Who Benefits More From Supplies Automation: The Dealer or the Distributor?

Who Benefits More From Supplies Automation: The Dealer or the Distributor?

October 24, 2014
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One of the latest trends in the office printing industry is automating the process of supplies fulfillment between a dealer and a distributor. The obvious benefit is that once this is set up, a dealer should spend less time “cutting P.O.’s.” While this is definitely a benefit, there is potential for costs to increase over time. Here are some things to consider:

The first thought is to really understand the current manual process you use to order supplies. Generally speaking, most purchasers have the ability to select from multiple vendors for each SKU. As an example, there may be two or three suppliers that can sell a remanufactured fuser for an HP LaserJet 4250, or supplies for an HP Color LaserJet 4700. If your company has approved multiple vendors for these SKUs, then presumably the purchase agent will select one vendor over another. It could be based on price, speed of delivery, credit limits, yields, or volume rebates, among other criteria.

The lifeblood of any profitable dealership is the ability to manage inventory levels and to reduce costs. Supply and part costs are a dealership’s biggest expense beyond labor.  The danger of automating your purchase orders too much is that over time you may be replacing important strategic decisions with an “easy button.” One thing to consider is why distributors seem so eager to sign up for automated ordering systems. In some cases they will pay your dealerships fees to do so. Why would they do that? Well, in fairness, it does make them more efficient by reducing order time between your purchase agent and the distributor sales rep. However, there is a larger underlying motivation: they know that once a dealer is locked into a system, the distributor has more leverage to increase prices over time.

It may also be the case that there are rebate programs between dealers and software vendors when PO systems become automated. Who pays? Well, the dealer does in the form of increased prices for their products.

Improving the efficiency of ordering systems is important. You need a system that can handle multiple vendors, select which vendor is best suited for each purchase, and with a click, execute a purchase order.

Miracle Service has taken this approach in designing our purchasing order system. It can manage multiple vendors, allow you to compare prices, and it easily integrates into accounting systems like QuickBooks. As a result, creating and tracking purchase orders is a simple, straightforward task. Is an automated P.O. system the right choice for you? It could be – but make sure you are clear about what the benefits and drawbacks are before you give up margin in an effort to automate.