A printing company owner I’ll refer to as Samuel, called me for help solve his problems with 2 digital presses. In his words “the stuff is always broken.”
This saga is still unfolding. Our lesson today, is what is about the definition of Equipment Uptime? I thought it meant how many hours a day equipment is running great. The Equipment Service Performance History Report touted a 95.5% uptime. WOW you think. What’s the problem?
Until I learned that this report measures the time between when a service call is placed and the arrival of the service technician. The digital press could have been out-of-service for hours or days. But Bill, the tech arrived on the scene in 45-minutes.
Samuel only cares about how quickly his equipment will be running, not jamming and producing high quality work. He is not excited that Bill set a land speed record to reach his plant.
Today Samuel and I had a conference call with the Regional Service Director (Greg), the Print Production Specialist and the sales rep for Samuel’s account. They all work for a large national distributor of printing equipment. Bill, the service tech couldn’t be on the call. He was busy fixing one of Samuel’s copier.
WHERE DO WE GO FROM HERE?
- Samuel will receive a weekly in-depth service reports on the service problems of the prior week and what corrective action was taken.
- The Regional Service Manager will meet with Samuel every week for the next month to review the service problems of the prior week.
- Samuel’s key equipment operator will maintain a log of every service call, the problem experienced and the resolution of the problem.
- Samuel and Greg will compare the Distributors service records with his own for discrepancies.
DOES THIS SITUATION SOUND FAMILIAR? If yes, stay tuned. I will keep following up on this. I am quite impressed with the commitment the equipment distributor has shown to date help their customer fix all the problems. Let’s see how this evolves.
A business owner asked if she could cancel her equipment lease. The leasing company told her that the lease was non-cancellable. She asked for help her understand the term “non-cancellable.”
Of course, you can pay a lease off early. IF and ONLY IF–you are willing to pay all of the amounts detailed below.
One hundred percent of all leases contain a price to terminate the lease early. Leases are meant to run their full length. Do not confuse a lease with a loan.
If a Lessee decides that they no longer need the equipment or that is has become obsolete, they may buy the lease out early—-for a price. Read the contract closely in order to know what you are for.
The usual Lessee early payoff quote often includes:
- All payments then due or past-due as of the date of the early termination.
- Any late fees that are then due.
- All remaining payments through the end of the lease term.
- Some leases require an early termination penalty fee or a restocking fee. of as much as 10% of the remaining payments.
- The current fair market value purchase price of the equipment assuming that the Lessee wants to own the equipment.
- Sales tax on the equipment fair market value purchase price.
- Property taxes due on the equipment.
- If the Lessee does not want to own the equipment, they owe the price to pack and ship the equipment back to a location designated by the leasing company, anywhere within the Continental United States.
- The Lessee must insure the equipment during the return shipping period.
- In addition, if there is a service contract associated with the lease, the Lessee owes a penalty on that as well.
In reviewing a digital copier lease and service contract, it was discovered that the penalty for early cancellation was costly. The early cancellation on a 36-month lease contained a 12-month penalty if the service contract was terminated within the first 12-months. If termination occurred in the first 24-months, the Lessee owed a 9-month penalty. And if the contract was cancelled in the final 12-months, the penalty was 6-months of service charges.
After adding up this long list of expenses, do you still want to end the lease early or just bite the bullet? Weigh your choices. Assess the costs involved. There may not be an upside.
The bottom line is always NEGOTIATE! “Everything is negotiable if only you ask.”
RFP’s: Just a Waste of Time?
If you are like supply chain and purchasing professionals, the addition of new or used equipment begins with a telephone call to the usual suppliers. Whenever there is a plan to buy equipment, the process begins with a request for price quotes. The quotes arrive and you shove on your negotiation hard hat and prepare for the battle of wills. Who wins? Usually the victor is the one with the most patience and perseverance.
Why waste time writing out equipment specs and financing options for the next equipment addition? Everyone knows that writing a Request for Proposal (“RFP”) is something the billion dollar companies do when spending several million dollars. Why take the time to write a complicated RFP when a phone call will get you what you want? The price is all that you don’t know.
Procurement professionals begin the buying process full of optimism and then find themselves stuck in the beginning phases of negotiations far too long. How can you avoid the getting stuck?
When current equipment is broken or has become undependable, an immediate replacement seems like the best solution. However using the RFP process can save your operation money and time if you have the basic steps established.
Large and Small Companies: All Save Big Money with the Lease RFP
Kevin, a North Carolina Printer Tries It
Big and small manufacturers, accounting and law firms, distribution organizations and most county, state and local governments use the RFP method for acquiring goods and services. Using a modified RFP or Term Sheet is sufficient when buying equipment less than $100,000.
The owner of a small commercial printing company in North Carolina used, a Lease RFP when purchasing a $100,000 digital copier for his business. The owner, we’ll call Kevin, used the services of a lease review expert who helped him draft the RFP. When Kevin initially began to acquire the new equipment, he had one lease proposal from the equipment supplier’s primary resource. Kevin decided to invite four additional lease companies to present finance proposals in response to his RFP Term Sheet. He was surprised to find that the best pricing came from his bank’s leasing company. He reduced spending by 14% using the lease RFP process.
Do Law firms Ask for HELP?
One Midwestern based law firm in the top 100 law firms in the United States, used the Lease RFP process when they prepared to move into their new corporate headquarters. They chose to lease $25 million dollars of high-tech telephones, office furniture, computers including laptops, desktops, servers and technology infrastructure their video conferencing equipment.
The firm’s Chief Operating Officer, we’ll call Audrey, knew what managers and business owner everywhere know; leasing equipment makes good business sense. According to the U.S. Department of Commerce, 80% of U.S businesses, large and small, lease rather than pay cash when adding or upgrading equipment and needed assets.
Both Kevin, the business owner and Audrey, the chief operating officer, agreed that the best leasing deal does not always come from the equipment dealer. Thirteen leasing companies and financial institutions responded to the law firm RFP. After a full review of all proposals and lease contracts, four leasing companies were invited to advance to the next phase.
Leverage: Simultaneous Negotiations
The firm conducted negotiations with all four leasing companies simultaneously. During the negotiations, one leasing company resisted making changes that Audrey required. Because she had three other leasing companies to meet her terms, Audrey could shift lease volume to any one of the other three leasing companies up until final equipment funding was required.
Using the RFP process leveled the playing field. It was easier for Audrey and her operations team to spot the differences in various financial solutions and the equipment benefits. Dealer presentations changed from glitzy sales sizzle into firm offers and contracts. Once the selling price and lease terms are on paper in a proposal, negotiation can begin.
Could You Save a Million Dollars?
The result of following the process shaved more than a million off the total lease cost for the law firm. For big or small companies, the process worked for both. In times of financial restraint, consider investing time in creating and managing a lease RFP.keep looking »