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Sustainability vs. headline cost

This month’s panel share their thoughts as to whether sustainable procurement remains high on the business agenda, or if the focus has shifted towards the headline cost and TCO?

PITR: As the economic uncertainty around Brexit continues, how is it impacting on your business?

Mark Smith, Operations Director, Vision
Mark Smith, Operations Director, Vision

Mark Smyth, Chief Operating Officer, Vision: “We have experienced a number of increases from vendors and our supply chain generally, and we are continuously analysing the impact on margins.

“The real challenge is when and if we pass on these increases to clients, and in some cases, we simply have no choice, as the impact is quite considerable.”

Julian Stafford, Managing Director, Midshire Business Systems Northern: “We have just enjoyed our best ever quarter in terms of both turnover and profit, so in reality the uncertainty over Brexit would appear to have had little or no impact.

“However we have, like all businesses, seen price increases due to movements in exchange rates. I’m sure once the negotiations start with the EU there will be further movements on the currency markets that may hit us in the short term.

“I believe as a business community we have to remain focused on doing what we are good at and not get side tracked by possible negatives. The country, led by the media, is very good at talking us into a downturn. The future in my opinion is very bright, I’m confident the economy will go from strength to strength.”

Scott Walker, MPS Business Development Manager, ZenOffice: “In my opinion, I don’t think it’s had as big an impact as it possibly could have. We’re on the verge of our most successful month ever and are involved in some very large opportunities.

“If anything, given we’re a service provider, our customers are approaching us to help them reduce their spend. Offering managed print services/document solutions is one area they seem to be exploring.”

Sam Elphick Sales Director, Lex Business Equipment
Sam Elphick Sales Director, Lex Business Equipment

Sam Elphick, Sales Director, Lex Business Equipment: “Aside from the expected price increases we have incurred from the core manufacturers whom we purchase our hardware from at the start of the year, there has not been too much disruption to the business.

“We continue with optimism that Brexit will not have too harsh an effect on us, but we are at the peril of currency fluctuations – which in turn can impact the cost pricing of consumables for hardware.”

Matt Goodall, Service Director, Office Evolution: “Any uncertainty around Brexit has been around now for almost 12 months. The announcement of a general election is bound to concern people more and bring the way that our exit from the EU is handled into sharper focus. As with any uncertainty, people will either hold off from making a decision or seek a shorter term view for any decisions being made, enabling them the freedom to change if the economy does.”

Matt Goodall, Service Director, Office Evolution
Matt Goodall, Service Director, Office Evolution

Jeremy Spencer, Marketing Director, Toshiba TEC UK: “So far, Brexit has not had a material impact on our business. However, like many brands in the industry, we are part of a global business and rely on cross-border supply chain. As such we are following negotiations around leaving the European Union closely and are keen to see a settlement that ensures the industry remains competitive and responsive to customer needs.

PITR: Given the state of the economy, are businesses putting green procurement strategies on the back burner?

Mark Smyth: “We are seeing clients remain reasonably committed to their CSR and green policies and in some cases, they will pay for services that help with their environmental strategy, however that number of clients is very low.

“We have some client sectors specifically, that expect as part of our managed services to be provided with all the tools to help meet their CSR and green credentials at no additional cost and we must then consider the overall contractual running costs and ensure this is fully considered.”

Julian Stafford, Director, Midshire Northern.
Julian Stafford, Director, Midshire Northern.

Julian Stafford: “Green initiatives are here to stay. Given that most green strategies are very cost effective in the long term, I don’t see any reason for the growth of environmentally sensitive purchases to diminish.

“Midshire has always looked at the long term, we invest as if we were going to be here in 20 years and it’s a policy that has stood us in good stead.”

Scott Walker: “I think it will always form part of the decision-making process, however, I personally think that it’s dropped down the list of priorities in terms of how they move forward with their chosen provider.

“Most contacts I have the pleasure of working with are relying on us to help them paint an image of how the world of managed print will looking in three to five years’ time. Being able to provide devices which tick all the ‘green’ boxes as such is standard with companies like Xerox. You’ve only got to look at their awards for providing green technology to see it’s more standard now than it ever has been.”

Sam Elphick: “The toner recycling service which we offer to our clients was as popular as ever last year, and this has continued into 2017. As a result, I can confidently say that businesses are still striving to be as ‘green’ as possible.

“Especially when dealing with larger organisations and most definitely with the public sector, more often than not the decision-maker is keen to understand the energy saving function of the printing hardware we are quoting. The main brand of colour MFP we supply is Develop – which oozes energy saving functions, including motion detection power-up, and auto-power down in line with business hours.”

Matt Goodall: “I think that the green policies that organisations have committed to will continue to form the grounding for many companies. However, cost will become a greater influence in the buying decisions and as long as the green objectives can be met whilst making the required cost targets, then green strategies will still form the basis of any decisions.”

Jeremy Spencer, Marketing Director, Toshiba
Jeremy Spencer, Marketing Director, Toshiba

Jeremy Spencer: “For most organisations, environmental considerations not only remain an integral part of buying document solutions, but have been woven into the very fabric of the procurement process. Indeed, we find that Toshiba TEC’s pioneering Carbon Zero scheme acts as a key differentiator when it comes to procurement, as it allows organisations to access the best products, at the best price, but with a clear conscience when it comes to sustainability and the environment.”

PITR: Is cost now king?

Mark Smyth: “Cost is certainly a big driver still, and on average we are seeing most tenders weighting their scoring with pricing at 40 per cent and above of the overall tender score. That said, we have had some rather refreshing experiences more recently, where we have certainly not been the lowest price of all bidders and gone in to win based on quality.

“Tendering for business in our market remains fiercely competitive and we are often tendering as part of some of the government frameworks where pricing and discount levels are already in place.

“When we win on quality and Vision’s not the lowest price and bid, it really does make it very rewarding. So much hard work and resource goes into the bid and tender process with the constant objective of potentially winning a new client or retaining an existing client, so for all our teams involved it is so satisfying when it’s not all about price and more about the quality of services you deliver! Price does often appear to be everything and it’s gratifying to know there are some clients, despite the current economic uncertainty that value partnerships and high quality service.”

Julian Stafford: “Cost is very much king for lots of reasons, not just for the economy. The growth of the internet, with prices for every commodity at your fingertips, is the main one. Everyone seems to be offering all types of products and offering services they have no qualification for.

“It’s very hard for a customer to ascertain who can deliver the initial or ongoing expertise and service they require. I have often told customers that ‘I could supply them a Jumbo Jet but I would struggle to keep it in the air’. Fortunately having a proven track record of delivering service of the highest quality for over 25 years does mean people want the added value offered by specialists like Midshire.”

Scott Walker, MPS Business Development Manager, ZenOffice.
Scott Walker, MPS Business Development Manager, ZenOffice.

Scott Walker: “Cost is probably one of the biggest factors in choosing a managed print provider, but I’m not convinced it’s ‘king’.

“More and more organisations have been ‘stung’ by poor service, poor account management and hazy terms and conditions on their contracts. The one message we’re hearing from our customers is that they want an honest, transparent and pro-active service with reliable equipment, high first time fix rates and low total cost of ownership.

“Cost is certainly going to make the top three in terms of how a customer will choose a supplier, but I genuinely believe our customers are looking at the hidden costs (down time, fix rates etc.) as part of their decision-making process.”

Sam Elphick: “More recently, it does seem that firms are looking for the best possible value from us as a reseller – so in essence I would agree that cost is king. It always has been to some extent but I would say even more so now.

“I think it is important though for businesses to understand that in some circumstances, and across most sectors by cutting cost, you also run the risk of cutting quality and service. And in turn this can sometimes negatively impact a business.”

Matt Goodall: “For many companies, cost has always been king, until that is, they get burnt and experience poor service or unacceptable downtime. All companies are seeking to reduce overheads, however, you cannot cut everything to the bone without sacrificing something, whether it be quality, service, response or product.

“The key now is to ensure that your business offering meets or exceeds the customers’ expectations, and set service as king! We are seeing that in many companies, service vs. cost is the key objective rather than just cost alone.”

Jeremy Spencer: “Clearly, competitive pricing is important, but it would be short sighted for the industry to focus on cost alone. Customers want to partner with organisations that truly understand their needs, have an expert grasp of the technology, and provide excellent levels of service.

“That being said, there is increasing interest in those of our software and solutions that help end users optimise workflows to improve efficiency and save time and money. These have a real impact on cost across the customer’s business and clearly appeal to those for whom financial considerations are key.”

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