Hoping for the best while preparing for the worst.
The MFPs you ordered for your five best customers are two months overdue. On a good day, you call your OEM and get vague promises. On a bad day, you get platitudes. Such is life in the age of broken supply chains. And you are hardly alone. Automobiles, computers, home appliances, and more are not being built because parts are unavailable. This is driving up prices for new, used, and rental cars. Digital presses are silent because parts aren’t being made, which in some cases means books are not being printed.
The reasons for this are legion, and some may even be based on facts. Like the parts for the printers you ordered are in a warehouse somewhere near Ho Chi Minh City, but the semiconductors—the same kind that are holding up construction of your new Lexus—are backordered until who knows when. Or, the MFPs are either in a container crossing the Pacific or in the oceanic parking lot of container ships anchored off Long Beach, California. No one is quite sure. But no matter the excuse, you wind up on the short end of the stick, talking customers in off the ledge.
If you thought last year’s shortage of toilet paper was bad, brace yourself. Disruptions throughout the global supply chain are causing deficits and shortages of items ranging from electronics to books to COVID tests, notes Derek Thompson in the October 8, 2021, edition of The New Yorker. “Americans are settling into a new phase of the pandemic economy,” wrote Thompson. “This is the ‘Everything Shortage.’”
The thing is, the situation is probably not going to change very quickly. I checked in with Doug Albregts, CEO of Marco, one of the largest office technology firms in North America. “The supply chain issue is going to last much longer than we expected, and we need to develop longer-term solutions,” said Albregts. “Most vendors are telling us they do not expect to see improvement until the middle of next year or into 2023.”
Jason Habbal, vice president and sales manager at Vision Office Systems, got a similar story when talking with people he knows at the ports and large freight companies. “I am hearing mid-2022 or so before things start to normalize. I hope it’s sooner, but from everything I’ve been told, it probably won’t be.”
In short, the world may be flat, as columnist and author Thomas Friedman once noted, but in reality, it’s flat like the ocean on the edges of a hurricane: There are a lot of big waves that will settle down, but until then, the ride will be bumpy.
Brand loyalty? Not so much.
So what kind of solutions is Albregts talking about? Begin with availability. The Marco CEO said he sees some customers buy or lease what is available when a preferred brand is not. “We tell customers what is available. Clients appreciate knowing and are looking more for a company that can support them than they are for a particular brand,” said Albregts.
Habbal said most of Vision’s customers are simply waiting until their machine arrives, knowing that it could be three months away. “We’ve had honest discussions with each client about the machine they wanted and offered the option to lease/purchase something other than their first choice. Some have taken it, but almost all have understood this is out of our control and is not just a problem in our industry. Everyone says they are waiting on something, whether it is furniture, a car, or a home appliance.”
“We have to be open and honest with our customers and our vendors,” continued Habbal. “If a customer wants a certain size or speed machine and we are able to get it from one manufacturer now instead of waiting two to three months, we tell the customer and let them make the decision. Some have chosen to wait to get a certain brand, while others want something now and don’t care what brand it is.”
Looking forward, it will be interesting whether the willingness Albregts and Habbal cite of switching brands is temporary or permanent. While in some cases the choice may be logical and reasonable, in others, it may be driven by the numbers on the lease deal, a sales rep’s pitch, or even the spiff a rep may get for unloading a slow-moving model nearing the end of its life cycle. While most dealers sell equipment from multiple manufacturers, the current supply chain disruptions may alter the way customers think about the machines they use. A specific brand—unless featuring unique capabilities—may matter less in years to come. After all, every vendor makes good products. Although not stated, it is very possible that to many customers the dealer matters more than the brand of machine.
A Broader Take
Dealers like Marco and Vision Office Systems are great sources, but I wanted a broader perspective, so I dialed up Jim Coriddi, vice president, dealer division, Ricoh USA. He told me the company is actually seeing increased demand. “Some [demand] levels are reminiscent of pre-COVID times,” Coriddi said. “Balancing increased demand with supply chain delays is the newest challenge, and we’re addressing it.”
This is good news, but Coriddi added the challenge of meeting the demand: “We’re balancing increased demand with supply-chain delays by increasing communications and being transparent with our dealer partners so they can provide updated delivery information to their customers.”
Another change, no one is actually using the term trend (yet) is selecting used equipment over new. This happens when a customer needs more features, greater capacity, or more speed, but the new machine of their dreams is not available. So, they snap up a lease-turn-in, and let the dealer refurbish and install it. It costs less and they may find a used machine works fine. This has been done with many types of major purchases for years, and the damaged supply chain is showing this approach can work well for office equipment.
Beyond Equipment
The supply chain is not just the equipment but also key consumables like toner and parts. Dealers large and small report turning to third-party suppliers, especially for toner, because the OEM cartridges are not in inventory. Toner is perhaps the most visible, but under the cover are many parts bordering on being what engineers call “unobtanium.” “The delay in some parts is causing customers pain when machines need service or are down altogether,” said Habbal. Some dealers already remedy this by loaning used machines to keep customers up and running, while some service techs have long cannibalized parts from machines that have been turned in at lease-end to keep customers’ machines running.
Still, just how using third-party supplies shakes out over time and impacts warranties is beyond the scope of this story, so if you are looking to go to a third-party toner supplier, be sure to see if it affects the warranty of any equipment you are selling.
Knowing the supply chain disruption will end, Albregts sums up a strategy that any dealer can adopt. “Continue to have options for clients,” he encouraged. “Be creative, keep thinking ahead, and be nimble in responding to a changing marketplace.”
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