When Konica Minolta Business Solutions U.S.A. President and CEO Sam Errigo convened a hastily-assembled update call with press and analysts early Monday, part of his objective was to dispel some misinformation regarding the OEM that has been circulating via certain outlets. But in the process of clearing the air, Errigo shared bigger news that may have unwittingly stoked the speculative fires.
Monday’s announcement of a memorandum of understanding (MOU) inked between Konica Minolta and FUJIFILM Business Innovation—which will see the companies combine the procurement of raw materials and parts—is a manufacturing hedge against the former getting caught in another supply chain disaster in the future. While not the only manufacturer to experience difficulties in securing materials in the post-COVID era, Konica Minolta (by many accounts) appeared to be one of the hardest hit.
“Those companies that are aligning together are going to find ways to create better procurement processes and better buying power in order to create some level of competitive advantage,” Errigo said. “It does create some advantages due to the joint buying power. It’s smart business.”
Errigo and the corporate team in Japan are hoping this joint venture, set to launch in the second quarter of 2024, will help prevent a repeat should an event, either global or regionally localized, tax the supply chain in the future. It will enable both companies to better reconcile cost increases fueled by inflation, especially as it is difficult to pass on substantial increases to resellers/end-users.
Not much is known regarding this union, other than FUJIFILM Business Innovation will be the majority shareholder (with the shares to be determined) and that it doesn’t have any official name. Errigo, while aware of the talks, was only recently made privy to the parts/raw materials development.
The more compelling aspect of the MOU is a feasibility study for a strategic alliance in the multifunction office printer and production print arenas, and what this could ultimately produce. Beyond the parts/materials agreement, the companies are studying how they can add toner development and production gear into the joint venture. This would be more reminiscent of last year’s JV between Ricoh and Toshiba, a deal which entails joint manufacturing and technology innovation sharing.
“The changing landscape in the MFP and printer market requires proactive measures,” he said. “It’s all about profitability: how do two major manufacturers generate more profit and continue to be viable in the market?”
Errigo, who earlier Monday related the information to the Konica Minolta Dealer Council, took great pains in underscoring that parts and raw materials procurement are the only elements the companies have signed off on as of now. “Anything beyond this particular area of supply chain is ongoing conversation,” he noted. “Right now, there is no change in our distribution or go-to-market strategy.”
Clarification
Earlier in the call, Errigo addressed what he deemed to be erroneous information populated by certain media in relation to corporate’s mid-term plan. The three-year plan outlines business selection and concentration, the ways and means of focusing on those businesses, the allocation of resources toward that end, and structural reform—all geared toward maintaining long-term profits.
Konica Minolta is focusing on the transformation of human capital and how AI/various technologies can help reprioritize tasks by eliminating mundane and repetitive low-value functions. This, in turn, allows the OEM to retrain employees and add new ones that can facilitate the scaling of business.
While earlier this month, Konica Minolta corporate announced a global workforce reduction of 2,400 over the next year, Errigo said it has “minimal to no impact on my U.S. operations, specifically for business technologies” and characterized the exact number as insignificant. There are no plans to sell direct branches, All Covered or any other U.S. properties related to KMBS. The branch operations are highly profitable, he said, and KMBS enjoys a 50/50 balance between its branches and dealer business. The OEM notched all of its profit objectives for the fiscal year, and Errigo said there are “no real concerns or big changes here in the U.S. relative to the global reform.”
He added that corporate’s actions will ideally allow the business to improve by 20 billion yen by fiscal year 2025 (April 1 of next year).
