Communication, transparency, data, and smart decisions are helping mitigate supply chain issues.
While the supply chain crunch has impacted all OEMs and subsequently their dealers, Sharp says its strategy to navigate the crisis sets them apart.
In our continuing series monitoring the supply chain, we sat down with Sharp President and CEO Mike Marusic, Senior Vice President of Channel Sales John Sheehan, and Vice President of Marketing Bob Madaio to learn more about Sharp’s efforts to reduce the impact of supply chain disruptions and chip shortages on their dealers.
Digging into the Data
Google Analytics has played a large part in Sharp’s efforts to mitigate supply chain and chip shortage issues. It has helped identify what markets are open, where people are working, and where Sharp should focus its efforts to ensure dealers have available products. Leveraging Google Analytics was instrumental during the early days of the pandemic in March and April of 2020, providing the company with data to make the best decisions and adjust its marketing programs in certain markets of the country as people started working from home. “If 30% fewer people were in the office, the dealer program had to be 30% less than what it had been in the past,” observed Marusic. “It allowed some balance for that.”
“Bob created programs that helped certain markets and drove initiatives that were important to dealers,” added Sheehan. “On the sales side, that’s what we try and focus on the most: getting to know the dealers on a personal level and what’s going to drive behaviors. It starts with data. If we recognize things are moving in a certain direction, we’ll adjust and follow that direction per the dealer. It’s our relationships that’s helped us grow our share. It’s a core of what we do.”
Data allowed Sharp to gauge print volumes as markets opened and people returned to the office and resumed printing and purchasing equipment. Those same tools helped deal with supply chain issues. Sensing that purchasing was going to pick up again, Sharp began bringing more product into the country. “Japanese companies don’t like inventory, and we were stocking up on inventory,” said Marusic. “As the first wave of the supply change [shortage] hit, we had inventory because we knew things were going to be opening up.”
Communication and Transparency
Marusic and his team have been transparent with dealers about Sharp’s strategy and supply chain shortfalls throughout the pandemic. “Every time something happens in our industry, when it’s all done, and the dust settles, what people remember is how open and honest you were,” said Marusic. “People understand bad things happen and that there are challenges. What they hold the OEMs accountable for is transparency. Did you tell us? Did you prepare us? Did you share what’s going on? Throughout this, the message across our team has been to be completely open and honest with the dealers, even when the information is not something that they’re going to be excited about.”
There is no underestimating the value of communication. “Every time there’s a problem, the issue comes down to communication,” emphasized Marusic. “You didn’t tell people what was really happening, so they made poor decisions, or they didn’t make a decision they would’ve made if they had the information.”
As the world changed in March 2020, Sharp changed its message to dealers. It went from “Buy, buy, buy” to “How can we help you?” That led to discussions around diversification and training on new and existing products and sales training for dealer sales reps that Sharp funded. “I will not forget, probably the last two weeks of March 2020, our time was spent figuring out how to help our dealers survive,” said Sheehan. “That meant offering training on different things to keep reps going who weren’t earning anything because nothing was being sold. That changed our whole mentality on the business. We have not changed that perspective since then.”
The webinars and training sessions turned out to be a big hit with multiple sessions daily and triple-digit attendance, according to Madaio.
What’s Hot and What’s Not?
Last April, with in-person dealer meetings on hold, Sharp held a virtual kickoff, with much of it focused on the supply chain, how Sharp secures product, and how dealers can secure product from Sharp. The need to diversify was one of Sharp’s key messages. “This shortage helped us get the message out that dealers need to be looking at other areas to do business because shortages like this will impact them,” said Sheehan. “We sell laptops, we sell displays, we sell projectors.”
“We were a little ahead of the game,” acknowledged Marusic about discussing the supply chain in April 2021. When supply chain issues started, Sharp dealers were prepped and understood what to do and how to work around it.
Last July, Sharp began providing dealers with a color-coded heat map of incoming product. Products in yellow represented products that might be in tight supply, red were products that might run out during the month but would be available the first two weeks of the next month, and green identified products in plentiful supply. If the dealer saw a yellow or red, they would avoid pitching those products to customers and instead focus on the products in green. “So, what naturally happens?” quipped Marusic “The reds don’t become reds because you sell less of it, and it self-balances.”
“If you have honest and open conversations, people understand what’s going on in the market,” added Sheehan. “You can’t push for what’s not there. If the product’s sitting in a port, you can’t ask us to get you product if it’s not there. People understand better when the communication flows better. We’ve opened the book to the dealers on how Sharp does business. That will only pay dividends moving forward because there’s trust that we’re trying to do the right thing.”
This strategy has helped Sharp balance inventory and allows dealer sales reps to make commissions they might not have if they didn’t have this information. “That was one of the key tools we used to make sure that we had a steady flow of product,” emphasized Marusic. “I love data because if you give smart people information, they know what to do with it.”
Sharp has made a concerted effort to protect their smaller dealers throughout the pandemic and as supply chain issues arose. “We have a lot of dedicated Sharp-only dealers,” said Marusic. “They’ve been loyal to us, and it’s not the time to say, let’s chase the big dual-line guy. We’ve got to make sure that our single-line dealers and our smaller dealers have equal opportunity.”
Dealers have supported Sharp’s decision on chips and focusing on A3 over A4. “Last April, we told the dealers that we were going to ease up on making A4,” said Marusic “I made the decision in December to ease up on making A4 because I knew the chip shortage was coming. We said we’re going to focus on A3. There’s no disagreement, MPS, it’s going A4. But your existing contracts and your existing customers have an A3 machine today. You look at the data, and if you’re a dealer, and your customer, even if they want to go print, they still want to replace one or two of the A3s. We had to protect that, even though I would have preferred to be aggressive with A4, which was our plan. But we made that decision, and dealers understood it.”
When Sharp looked at the data, it revealed that only 1% to 2% of A3 customers were using the wireless function, and that function required multiple chips. Those chips can now be used in other areas. Communication was also key, making sure that dealers understood why Sharp made this decision. “If you explain that this allows us to make a couple hundred more products a month, that’s an easy decision, and dealers appreciate that,” said Marusic.
“It took away our A4 focus a little,” acknowledged Sheehan. “Not that it buried the A4 focus, but our dealers needed A3 product. That decision was one of the better decisions we’ve made.”
Having Foxconn as a parent company has also been an asset during the chip shortage. Foxconn handles Sharp’s chip procurement. “It’s hard to get more, but they’re not going to be shorted,” said Marusic. “But they’ll lay it out to me and say, ‘six months from now, this will be an issue,’ which gives us time to work around it.”
An example of an early problem was fax boards. “In October of 2020, we were told that a chip on our fax board was going to run out of supply in May or June of the following year,” recalled Marusic. “I then told my branches you’re not allowed to sell fax boards without my permission. That lowered our fax board sales so that the dealers always had fax boards.”
Dealers never knew about the potential problem because the Sharp team was able to prevent it. “Those are the types of things where communication with the factory is advantageous right now,” said Marusic.
We spoke with three Sharp dealers who appreciate the access to data, the communication, and the transparency from their supplier.
“We have been very fortunate to represent Sharp. As most are aware, they have outperformed the market on being able to supply products and services during these difficult times,” observed Troy Olson, owner/chief business development officer, Les Olson Company.
Those sentiments were echoed by Mark Miller, president of Eakes Office Solutions in Grand Island, Nebraska, the subject of this month’s CR-Connect Dealer Tour profile. “The experience that we have with Sharp has been very good. We hear that Sharp’s managed their inventory control, the best of all the manufacturers. We are very in tune to how they’re rolling, and we believe they’re doing a very good job. There was a time in the early stages of the pandemic that they made some tough decisions about where to allocate chips, and it turns out that those decisions were really good. They have, as everyone has, some challenges in A4, but they made a choice to allocate more chips to A3 and that has made a big difference.”
“We’re very lucky to be a 99% Sharp dealer because of the availability of product,” said Chris Wolowitz, president of Shore Business Solutions in Farmingdale, New Jersey. “I can fill my warehouse if I want, or if I feel comfortable ordering A3 equipment, I usually have it within a week, and that’s unheard of these days. We’ve had no interruption with supplies. The communication with them every month is [great]. We get our communication from Mike [Marusic] with his explanation of what’s going on, what the changes were over the last 30 days, and what chips were in. We get a color-coded graph, and we take that document and hang it in our bullpen with our salespeople so they know what they should be selling and what they shouldn’t because of availability of product.”
“Thinking two months out, you know from a run-rate perspective whether or not they have enough inventory to cover a standard or expected run rate for the next two months,” added Danielle Wolowitz, vice president of marketing and business services at Shore. “I used it the other day on the AQUOS boards. I told the rep if you want to sell that model you better get the deal in February or the first week in March because they’re showing that in March, they might not have enough to fulfill the run rate. It’s good information to have because it pushes that sense of urgency on our reps.”