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Supply Fulfillment – Shipping Part 1: Defining the Variables

One of the hardest challenges business machine dealers and value added resellers (VARs) face is maintaining profitability while fulfilling contracted managed print services agreements.  Shipping imaging machine consumables, parts and supplies is a primary area of concern for many providers.

At first glance, shipping business machine parts and supplies to customers might seem easy — A customer expresses need, product is pulled from the shelf, then shipped and the customer is happy.  But that’s not how it happens every time, or even most of the time.  There are so many variables at play that unless the savvy dealer identifies and takes those variables into account, it may not be long before the supplier is bleeding toner – and profits.In this series we hope to illuminate common distribution challenges faced by dealers, VARs and IT providers and suggest ideas to overcome them.Identify the VariablesThere are many situations – both predictable and unpredictable – VARs should plan for when providing supply fulfillment as part of their MPS program.  Dealers with sound consumable shipping practices have defined guidelines to combat unforeseeable events.  But first variables need to be identified.In general, distribution challenges can be broken into four or more loosely formed groups:

  1. Technology
  2. Fleet Management
  3. Supply Orders and Processing
  4. Managing the Supply Chain

Each group has subsets which may affect established processes within the group or within other groups. Let’s get an overview of each group and its common components.TechnologyTechnology generally refers to software and its configuration, installed at customers’ locations used to gather business machine information, but it also includes the business machines themselves.  All monitoring software is not created equal *, nor do all machines have the same level of reporting ability — Dealers must be prepared to share limitations in capability with customers to avoid pitfalls.Some of the more common challenges VARs face with technology include:

  • Data collection software (DCS) *
  • Toner (supply) alerting *
    • Contingency planning needs to be in place for all device reporting conditions as certain devices provide more supply level accuracy than others:
      • Common machine reporting capability: 25%, 20%, 10%, 5%, 1% and 0.1%
      • Some devices may report down to levels 25 or even 20% then stop reporting toner levels.  Some collection software providers * refer to this condition as “reaching a state of “normalization” … Which is NOT normal at all!
      • Some devices report toner as service conditions of: OK (Ready), LOW, and OUT
      • Some devices (depending on network connectivity) report no supply information
    • Setting of global site alerting vs. individual device settings
      • Used when specific devices have more (or less) usage than the fleet average
    • Supply providers need to know
      • Device reporting capability
      • Threshold reporting accuracy
      • Which devices send toner warning notices as service alerts
      • How to activate Volume Alerting * when devices do not report supply need
      • Device connectivity ( USB connected printers provide little information)
  • Supply providers need to understand false positive reporting * and be able to:
    • Pull verification reporting
    • Verify appropriate volumes have occurred to ensure supply is truly needed
    • Set up of automated summary reporting to ensure all alerts are taken into account
  • Days to supply depletion reporting *

Some software products may show a percentage of toner remaining in the cartridge as of the last meter read.Others may report the approximate number of days remaining before the cartridge is empty.Information is based on usage trends and should be used as a guideline.

  • Premature Cartridge Replacement (PCR) Alerting *

Whenever possible, supply providers should monitor supply levels remaining in cartridges as they are replaced. Supply providers should include clauses of action in supply contracts to stipulate penalties when toner is replace early, above designated threshold levels or when there is still substantial toner remaining in the cartridge.

  • Cartridge Replacement Alerting vs. Device Need Reporting *

Supply providers may choose to set alerting for when cartridges are replaced, rather that when devices indicate a need.The feature would be typically used when safety stock in present at customers’ locations.

  • Skip-Alert Activation *

Typically used when the supply provider’s customers have many of the same models and safety stock is present at customers’ locations (consult your software provider for details).

  • Imaging machine dealer / VARs’ ERP Software Integration *

Many software solutions have the capability of integration collected and reported alert information into ERP and billing platforms.Many ERP systems have the ability to generate sales quotes triggered by incoming alerts.Check with your ERP and software provider.* NOTE – Not all software may offer or provide the features listed above.  Dealers should employ software capable of reporting the capture accuracy needed for devices they service.  Review Alerts and Alert Management for information about device precession.  Be sure to check on software support as well; software must stay installed for it to provide reliable reporting .Fleet Management

Often, and typically after a fleet assessment has been completed, supply providers may choose to limit the services they provide.  The reasons may vary, but frequently it comes down to device limitations and/or connectivity.  Machines not connected to the network ( USB cable or “locally” connected ) will not provide the same level of detail as those that are connected to the networked.There may also be situations where only a portion of the fleet will be managed by the supply or service provider.  Fulfillment contracts should clearly define services offered for:

  • Device Diversity in the Fleet
  • Number of Devices in the Fleet
  • Device management
    • Include which devices are and are not under contract
  • Device Connectivity
  • Device Reporting Capability
  • Device Usage
  • Page Coverage Increases Supplies Cost
    • The dealer needs to know the customers’ typical print jobs

Supply Orders and Processing

Taking orders and fulfilling them is where the rubber meets the road for many supply providers.  Having well documented steps in a Supply Standard Operating Procedures (SOPs) guide can prepare them for most events that may occur.  Imagine driving from Miami to Tampa by way of Los Angeles, Chicago, and New York.  Unless there was a road map, the journey might be challenging.  Supply fulfillment can be fraught with difficulty as well.  Along with the above, following are a few situations to include in a Supply Fulfillment SOP:

  • Safety Stock on Hand at Customer location
  • Just in Time Delivery
  • Handling Supply Item Requests

Be sure the SOP includes steps to follow when multiple requests are received for the same item or for the same device.This could include multiple orders for black cartridges for a single device, and/or putting safeguard practices in place to check if other devices at the site need supplies or machines may be needing supplies soon.In this way shipping costs can be saved.

  • Customer Out of Stock Causing Emergency Supply Fulfillment

Identify the steps to be taken to handle emergent situations

  • Customer vs. Dealer Installation
  • Spent Supply Collection Policies (Recycling)
  • Overage Shipments vs. Contracted Fulfillment

If total cost of ownership is not taken into account, VARs could be upside down in their agreements.Dealers should stipulate how many cartridges are included for specific devices over the contract term or for a given timeframe.

  • Funds Collection for Fulfillment Services

Managing the Supply Chain

“As if anything else could go wrong …”   VARs should include contingencies for managing the supply chain as well.  This not only includes managing the dealer’s staff, but inventories and delivery of product as well.  Oversight is needed for:

  • Order Tracking from Placement and Need Indication to Product Fulfillment and Installation
  • Dealer vs. Supplier Warehousing
  • Supplier Technology and Services
  • What Supplies will be Used to Fulfill the Contract?
    • OEM vs. Remanufactured or Replacement
    • Standard vs. High Yield
  • VARs’ Supplier(s) Direct Shipping Processes
  • What Happens When Orders are “Lost” or Misdirected?
  • Supply Chain Shortfalls … Can Product be Sourced from Alternate Vendors when Out of Stocks and Shipping Delays Occur?
  • Supply Item Quality and Delivery (Defective and Return to Vendor Policies for Shipment Errors)

… In Summary

Successful business machine dealers and VARS offering supply fulfillment have many challenges to overcome, many of which may not be in their control.  Careful planning must be employed to be ready for all contingencies.  All employ some type of software to begin the process with some type of data gathering.But data capture is just one of the initial steps; machine connectivity and reporting capability must be established.  Some of the newest equipment may not be truly MPS ready if reporting accuracy is limited.  Then there is the challenge of maintaining the software for reliable reporting.  It is of no use if daily maintenance is needed to ensure reporting continues.Fleet management is also of importance.  Certain devices may have connectivity challenges.  There may be a portion of the fleet that is not included in fulfillment contracting, or may belong to other providers.  It is equally important to know what the customer is printing, how often they print and when critical printing periods occur.Once supply need is established, and orders for toner cartridge and other consumables begin flowing in, the VAR needs to have a plan in place to ensure orders are fulfilled.  This is more than going to the shelf, and putting a cartridge in a box for mailing.  It can include payment processing as well.Finally there is the challenge of supply chain management.  Supply fulfillment providers should have some type of order tracking capability as many challenges can occur along the way … “lost” and misdirected product, supply chain shortfalls such as out of stocks and shipping delays, and issues of supply quality and return to vendor policies.A sound supply fulfillment program requires written policies to cover all eventualities.  As Sissy Spacek portraying Helen Webber in ‘Blast from the Past’ said, “Write that down.”