International Laser Group (ILG):Success From the Ground Up
- By Raegen Pietrucha
- Nov 01, 2011
Back in 1988, the aftermarket was just getting started — as was International Laser Group (ILG), one of the U.S.’s largest cartridge remanufacturing companies. Knocking on doors in Los Angeles to generate their own business, ILG’s husband-and-wife co-founders, Gary and Cindy Michaels — COO and CEO, respectively — refilled cartridges themselves, boxed them up, then shipped them out at UPS. At the time, the industry consisted primarily of drill-and-fill operations, which gave Gary an idea: “I could take it up one more level with a certain level of quality that nobody is doing now.” And the Michaels did just that. Implementing a more stringent core selection process and using new components to remanufacture cartridges, the ILG business and family has been growing ever since — from one distribution center to five and from two people to more than 500 today.
ILG’s “internal clients” — its rock-solid foundation
Just as they had a dream of remanufacturing a better cartridge, the Michaels had a vision for building a better team — one that became a reality as their business picked up, creating the need for a larger number of employees each consecutive year that passed. “I started out in the corporate world in my early years in business, and I made a vow that I am not going to be like the big corporations that I worked for — dress codes, attitudes, closed doors,” Gary said. “We recognized that you can have a title, you can have a degree, you can have experience, but none of that is successful without the team.”
This belief is reflected in the abbreviation “IC” — meaning “internal clients” — that the Michaels coined. “We’ve always believed that if our internal clients — which are the members of our team — are happy, efficient and productive, then everything will fall into place with our external (clients, or EC),” Gary said. One way ILG promotes the happiness of its internal clients is through weekly gatherings like the egalitarian interdepartmental communication/collaboration meeting, where anyone — regardless of rank or department — is free to bring ideas to the table, knowing that, if feasible, such ideas will be quickly implemented. Many doors are open throughout the facility as well to foster a connection among team members and inspire innovation. “Ideas, information and imagination — they’re all welcome here because that’s how we grow,” said Joe Shulman, senior VP of client solutions. “About 15 years ago, we came up with a tagline called ‘Discover the Difference,’ and that difference is this whole experience.”
Several others were eager to share their experience of being one of ILG’s internal clients. “It’s really amazing how we do things here; (it’s) teamwork you haven’t seen anywhere,” said Purchasing Manager Farideh Josephson. “Everybody works together very hard to achieve what the customer wants.” Marketing Director Lili Miura noted that “everyone (is) so passionate, … it’s contagious.” Even ILG’s newest team member, Dean Massey, manager of operations and strategic procurement, has already been deeply impressed: “I’ve just never seen a more exciting group of people — all the way from the person that answers the phone to the people that are cleaning at night.”
The Michaels recognize how much their team contributes to the company’s success and have therefore strived at all times to keep them satisfied; they’ve been rewarded with high employee loyalty and low turnover. “The strength of ILG is really our people,” said Cindy. “They were a success, so we became a success.”
Building the right vendor base
The next step in creating a successful company was choosing the best vendor partners for the job. Every vendor must be approved by Cuong Hoang, vice president, research and development and quality assurance; he visits vendor facilities to ask questions, see how organized staffs are, meet with engineering departments, and assess whether outside companies truly embody the value propositions they claim to — especially when it comes to quality. ILG’s vendor selection process has gone well, considering that many of its suppliers over the last 20 years still stand in spite of recessions and other strife. “We’ve been told by … many of the vendors that we’re the most challenging client, largely because of … ‘Dr. Cuong’,” Gary said. “We go through a verification process that’s probably longer than most and more stringent, so we have an interesting relationship with our vendors. Let’s just say there’s a mutual respect.”
This respect is epitomized by the fact that ILG serves as a beta test site for many vendors. “There are actually several vendors that are using us as their beta test site, which is, I would say, one of the highest honors one could receive because they trust our judgment,” Shulman said. Working together and receiving pointers on how to improve products and consequently grow their own businesses even further, vendors are made to feel part of the ILG family too. And having these types of relationships with vendors allows ILG to remain a step ahead of the game, in that anytime sourcing becomes strained, partners are eager to notify ILG well in advance so the company can compensate accordingly without skipping a beat in its own production.
Creating a product powerhouse
To produce a “mirror image to the OEM” (a term ILG uses to reflect its goal with respect to its cartridges), the OEM product must be — and is — studied thoroughly before remanufacturing takes place. The company invests more than 5 percent of its revenue back into R&D and has a great deal of testing equipment, including an extensive printer collection, to accomplish this. Since the company always aims to be first to market with a high-quality product that improves customer profitability, ILG puts its name at the top of vendor lists for new supplies releases and has its engineering team formulating solutions before other aftermarket components (such as chips) that will ultimately complete the company’s products are made available to it.
ILG’s method for color remanufacturing in particular starts with a rigorous empties selection process. Virgin cartridges must be handled a specific way, and they must meet certain criteria for ILG to even consider accepting them. Once these empties are secured, they, the toners and the components are engineered individually based on color. ILG’s proprietary solution — what the company calls its Smart Color System — includes its TCB (turbo cleaning blade) Technology and Leak Guard System, and the remanufacturing process begins with the on-site inspection of cartridges. Using video microscopes, ILG staff members examine cartridge components to ensure they are compliant with specifications that will better guarantee a high level of performance in the field. Under strict process-control parameters, cartridges are remanufactured, then post-tested before being packaged and shipped to customers.
Today, more than 50 percent of ILG’s sales are of its color products — much higher than the average aftermarket market share of 5 to 8 percent — which highlights the unusual relationship the company has to the OEM. “Typically, our mentor is the OEM,” Shulman said. “(But) even though we love them — because without them, we wouldn’t have products — we want to target them as our No. 1 competitor. … If the OEMs’ yield spec is … 20,000 pages … and we can offer 30,000 pages, we’ve done something to enhance the customer’s ability to give a value to their clients. … The OEM doesn’t offer these unique products, so we have an opportunity there.” This particular opportunity — which translates to significant cost-per-page savings over OEM products for ILG’s customers — took shape three years ago as the company’s Jumbo Color line.
Another original product ILG developed is its MPS Certified line of both monochrome and color cartridges, which again provide improved cost per page, though these products are more stringently tested to provide MPS customers a higher level of confidence in alternative consumables. ILG uses two ISO standards (19752 and 19758) to guarantee 5 percent yield and extensively tests to ensure performance in challenging applications such as duplexing and full-color-bleed printing.
Making the “external client” feel right at home
Just as ILG is careful in its choice of employees, vendors and supplies, the company is also selective with its customers, collaborating only with those who are driven by quality and innovation rather than a price model. But the entire ILG team — including in-house and outside sales, R&D and other departments — works hard to keep the partnerships the company does forge with like-minded external clients (i.e., the customers) strong.
The Priority 10 (P-10) system was developed with respect to the technical support ILG provides; it is a company “law” that employees must both respond and satisfactorily resolve client issues within 60 minutes, or the product is free. “Sometimes (customers) get frustrated, but only a five-minute discussion giving them guidelines solves the problem, and they’re just so happy,” Hoang said. “This is ILG money to help customers, but we’re willing to do it. Why? Because we want to make the customer happy. ... And this is … value that’s very difficult to define but that we have added to our product.”
Another value the company is proud to offer is the one the remanufacturing industry as a whole often emphasizes: sustainability. ILG now provides free recycling through its E-Core-Cycle and Zero Landfill programs and is building partnerships to further assist companies that already have their own end-user programs in place. ILG seeks to collect all the products it manufactures to either reuse them or dispose of them properly. “If we can’t use it, we try to find somebody first that can use it responsibly as a product,” said Senior VP of Manufacturing Bill Kopatich, “even if it’s a competitor.” In addition to recycling all paper, cardboard and metals, ILG has also partnered with vendors that have environmentally friendly ways of turning waste and other materials involved in the manufacturing process (such as plastics) into clean energy to meet its zero-landfill initiative. In 2011, Recharger Magazine readers recognized ILG’s efforts in this area by voting the company the winner of the Readers Choice Green Award.
As times get tougher and the industry continues to change, ILG strives to take it all in stride, making sure it responds to a wider variety of customer demands than ever before. Clients going through rough patches economically are accommodated by ILG’s credit and collections department, and the company now offers webinars, conference calls and even on-site visits to train them on products and educate them on sales techniques so that they can improve their business. “It’s no longer just selling a box. Those days are gone. Now you have to be a priest; you have to be a consultant,” Shulman said. “You have to come up with some imagination. You have to come up with unique ideas in order for your client to succeed, because if they don’t succeed, we’re not going to succeed. … The happiest day on Earth is ‘Joe, my business is up 30 percent this year.’ That’s great! I get so excited when I hear that because I know that we help contribute to people staying in business at a time where it’s very hard to maintain.”
A future of continuous improvement
“This industry has morphed into different industries every four or five years over the last 23 years,” Gary said. “That gives us an opportunity to reinvent ourselves along with the industry’s rebirth.” For instance, when the influx of compatible and clone cartridges from China began, ILG focused on improving its efficiencies and developed initiatives such as lean manufacturing to be more competitive not only in terms of quality, service and delivery, but also price. When color hit the market, the company added more industry experts, such as Kopatich and Hoang, to the team. When MPS came on the scene, ILG developed its Jumbo Color cartridges. “Every big thing, if you will, that has come along, we’ve recognized that we must be creative and innovative in that new thing, and I think … along with our tremendous emphasis on our people for their happiness, efficiency and productivity … that’s what’s kept us still standing today,” Gary said. “You have a choice: You can either change and be innovative and create, or stay the way you are, fall back and become extinct.”
Because of its dedication to its own evolution, ILG has continued to expand. Its latest facility opened recently in San Diego, and the company now has more than 150,000 total square feet of manufacturing facilities in North America. ILG is also branching out on the marketing-support front, conducting dealer training and starting the production of a new webinar as well as several company videos detailing manufacturing processes, distribution and selling techniques. ILG will also be appointing an ambassador to visit clients and encourage them to explore the company’s facilities.
Tomorrow looks bright for all of ILG’s clients — external and internal. “I’m looking forward to a great future,” Gary said. “We’re positioned very well for that because we have all of the key elements in play, and we’re right at the edge of technology and research and development. We have the leadership and expertise to take on challenges that come our way.”
This article originally appeared in the November 2011 issue of Recharger.