As the calendar turns to November, businesses enter the final quarter of the year, often marking the time for potential contract renewals and strategic planning for the upcoming year. For many organizations, printer hardware and toner supply contracts are integral components of their daily operations. These contracts can significantly impact the organization's productivity, operational costs, and overall efficiency.
When it comes to traditional office supply contracts in particular that include general office supplies as well as inkjet and toner cartridges, and other printer consumables - these are high value contracts with the highest amount of observed overspending, as it is well known in the printer cartridge industry that the profit margins on office supply contracts lie not with general office supplies, but instead lie within your printer cartridge pricing. Therefore, it's crucial to approach these negotiations with a well-defined procurement strategy to maximize value, strengthen supplier relationships, and drive cost savings in preparation for 2024.
Understanding the Importance of Printer Supply Contracts
Printer supply contracts are more than just agreements to procure hardware and toner. They encompass various aspects critical to a company's daily operations, such as maintenance, support, and timely supply of consumables. While not always the favorite category of spend for procurement and category managers, these contracts influence cost structures, service levels, and vendor relationships, making them a pivotal element of an organization's procurement strategy. Unfortunately general office supply contracts with many organizations tend to follow a “set it and forget it” task that earn themselves long multi-year contracts and sometimes with optional extensions, so the frequency of contract review is not done as often as it should be, leaving money on the table.
Conduct Comprehensive Needs Analysis
Before initiating any negotiations, conduct a thorough assessment of your organization's needs. Understand the volume and types of printing required, review the make and models of your printer fleet and what business units are using them, verify the cartridge models and available page yields, analyze the performance specifications needed and the expected levels of service and support, and engage with different departments to gather their requirements and expectations. Armed with this comprehensive understanding, you can approach suppliers with clarity and precision.
Leverage Data and Market Insights
Make informed decisions by analyzing market trends, pricing models, and supplier performance data, but don’t forget to review your own organizations printer supply usage history for at least the previous 12-18 months too. Utilize data to benchmark existing contracts against prevailing market rates and terms. This data-driven approach positions your negotiation strategy on a solid foundation, enabling you to negotiate better terms and prices.
One area of printer cartridge supply contracts that get overlooked - is product substitutions. In most situations suppliers will automatically substitute an item if the one that was ordered is out of stock - this is to prevent down time by your employees. You would be shocked though to find out how many suppliers do not “price match” when it comes to the cost per page (CCP) of the originally ordered item and the one it was substituted with, and how often midsize and enterprise level organizations overpay - to the tune of millions of dollars in overspend a year - for those substituted items without even knowing it. Why should you be punished with higher prices when it was not your fault your supplier had back-orders???
Engage in Transparent Communication
Open and transparent communication with suppliers is key to successful negotiations. Clearly convey your organization's needs, expectations, and desired outcomes. Establishing open dialogue fosters a collaborative environment, enabling both parties to work towards mutually beneficial agreements. Speak with your existing and potential new suppliers and inquire with them how they would best approach the goals you have in mind….not everyone would take the same journey to get there and you may end up with solutions you had not thought of before.
Consolidate Suppliers and Standardize Contracts
Consider consolidating your office supply contracts with a limited number of reliable suppliers who specialize in some of the high dollar value items under that spend. By parsing out sub-categories of your office supply spend to suppliers who specialize in those particular products, you can negotiate better prices, increase they value you receive from that spend, and streamline procurement processes. Standardizing contract terms and conditions across suppliers ensures consistent service levels and simplifies contract management. This could also mean going with a prime supplier specifically just for your printer hardware and/or printer cartridge supply needs and separating them out from your base office supply contracts for general office supplies like pens and paper. You would be surprised at how much savings can be gained by pulling high-margin printer consumables out of low-margin general office supply contracts.
Negotiate Flexible Agreements
Craft contracts that offer flexibility to adapt to changing business needs. Include provisions for scaling services, adjusting quantities, or incorporating emerging technologies. Flexibility in agreements accommodates growth and technological advancements, ensuring a sustainable contract throughout its term. One area of contract negotiation that should be included is the use of blackout catalogs. Most desktop printers in use have multiple cartridge models available with various page yields. As a general rule of thumb, the higher the cartridge page yield the more cost effective it is, as they have a lower cost per page (CCP) than their lower yield counterparts. By consolidating your spend on a reduced number of SKU’s you’ll be able to negotiate even better pricing based on those increased quantities.
Setup Supplier Reporting and Review them at least Quarterly
Contracts geared towards large higher-ed organizations or large enterprise level organizations typically have a large supplier catalog available as the printer fleets with these size orgs tend to be substantial, filled with numerous printer makes and models using a variety of different printer cartridge supplies and other printer consumables. How does this affect the average end user however, who is actually placing their own supply orders? It’s quite overwhelming, to say the least, as most end users will focus more on the lower dollar amount of a low yield cartridge thinking they are saving money, not realizing it actually has a higher cost per page (CCP) than the available higher yield cartridges. The result is they order that lower yield cartridge more frequently, spending more money in the long run. The solution? Blackout any printer cartridges that are not cost effective options for the printer fleet.
To top it off, most of these organizations do not have the time to regularly review supplier spend reports even on an annual basis. So it is imperative to set up supplier expectations within the contract itself, and include clauses about product substitutions and catalog blackout capabilities to ensure that you’re always getting the most cost effective supplies at the time of purchase, and also the most cost effective pricing when product substitutions take place. This way, you’re not reacting to higher costs resulting from either scenario, as by the time bi-annual or annual reviews are done the money has already been spent and is poof……gone.
Emphasize Performance Metrics and SLA's
Incorporate clear performance metrics and service level agreements (SLAs) in contracts. Define key performance indicators (KPIs) that align with your organization's objectives and expectations. Monitoring supplier performance against these metrics provides accountability and ensures adherence to agreed-upon standards. It’s also important to speak with your end users who are actually placing the orders with your suppliers…..find out from them what they really think of the supplier, their overall service and ease of ordering, and of the products they’ve received.
Explore Sustainable and Cost-Effective Solutions
Consider environmentally friendly and cost-effective options when negotiating printer hardware and toner contracts. Ten years ago, laser desktop printers were expensive to purchase, so most companies maintained them and kept them in use for 5-10 years to get the most of their capital investment.
Desktop printers these days however are lost-leaders, and typically are replaced every couple of years. Rather than doing a printer refresh with the newest models (likely switching you into a higher tier of pricing for the new toners they’ll use), consider partnering with a supplier who can provide certified refurbished printer hardware, that will keep you in your lower tiers of pricing for their toner cartridges and will be easy to install by your IT teams as the software is already on your servers.
Suppliers often offer energy-efficient devices, recycling programs, and high-quality sustainable printer cartridge supplies that may align with your sustainability goals to reduce long-term operational costs. We are at an age with technology that the non-Genuine brand supplies of today are not the same poor-performing cartridges of the past. Many third-party printer cartridges come with guarantees to not void original manufacturer printer warranties (there is actually a US law that protects consumers of this), as well as guarantee their performance to be at or even better than the original Genuine brand manufacturer’s cartridges.
Negotiate Long-Term Relationships
Strive to build long-term partnerships with suppliers rather than focusing solely on immediate gains. Nurture relationships based on trust, transparency, and shared objectives. Long-term relationships often result in more favorable terms, improved services, and enhanced value over time. Perform regular QBR’s with your suppliers and do it face-to-face as much as possible (even if it’s via video conference), providing a clear agenda of what you would like to discuss as well as improvements you are hoping can be made, if any. It’s also important to ask your suppliers for their own feedback of how the contract is performing on their end, and where they might see opportunities for them to add even more value to your business relationship that you had not thought of before.
What Happens if You Do Nothing?
If customers choose not to review their printer cartridge contracts and take action, they may face significant consequences that could impact their business operations in the form of higher costs, missed opportunities for better deals and products, and being locked into unfavorable agreements. These consequences can have a domino effect on the overall business, affecting its profitability and efficiency.
Moreover, not reviewing contracts could also lead to complacency and overlooking potential issues or concerns that may arise. By not actively reviewing their contracts, customers may miss out on identifying areas of improvement or addressing any problems that may be present. This could result in decreased productivity and lower quality outputs, ultimately damaging the business's reputation and customer satisfaction. How do you gain more insight? Speak with the main business units and poll your actual end users to gain clarity into how these suppliers and their products are actually performing and what they wish was different. What works for your corporate office may not work as well for your other business locations. Learning more could very well help you negotiate more favorable terms with this supplier if improvements can be made, or, allow you to decide whether or not your supplier is even the right fit for your organization at all anymore.
Overall if customers choose to maintain the status quo and not review their printer cartridge contracts, they may face various ramifications that could hinder their business's growth and success. By not exploring other options, customers may miss out on potential cost savings or better products and services that could benefit their business which could lead to increased expenses that reduce the company's bottom line.
Let QIS Help You Secure Your 2024 Printer Supplies
Procuring printer hardware and toner supply contracts for 2024 demands a strategic and thorough approach. By conducting a comprehensive needs analysis, leveraging data and market insights, engaging in transparent communication, consolidating suppliers, negotiating flexible agreements, emphasizing performance metrics, exploring sustainable solutions from cartridge recycling to ITAD services, and fostering mutually-positive long-term relationships…organizations can optimize their procurement strategies. These best practices pave the way for enhanced operational efficiency, cost savings, and strengthened supplier relationships…ultimately positioning businesses for success in 2024.
Discover a superior sourcing experience with Quality Imaging Solutions, your trusted partner. We tailor solutions to your needs, so you benefit from our cutting-edge technology, cost-effective solutions, and exceptional customer service. To discover more about securing your 2024 contracts, contact us today!