Part 3 of the set of articles ”Lean Management in MPS” tasks about how the dealer’s business is influenced by the usage of an MPS solution that contains Lean components. The first advantages the dealer gets benefits his/her customers. As a result the dealer differentiates his offering to compete in aspects other than the price. The dealer also obtains these other benefits:
a) Cost-oriented advantages
The distribution activity is a burden that the dealer can often solve by sharing the workload responsibilities and cost with the distributor (see “Lean Management in Managed Print Services (Part 2)” for more details). The teamwork between the dealer and the distributor has worked for a long time as a successful tandem in the IT market. But the situation is changing due to the fact that the dealer now knows with accuracy (printer by printer, reference by reference) and in advance what the needs of its customers are in the following weeks or even months. As a result, the traditional manual order triggering process is being replaced by an auto-fulfillment process. Powered by yield management systems, the auto-fulfillment process in place identifies the need for toner or drum or any other supply or part, evaluates when it is the right moment to trigger the shipment, and automatically notifies to order fulfillment department. There are no more calls from the customer that initiate the process. The dealer’s order fulfillment department works with accurate and detailed forecasts knowing the cartridges references that have to be delivered during the next three months. So the question is whether the dealer is willing to move the whole supply management chain to the distributor. Instead it may want to keep triggering the deliveries. I am afraid there is not a single answer. While some dealers are excited to move it all to their distributor partner, others decide to keep it under their umbrella.
With a yield management MPS tool in place, the inventory turnover accelerates. Both the overage and underage costs are minimized at the warehouse, and so is the size of the stock. A tens flow policy is now at no risk for the dealer, even for the service department. As a result, services are solved quicker: the down-time of the printer or copier diminishes, and so does the dealers’ cost.
The predictability capability of the yield management tool is also used to identify lost business opportunities. It is now easy to figure out all those SKUs that the dealer does not carry but that the customer is buying from a competitor. By adding the SKUs to its catalog, the dealer can then increase its sales to its customers, while locking out the competitors from its accounts.
b) Business strategy oriented advantages
One of the most important strategic decisions that the dealer can make once they have put in place an MPS yield management tool is how to use the business intelligence component. Indeed, it is a huge qualitative step towards a new way of managing their business. Quite frankly, this is where many of the dealers struggle. It shouldn’t be so, because it is as easy as responding to the following question: if it happens that somebody tells you that you can increase your sales by 10 percent by just adding 20 new SKUs to your catalog, wouldn’t you just do it? Though the answer is obvious, the reality is that many dealers (most of them small ones) have no time other than to manage their day to day work. In other words: they are waiting for someone else to tell them what specifically they have to do to grow.
Yield management MPS tools open new opportunities for consultants. No matter if the tool is hosted by a distributor, by the OEM or the dealer itself, the consultant uses the business intelligence embedded to identify the opportunities specific to each party. The kinds of questions yield management MPS tools provide answers to are the following:
-
Which are the most profitable contracts?
-
Which of those contracts is where the dealer is losing money?
-
How should the dealer improve the order fulfillment process in order to avoid the waste of toner?
-
What are the printer models in which the profit is the highest?
-
Is the risk the same with printers of any vendors (in terms of profit)?
Lean management applied by a dealer does not only reassign the internal resources for a best in class infrastructure. Longer term the business strategy is also amended to both develop the most profitable business and to address those missing opportunities.
Another consequence of implementing a yield management tool and to handle the MPS business from a lean approach is the re-designing of the terms of co-working with the customer itself, and indeed with any stakeholder. As a matter of fact, the customer is the target of any strategy around MPS. They should perceive the consequences of a good management of its printers and copiers in a clear manner. But this will be the content of our next article “Lean Management in MPS (part 5)”.
