNATIVE CONTRACT EVALUATION APPROACH Key Concept – “Product Watchdog” One Product At a Glance Toner Cartridge: OEM (HP) Item: C4127X $104.77 / each Compatible (Xerox) Item: 6R926 $65.26 / each – 38% Compatible (Premier) Item: 200-27X $48.10 / each – 54% $0.02 Cost per Printed page $0.01 $0.00 HP Xerox Premier

  34. THE ALTERNATIVE CONTRACT EVALUATION APPROACH The Traditional & Alternative Contract Compared

  35. TECHNOLOGY SUPPLIES CUSTOMER PROPOSITION • Full Imaging Supplies Product Offering 5,000 Items • Field Rep And Customer Service Support • Complete Monthly Reporting • Quarterly Rebates On 15% + Margin • 99.9% Order Accuracy & 98% Same Day Fill Rate • Auto Product Substitution – On Approval • 100% User Product Satisfaction

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