Recharger Magazine

Achieving Higher Profit Margins Through Partnerships - Part 1

This guest blog was contributed by Kyle Parcher.

We have seen many changes in our industry throughout the past 20 years. Garage and basement businesses have given way to large, $100-million-plus corporations, some of them producing upward of 300,000 units per month. Additionally, the number of businesses producing cartridges has decreased. I owned a remanufacturing company more than six years ago, and I find the changes that have taken place since that time absolutely fascinating. Is there any other industry like ours where most of the business owners know one another?

Companies that do not manufacture are now forced to rely on their outsource solution providers for top quality – quality that can only be determined by the person responsible for producing the cartridges. But what is quality? Typically, quality is perceptual and is usually determined by the end user. However, I found that our technically savvy business owners are more in tune with the quality than their customers. This concern for the perfect cartridge or “OEM look-alike” can be quite a daunting mentality.

Follow me now as I walk you through some questions to ask your outsourcing solution provider. They may drive your vendor crazy, but the answers will help determine whether you are offering a quality product to your customers and achieving a higher profit margin.

Does your vendor produce?

The first step is finding out if your vendor produces cartridges or outsources them. Many vendors now outsource from someone else, and hopefully, they will tell you when asked. I am sure that some of you are asking, “Is it imperative that you purchase from a producer?” My answer to that question is yes. Outsourcing solution providers are presented with a challenge when guaranteeing quality. Most of them buy from a multitude of different manufacturers and settle for the lowest-cost common denominator. Swimming in an ocean of cheap cartridges can give you varied results and all-night headaches at best.

What is quality?

We first need to snap a plum line and redefine what quality means to you. Most vendors will follow the testing results that they find from testing OEM cartridges. Most of them test and use the same equipment to measure. The ASTM protocols produced by the Int’l ITC may or may not be followed. However, there are a few key points that will help you redetermine quality: page yield, density, durability and defectives/rejects.

Let’s step back for a few minutes and consider a real-world scenario that might help you to understand why testing is so important to verifying what quality means to you.

Company X purchases 100 units per month from you with little to no returns until lately. Recently, you have been seeing a higher number of returns on almost all of the cartridges it purchases – so much so that it is becoming noticeable to Company X as well. You quickly bag up the cartridges and send them back to your vendor. A week or two passes (insert music here). Your vendor calls you to discuss the issue with you. Upon looking into the RMAs, the vendor finds that over half of the cartridges have been returned almost completely empty. There are many factors that can lead to premature death, but in this instance, let’s suppose that the customer was printing 10-plus percent coverage. Arming yourself with 5 percent coverage samples, you discuss the complexity of printing to your end user. Your customer, though starry-eyed, now understands the reason why the cartridges are not printing to the OEM yields or even the yields you quoted earlier.

You need a great partnership – one where communication and product knowledge are key connecters to maintaining and increasing business opportunities for you.

In Part 2, we are going to discuss testing procedures and protocols. These should help you verify that your vendor’s cartridges are yielding and producing what your customers are looking for.

Posted on Feb 21, 2012