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When buying any capital asset, it is important that
you separate emotion from the procurement equation. With all
of the bells and whistles on today's office equipment, sellers
cloud the buying issue by offering you features you do not
need. It is the seller's job to sell up and sell often. This
is directly opposite of your desire to buy only what is needed
and to run the equipment into the ground.
A field of dreams, show it and they will buy........
Before you start looking at equipment, you should create a
"Needs and Wishes" list. On this list, you will ask yourself
what needs you must have, such as:
a. maximum size of original documents determines glass surface
area b. maximum size of duplicated documents determines type
of paper feeder or need for reduction and/or enlargement c.
type of documents some copiers offer features to easily copy
books d. how often multiple page documents are copied
determines if you need a document handler
determines if you need a document sorter e. number of copies
you make each day/month
While purchasing over 100 copiers for a previous employer, I
quickly learned during a survey of "Users' Perceived Needs"
that they felt any copier, other than the most expensive, was
inadequate. It seemed the quality and speed of the
top-of-the-line model would be just barely suitable for them,
and that management was too tight with a buck to provide
adequate tools with which to work. It's obvious that users
will demand the best, as they are less concerned about price,
since they don't have to pay for it directly. Indirectly, of
course, they pay for it by being squeezed, in the entire
budget/available-funds equation. Then, when bonus and salary
issues surface, the money that was poured into unnecessary
capital equipment has eaten away at funds that could have been
given to staff. Many users fail to realize they are taking
money from their pockets and giving it to a vendor.
As a budget manager, it is your duty to find the correct
balance. For, on the other side of this thorny issue,
productivity can only be achieved by ensuring adequate tools
for individual performance. A good method of determining
needs is to conduct an unbiased survey, by borrowing a user
friendly model from a probable vendor that carries every bell
& whistle you want. Make sure the unit has various meters
built into it, meters that measure the number of copies,
number of copies per original, how often the stapler was used,
etc. The Xerox 1090 copier has those meters, which I used to
determine demand on an unbiased basis. If the unit you borrow
does not have meters, you must provide a person to monitor the
use of the copier. Never rent this survey unit, borrow it.
Many, if not most copier suppliers loan copiers on a
thirty-day basis, to potential customers. Your only cost
should be for toner & paper. The second part of the survey
is to provide a log for users to sign in before, and to sign
out after use. Regardless of when they actually use the
machine, they should be instructed to sign in immediately upon
arrival. This effort will enable you to determine if the
machine is too slow or whether you have enough copiers to meet
demand. It will also allow you to determine when, and within
what departments, peak demand occurs. Above all, you need to
capture staff waiting time. The results of this list may also
tell you that (i) you need more than one machine, (ii) you may
wish to establish a copy center, allowing departments to leave
copy jobs with a clerk for completion or (iii) that
departments need to be scheduled to optimize existing
capacity. For example, departments may be scheduled in a
manner similar to that of metropolitan traffic, giving
departments time segments within the day to operate the
copier.
COPIER LOG
NAME
DEPARTMENT
TIME IN TIME OUT
#OF COPIES
Jane
Acct
10:05 10:07
10
Ed
Ops
10:05 10:09
20
Sam
Exec Off
10:20 10:21
3
Results: Three users total, one person waited two minutes
during a sixteen minute machine activity, machine was idle
eleven minutes. These numbers will allow you to attach a
value of both labor and machine. Hypothetically, you would
assign a value of $8 per hour for employee time, versus the
copier's hourly lease and maintenance cost of idle time.
Example: 02/60 minutes X $8 = 27 cents lost productivity
versus
11/60 minutes X (($150 monthly rate + $35 maintenance cost) /
173 work hours in the month)) = 20 cents
In this measure, you lost 7 cents worth of productivity, over
the idle cost of the asset. If your survey continues to
reflect this sampling, you could afford to purchase a better
machine or another machine, as long as the additional cost did
not exceed the equilibrium difference of 7 cents. Now then,
if a self-monitoring copier is not available, have a person
conduct a User Utility Survey on a random basis, utilizing the
same criteria.
USER UTILITY LOG
#of originals #of copies
per
staple? (Y,N)
2 sided (Y,N)
5
1
n
n
1
20
y
n
Contrary to current belief, photocopying on both sides of a
document does NOT cut your copy costs in half. The savings,
utilizing a Canon 3050 is determined by dividing the cost of a
sheet of paper ($0.005) by the total cost of printing a
photocopy ($0.026), which results in a savings of only 5.2%,
excluding the cost of the duplicating accessory.
You still have toner cost, copier cost (with maintenance
usually paid on a per-copy basis) and the cost of the duplex
accessory. You will save on paper, which costs about a half
cent per page, and you will reduce the number of pages headed
for a landfill. However, all of the dollar savings will be
taken back by the copier vendor in aforementioned costs. For
example, a Canon 3050 copier, which does have the duplex
feature, costs $800 more than the Canon 3030, which has all
other features. Assuming you keep your copier for 60 months,
it will cost you $13.33 per month to own the duplex feature.
Remember, the cost to buy toner, maintenance and machine
depreciation will not be altered AT ALL, regardless of your
decision to print single-sided or double. The equilibrium
decision level, where it makes dollars and cents to buy a
duplexer (excluding weight reduction for postage cost
consideration), is 2,667 double-sided copies. Therefore, on
the basis of cutting costs by copying both sides of a paper,
you will need to print almost 3,000 double-sided documents per
month before you consider this feature. You will have to
exclude copies per month that are printed only on one side, to
get a true picture. When all of the dust clears, it will cost
you more to copy both sides of a piece of paper than to copy a
sheet on one side. Now that you have finished a Needs
Analysis, let's talk price. You must concern yourself with the
entire cost of operating this product during its entire life,
which is usually 60+ months. Some vendors will offer you a
guarantee, like Canon's Five Year guarantee, while others will
try to keep you locked into a thirty-six month cycle of buying
or leasing a new machine. During the sixty month operating
life, insist upon a firm cost to maintain the unit. This will
prevent you from falling into some marketing trick. For
example, in 1989, Xerox offered a twenty-four month, free
maintenance guarantee. To a novice, it seemed like gold from
heaven. After all, FREE! When I asked how much the
maintenance would cost me AFTER the twenty-four month period,
the salesperson was unprepared to respond. After several
requests, I was finally given the secret numbers. Coming as no
surprise to most of you, I learned that the maintenance
expense on the twenty-fifth and future months was so high as
to completely reimburse Xerox for the previous twenty-four
months. Of six vendors participating in the bidding process,
Xerox became the second highest in cost for service. Also,
be certain an adequate limit for "cost of living allowances
(COLA)", etc. exists. In these service agreements, a vendor
may attempt to recover any discounts given during the bidding
process, by obtaining built-in, increase commitments during
the future of the contract. Read the fine print and limit the
vendor to the following:
1. Demand a guaranteed machine performance of at least sixty
months.
2. In writing, get a "fix or replace performance guarantee,"
if the last copy copied is not as good as the first ever
copied. It should work as good as a new one.
3. Insist upon a written letter or price list, giving the
maintenance cost during the entire sixty months.
4. Compare "time & materials costs" to that of a "full-service
contract."
5. Be sure any service plan commences AFTER the warranty has
expired.
6. Include a non-performance penalty clause.
There is a lesson to be learned from Shell Oil's efforts to
sell kerosene to the inhabitants of mainland China during the
early 1900s. Shell Oil created demand for their petroleum
product by giving away kerosene lamps. To illustrate how
history repeats itself, 3M created a demand for Post-It Notes
by giving them away to unsuspecting office staff; and Apple
gave a free computer to every school in America who asked for
one. Copier vendors have almost perfected the practices that
were pioneered by 3M and Shell. I am convinced that the profit
on service and supplies is so substantial for copier vendors,
as to allow them to give-away the copier. As you negotiate the
purchase price of the actual machine, you should keep that in
mind. Think of the Shell Oil lamps. Vendors should and can
give steep (up to 30%), discounts from published retails. A
common practice of copier vendors is to establish a selling
price. Typically, a salesperson is given that price as a
ceiling and a lower net, about 30% to 40%, as a floor. Any
money on the table above that floor is split between vendor
and his salesperson. For multi-unit orders, salespeople can
expect a percent of the entire sale, providing they do not go
below the floor. At the floor, a copier vendor in California
still collected a 30% profit over actual net cost. Do not
allow a vendor to insult you by telling you that the margin is
thin, it is just untrue. When buying a copier, examine EVERY
detail to determine the lifetime cost to operate this machine.
Examine:
1. Maintenance for sixty months, T&M or Full Contract
2. Toner cost & yield
3. Guarantees
4. Acceptable monthly copy rate
5. Electrical consumption (yes, electricity is an expense)
6. Lease or purchase
and, if your copier is thirty-six or sixty months old, and the
vendor is pushing a new machine, before you prepare to buy a
new machine.
7. If your copier is working well and existing maintenance and
supply cost is less than replacement-maintenance-supply costs
of a new unit, do not buy the new unit. Lastly, when
comparing products from multiple vendors, NEVER share
confidential quotes from other vendors. DO share
specifications, asking if the story is accurate and/or
complete.
Opinion: I found Canon copiers and micrographics products to
offer the best value, of the seven vendors considered for the
100+ unit purchase I made in 1989.
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