COMPUTER PRODUCTS, COPIER SUPPLIES, LASER PRINTER PARTS.

COMPUTER PRODUCTS, COPIER SUPPLIES, LASER PRINTER PARTS

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PRESENTATION PREVIEW

V. Recognizing “Blind Spots” in Traditional Contracts

II. Office Products - Stats and Facts

III. Technology Supplies – The Unique Characteristics

IV. The Traditional Contract Evaluation Process

VI. An Alternative Contract Evaluation Approach

VII. Next Steps – The Discovery Process

I. Overview

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Overview

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WHO WE ARE

1. Laser Printer Parts & Imaging Supplies Distributor

2. Privately Owned

3. 1,400 Employees – Small Business

4. Financially Stable

* Fiscally Responsible

* Appropriately Financed

5. $20 Million Inventory

6. Technology Focused

7. Highly Valued Relationships

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We align ourselves with manufacturers who represent the industry leaders in technology and market dominance.

PRODUCT LINES

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Office Products:

Stats and Facts

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OFFICE PRODUCTS

Traditional Supplies:

• Writing Utensils (Pens, Pencils)

• Folders / Binders

• Staples / Staplers

• Clips / Clamps

• Envelopes

• Stick-On Notes

• Tapes

• Writing Pads

Technology Supplies:

• Printer / Fax Supplies

• Magnetic Media (Back Up Tapes)

• Copier Supplies

• Printer Ribbons

• Computer Accessories

• Labels / Transparencies

SIMPLE DEFINITIONS

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OFFICE PRODUCTS

Technology Supplies NOW = 50%+ of Total Office Supply Spend

1990’s

55 %

45%

2010

45 %55%

1980’s

75 %

25%

Technology Supplies Spend

Traditional Supplies Spend

THE SPREAD

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OFFICE PRODUCTS

BUT Technology SuppliesBUT Technology Supplies Make Up Greater Expense

Traditional Supplies

Technology Supplies

Annual Spend per Employee

$150

$300

$450

$600

$750

$900

$1,050

Traditional Supplies Offer More Line Items

35

Traditional Supplies

Technology Supplies

0

5

10

15

20

25

30

40

Line Items Offered (in 1000’s)

THE SPEND

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OFFICE PRODUCTS

7 % CAG$

Technology Supplies

Technology Supplies Is Growing Expense – Avg. 7% Growth Annually

Traditional Supplies Is NOT Growing Expense – Avg. 0% Growth Annually

CAG = Compounded Annual Growth

0 % CAG

Traditional Supplies

$

THE EXPENSE GROWTH

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OFFICE PRODUCTS - THE SPEND, Case Study

Company: Fortune 100 Publishing Company

Employees: 175

2 Office Supply Contracts: • Traditional Supplies Vendor - 200 core items

• Technology Supplies Vendor – 80 core items

Technology SuppliesTraditional Supplies

Office Products Total Spend

$105,000 $130,000

THE SPREAD, THE GROWTH

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OFFICE PRODUCTS - THE SPEND, Case Study

Company: Fortune 1000 Bank

Employees: 52,000

4-5 Office Supply Contracts:• Traditional Supplies Vendors – 2000 core items managed

• Technology Supplies Vendors – 500 core items managed

Technology SuppliesTraditional Supplies

Office Products Total Spend

$6,500,000

$7,500,000

THE SPREAD, THE GROWTH

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Technology Supplies:

The Unique Characteristics

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TECHNOLOGY SUPPLIES

Rapidly Changing Costs …

At home, we expect and see technology products like

(Televisions, DVD Players, Stereos, and Appliances) to drop in price over time.

At the office, shouldn't we expect the same from technology products

like (Back-up tapes, Copier Supplies, and Laser / Ink Jet Supplies)?

UNIQUE CHARACTERISTICS

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TECHNOLOGY SUPPLIES Rapidly Changing Costs …

If (You) the consumer are not seeing price reductions from your technology supplies distributor (Vendor), your vendor’s margins (Profit) are going up over time as your prices stay the same.

Conclusion:

Fixed Pricing = Increasing Vendor Margins =

Lost Consumer Savings Opportunity!

UNIQUE CHARACTERISTICS

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TECHNOLOGY SUPPLIES

MEDIA BRAND TYPE 3-09 3-10 Price % Change HP 4 mm 120 M $3.72 $3.58 -4%IBM DAT72 $18.95 $14.95 -27%Imation DLT IV $52.00 $29.80 -74%Imation LTO 2 $69.95 $50.15 -39%Maxell DVD-R $1.50 $1.02 -47%

OEM PRINT BRAND TYPE 3-09 3-10 Price % Change Xerox Toner 6R926 $71.05 $60.39 -15%Xerox Toner 6R903 $49.35 $41.95 -15%HP Paper Q1785A $23.19 $20.29 -12.5%OKI Drum 42126604 $78.10 $63.45 -18.8%OKI Drum 42126601 $96.20 $69.35 -27.9%

* Prices based on standard market wholesale costs

Rapidly Changing Costs …

UNIQUE CHARACTERISTICS

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TECHNOLOGY SUPPLIES

$

40

50

60

70

80 Customer Price

Fixed

03 -2008 03 -2009

Rapidly Changing Costs … One Product At A Glance Item: Imation LTO 2 (Magnetic Media)Distributor Cost (03-09): $69.95 / per crtg.Distributor Cost (03-10): $50.15 / per crtg. (-29%)Contracted Sell Price: $71.00 / per crtg. (Contracted – Fixed Sell Price)

40

50

60

70

80

$

Distributor Profit

Increasin

g

03 -2008 03 -2009

+ 29%

UNIQUE CHARACTERISTICS

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Alternative Products Can Provide 30% - 55% Savings Without Sacrificing Product Performance !

TECHNOLOGY SUPPLIES

Alternatives to OEM Products Include …

- Compatible Products (Xerox for HP)

- Remanufactured Products (Premier for HP)

- Other OEM Products (Sony for Fuji)

Several Alternative Product Options

UNIQUE CHARACTERISTICS

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TECHNOLOGY SUPPLIES

Several Alternative Product OptionsUNIQUE CHARACTERISTICS

Savings % Over OEM

OEM Brand 100 Series 200/500 Series

Brother 32% 45%

Canon Fax 28% 50%

HP 43% 56%

IBM/Lexmark 51% 63%

Imagistics 55% 65%

Panasonic 42% 52%

Sharp 40% 40%

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TECHNOLOGY SUPPLIES

SavingsRealized

$400,00028%

Several Alternative Product OptionsCase Study: Fortune 1000 national bank with 900+ locations

Annual Technology Supplies Spend

$200,000

$600,000

$1,000,000

$1,400,000

$1,800,000

Year 1 Year 2

$1.8 Million

$1.4 Million

UNIQUE CHARACTERISTICS

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Traditional Contract Evaluation

Process

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THE TRADITIONAL CONTRACT“The One Source Solution” Evaluation Process• Evaluate entire office product line at same time

same way• Combine traditional supplies & technology supplies

Traditional Supplies

45%

Technology Supplies

55%

EVALUATION

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THE TRADITIONAL CONTRACT

The Traditional Process

1) Submit (RFI) Request for Company (Vendor) Information

2) Submit (RFQ) Request for Quotation - Top Moving Products

3) Establish “Critical Vendor Requirements”• E-Commerce Ordering Capabilities • National Distribution

• Large Inventory (high fill rates) • Manufacturer Relationships

• Financially Sound • General Infrastructure/Support

4) Request “locked in (guaranteed) pricing” for 1-3+ years

5) Re-Evaluate Pricing as Needed

EVALUATION

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Recognizing “Blind Spots” in a

Traditional Contract

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RECOGNIZING THE CONTRACTThe Traditional Contract Problems

• DOES NOT account for rapidly dropping technology

supplies cost.

• DOES NOT provide cost savings plan.

• DOES NOT target the significant spend area (technology

supplies).

In brief, the traditional contract DOES NOT recognize the

uniqueness oftechnology supplies.

BLIND SPOTS

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SUPPLIER CONFLICT

5%

10%

15%

20%

25%

30%

Average Margins

Traditional

Supplies

Technology

Supplies

25% +

17%

5%

10%

15%

20%

25%

30%

Average Cost-To-Do

Contract Stationer

Independent I.P. Dealer

19%

12%

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RECOGNIZING THE CONTRACT A thoughtful, well negotiated Technology Supplies

Contract must be developed (independent of the Traditional Supplies Contract)...

Traditional Supplies

45%

Technology Supplies

55%

… with a vendor capable and willing to manage the uniqueness of a Technology Supplies Contract.

BLIND SPOTS

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Alternative Contract Evaluation Approach

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THE ALTERNATIVE CONTRACT

The Alternative Process Create Two Separate Contracts & Manage To The Uniqueness

Of Each

Traditional SuppliesContract

1) Establish “Vendor Critical Requirements”

2) Submit RFQ – “Request for Quotation”

3) Request FIXED Pricing Plan

4) Redevelop Contract YEARLY

Technology Supplies Contract

1) Establish “Vendor Critical Requirements

2) Submit RFQ – “Request for Quotation”

3) Request PERPETUAL Pricing Plan

4) Review Contract QUARTERLY

EVALUATION APPROACH

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THE ALTERNATIVE CONTRACT

Key Concept – “Real Time Pricing”

“Real Time Pricing” occurs when a distributor receives

a price decrease and the distributor passes a price

decrease from manufacturer to the consumer.

Example: Manufacturer drops prices to distributor by 10%, so the distributor (Vendor) drops prices to consumer

(You) by 10%

EVALUATION APPROACH

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THE ALTERNATIVE CONTRACT

20

30

40

50

60 Customer Price

$

03 -2008 03 -2009

“Real Time Pricing” Applied

One Product At A Glance

Item: Imation DLT IV (Magnetic Media)Distributor Cost (03-09): $52.00 / per crtg.Distributor Cost (03-10): $29.80 / per crtg.Contracted Sell Price: Decreases by 39% over Time

20

30

40

50

60 Distributor Profit

03 -2008 03 -2009

$

Decreasing Fixed(-39%)

EVALUATION APPROACH

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THE ALTERNATIVE CONTRACTKey Concept – “Product Watchdog”

“Product Watchdog” occurs when the dealer researches

the technology supplies market, looks for

cost-saving options and alternatives,

and informs the consumer

of these options.

Result: Consumer (You) benefit through new cost saving options available in market.

EVALUATION APPROACH

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THE ALTERNATIVE CONTRACT

Key Concept – “Product Watchdog” One Product At a Glance

Toner Cartridge:

OEM (HP) Item: C4127X $104.77 / each

Compatible (Xerox) Item: 6R926 $65.26 / each – 38%

Compatible (Premier) Item: 200-27X $48.10 / each – 54%

$0.00

$0.01

$0.02

HP Xerox Premier

Cost perPrinted page

EVALUATION APPROACH

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The Traditional & Alternative Contract Compared

THE ALTERNATIVE CONTRACTEVALUATION APPROACH

Need Characteristics

Traditional Contract Solution

Alternative Contract Solution

Vendor Critical Requirements Met Yes Yes

“One Source Solution” Yes No

Perpetual Competitive Pricing No Yes

All Savings Opportunities Realized No Yes

Frequent (Quarterly) Reviews No Yes

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TECHNOLOGY SUPPLIES

• Full Imaging Supplies Product Offering 5,000 Items

• Field Rep And Customer Service Support

• Complete Monthly Reporting

• Quarterly Rebates On 15% + Margin

• 99.9% Order Accuracy & 98% Same Day Fill Rate

• Auto Product Substitution – On Approval

• 100% User Product Satisfaction

CUSTOMER PROPOSITION