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Home » Buying Profitably from Aftermarket Suppliers

From the May 2003 Issue of ImageSource Magazine

“Buying Profitably from Aftermarket Suppliers: A Ten-Point Checklist”

by Ray Meifert

Vice President, Marketing

Katun Corporation, Minneapolis, Minn.

Budget-conscious customers. Shrinking margins. Stiffening competition.

Sound familiar?

In today’s tough economy, copier and printer dealers everywhere are finding it more difficult to stay profitable and on the path for growth. Succeeding today not only means working harder, it means working smarter — to locate those hidden opportunities to drive revenue and cut costs.

In that light, it’s an especially appropriate time for dealers to review all aspects of their business operations — even those that seem routine — to see where changes might be made for the better. One promising area, often overlooked, is the sourcing of supplies and parts.

For years, many dealers have turned to aftermarket suppliers instead of OEMs because of the pricing advantages they offer. Too often, though, the discussion ends there. Pricing is important, but it’s simply one element of the overall value that an aftermarket supplier should deliver. A relationship with an aftermarket supplier should go beyond the simple filling of orders. A supplier should be a dealer’s business partner — working with the dealer to enhance revenue, to reduce current costs and avoid future costs.

Of course, not all aftermarket suppliers are the same. They vary by size, reach, product offering and dozens of other ways. In that sense, they can be somewhat difficult to compare. These days, however, successful suppliers are doing more to gain and retain business. They are realizing that success does not necessarily hinge on competing on price alone, and that they must provide other compelling reasons for dealers to do business with them.

This means that dealers now have more opportunity than ever to evaluate aftermarket suppliers and the products and services they provide. A systematic approach can be helpful in judging current or prospective suppliers. Using the following ten, specific criteria, dealers can rate the total supplier offering and compare the important points. While these criteria are specific to aftermarket printer and copier suppliers, they also are good rules of thumb for suppliers generally.

1. Does the supplier demonstrate consistent, OEM-equivalent product quality? Quality must be a given. A less-expensive product represents value only if it performs as it should. It is one thing to claim quality; it’s another entirely to be able to prove it. Suppliers should not only claim to deliver quality products, they also should be able to produce valid documentation regarding technical tests and the quality assurance processes they use to ensure that they deliver OEM-equivalent quality. Among the obvious advantages this brings, it also eliminates the need for redundant, time-consuming acceptance testing, which means that savings can begin sooner for the dealer.

2. Does the supplier offer one-stop shopping? For both convenience and efficiency, many dealers are attracted to suppliers that offer a broad line of quality products. This is an advantage of aftermarket suppliers generally, as opposed to OEM suppliers that offer a single brand or line of products. But there is considerable difference in the breadth of product offerings carried by aftermarket suppliers. By consolidating supply relationships with a limited number of sourcing partners, dealers can streamline invoicing while reducing operational and logistical costs.

3. Does the supplier employ committed sales and marketing personnel? To be a true business partner, a supplier must have people who know the industry, are technically proficient, and are willing and able to provide advance information on new products. Committed staff should demonstrate knowledge and interest in a dealer’s overall business over time — not just a single transaction.

4. Does the supplier offer innovative purchasing and incentive programs? Suppliers should reward loyal customers by helping them decrease some of the costs of doing business. In considering suppliers, dealers should be sure to evaluate how the supplier helps cut costs with purchasing and incentive programs such as promotions, packaging alternatives, price discounts, electronic ordering and others.

5. Does the supplier offer competitive pricing? Aftermarket pricing should not only offer consistent discounts compared to OEM products; it also should be logical and easy to understand. Remember that overall cost is more than the price of the product, but the amount paid to use it. Low pricing is not an advantage if other aspects of the supplier relationship end up offsetting the savings.

6. Is the supplier speedy to market without sacrificing quality? Dealers should expect suppliers to be fast to market with new products, but there can be such a thing as “too fast.” Thorough and careful quality assurance testing of new products takes time, and dealers should be extra discriminating about aftermarket products introduced fewer than six months of OEM introductions of the same technology.

7. Does the supplier provide meaningful product warranties? Dealers should look for aftermarket suppliers that assume responsibility for issues that arise with products. Warranties should offer quality assurance and performance guarantees that clearly delineate performance measures and how the company responds in the event of problems.

8. Is the supplier experienced and financially secure? The past decade has seen a fair amount of consolidation and failure within the industry. It’s safer to deal with suppliers that have solid industry experience, a firm financial footing and a good reputation. Suppliers with a strong customer base have worked hard to achieve it and are motivated to maintain it in the face of fierce competition — and that can be a real advantage for the dealer.

9. Does the supplier perform rapid, dependable order processing? Dealers need products when they need them. Suppliers should not only know how to sell products, they also should know how to move them — reducing the dealer’s need for large inventories while minimizing machine downtime and repeat service calls. Electronic order processing helps to speed turnaround time while making the process easier.

10. Does the supplier offer excellent customer service and tech support? Suppliers should be able to understand and respond to needs quickly, with skilled tech support personnel available who understand their product line. It’s good to evaluate how well the supplier answers questions and the speed and substance with which they do so.

Suppliers that rank highly on most or all of these criteria are working hard to merit a dealer’s business. These suppliers will be most likely to deliver quality, reliability and service from a single source. They’ll help dealers to develop longstanding value with customers while increasing sales and share. They’ll also help the dealer keep products sold, sustain and build the dealer’s reputation, and assist overall profitability.

And, especially in these tough economic times, dealers should demand nothing less.

Ray Meifert is vice president of marketing for Katun Corp., which serves copier and printer dealers as the world’s leading aftermarket suppler of OEM-equivalent parts and supplies. This article is based on a presentation that Mr. Meifert delivered at the ITEX Exposition in Las Vegas this past February.