ENX Magazine February 2016 Issue

VOLUME 23 NO. 2 FEBRUARY 2016

Connecting People, Ideas and Products in the Document Imaging Industry since 1994 Connecting People, Ideas and Products in the Document Imaging Industry since 1994

Establishing Credibility

in the Light Production & Production Print Markets

engage ‘n‘n exchange engage exchange

Office Technology Service Excellence Award

DIAMOND LEVEL

A Conversation with

In 2015, Manufacturer Sales Slowed and Profits Fell.

So, What About This Year?

Advanced Office’s Richard Van Dyke Creating Your Transformation To Managed Services Do Your Diligence Before You Go To Market Evaluating Service Performance

Business Profile

ENXMagazine Magazine ENX POBox Box2240 2240 Suite PO Suite 729729 TolucaLake, Lake, 91610-0240 Toluca CACA 91610-0240 USAUSA tel:818-505-0022 818-505-0022 tel: / fax: 818-505-9972 email: enx@pacbell.net fax: 818-505-9972 www.enxmag.com email: enx@pacbell.net www.enxmag.com

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5

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In This

Issue

NOTE 12 EDITOR’S Between the Lines: Tell Us Who’s Making a Difference!

OF THE INDUSTRY 20 STATE Establishing Credibility in the Light Production & Production Print

Markets

By Scott Cullen

e n x

INTELLIGENCE 16 Between The Lines 28 MARKET In 2015, Manufacturer Sales Slowed and Profits Fell. So, What About

In This Staff

EDITOR’S NOTE

This 24 Year?

Trends and Trendsetters of 2015

By Charles Brewer

By Scott Cullen

Issue36 32

STATE OF THE INDUSTRY

BUSINESS NEWS PROFILE BRIEFING

HP Sheds More Resellers It Implements Newfor Qualified Mail Superiority: Paitec USA, aAs Dependable Source Quality and Supplies Program Affordable Mailing and Paper Handling Solutions

By Charles Brewer

42 A40Conversation with Advanced Office’s Richard Van Dyke Static Control DEALER SPOTLIGHT

BUSINESS PROFILE

SERVICE 44 A Conversation 48 MANAGED with KeithToJustus, President of Business Creating Your Transformation Managed Services

Staff

DEALER SPOTLIGHT:

Copier Solutions

By Charles Lamb

Susan Neimes

Publisher & Managing Editor

48

SERVICE EXCELLENCE

52 Even Through Excellence in 2015 All Copy Continues to Excel at Service Expansion, SERVICE EXCELLENCE DIAMOND WINNERService BEI Services and ENX MagazineAWARD to Acknowledge

54 STRATEGY The Year Ahead 56 EXIT Do Your Before You Go To Market

By Diligence Brad Roderick SALES & MARKETING

Susan Neimes

Publisher & Managing Editor

By JimMANAGED Zipursky IT

58

HowMANAGEMENT to Win Over a New SERVICE

Prospect

60 Evaluating

By Dave Sobel Performance Service Bob Alaburda Senior Editor

Scott Cullen

Editorial Director

STRATEGY

By Edmonds 60KenEXIT The 10 Biggest Mistakes Business Sellers Make – Part 1 of 3

TECH TIP

By Jim Zipursky 66 PRINTER

By LaserPros

62 Display Advertisers Index Industry Events 65 Phaser 3635 68 Xerox Printer Tech Tipand WC-3550 Technical Information 66 By

By Britt Horvat Laser Pros TECHNICAL TIPof Calendar ®

®

ADVERTISERS INDEX Tech Help 68 Free 62 DISPLAY

By Smarka!

OF INDUSTRY EVENTS 66 CALENDAR 70 Xerox 4110 Style Fuser Repairs ®

Ronelle Ingram

By Britt Horvat

ContributingRonelle Editor Ingram Contributing Editor

engage ‘n exchange engage ‘n exchange

engage ‘n exchange

engage ‘n exchange

Christina Kim

Christina Associate Kim Editor Associate Editor

14

10

•

México & Latin America La Revista del Distribuidor Dealer Source

Corporate Office Susan Neimes - susan@enxmag.com Corporate10153 Office1/2 Riverside Drive., Suite 729, Toluca Lake, CA 91602 Editorial Office: Susan Neimes - susan@enxmag.com Scott Cullen - scott@enxmag.com tel. 818-505-0022 • fax. 818-505-9972 10153 1/2 Riverside Drive, Suite 729 21 Llanfair Lane, Ewing, NJ 08618 Editorial Office: Toluca Lake, CA 91602 Scott Cullen - scott@enxmag.com tel. 609-406-1424 21818-505-9972 Llanfair Lane, Ewing, NJ 08618 • tel. 609-406-1424 tel. 818-505-0022 • fax.

ENX Magazine is published monthly by Affinity Business Communications, Inc. Any inquiries should be sent to: enx@pacbell.net or mailed to the corporate office.

ENX Magazine is published monthly by Affinity Business Communications, Inc. Any inquiries should be sent to: enx@pacbell.net or mailed to the corporate office.

Copyright ©2014 by ENX Magazine printed in the U.S.A. All reproduction in whole or part is prohibited without written permission. Cover photo from shutterstock.com Copyright ©2016 by ENX Magazine printed in the U.S.A. All reproduction in whole or part is prohibited without written permission. Cover photo from fotolia.com •

www.enxmag.com l January 2015

www.enxmag.com | February 2016

We Saw It In ENX Magazine

We Saw It In ENX Magazine

WorkForce DS-520 30 ppm/60 ipm 50 Pg ADF

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B E T W E E N

Contributors Charles Brewer | Charles Brewer is the founder and president of Actionable Intelligence, the digital imaging industry’s leading market research firm. He was an editor for Inc. magazine and ComputerWorld during the 1990s, and more recently, the managing editor of The Hard Copy Supplies Journal. Mr. Brewer’s analysis is currently featured at his firm’s website, www.Action-Intell.com.

Ken Edmonds | Ken Edmonds Edmonds is currently employed as a District Service Manager for a major copier manufacturer. He has an extensive background in the imaging business, having owned a successful dealership, serving as service manager for multiple dealerships, and as a Document Solutions Specialist for Sharp Electronics. Additionally, he has more than 40 years of experience in the electronics and computer fields. He has attended the BTA Fix service manager training, the Pros Elite service manager training, and the Service Mangers Achieve Results training conducted by John Hay and John Hansen for Sharp Electronics.

He additionally completed the University of Wisconsin training program for technical trainers.

Charles Lamb | Charles Lamb iis the President and CEO of Mps&it Sales Consulting. His firm delivers proven methodologies and processes that assist dealer principals seeking a successful transformation into the managed services space.

He’s created complementary solutions including Funnelmaker, Gatekeeper, and Shield IT services.

For more info, call 888.823.0006, e-mail him at clamb@mpsandit. com, or visit www.mpsandit.com.

Jim Zipursky | Jim Zipursky is the Managing Director of CFA-MidWest, an investment bank serving the middle market. Jim is a registered representative of Silver Oak Securities, Inc., member FINRA/SIPC. For more information visit www.cfaw.com/omaha. Follow Jim on Twitter (@jazcfane) for articles and information about M&A. For more information about Exit Strategies or Selling Your Business, feel free to contact Jim at (402) 330-2160 or jaz@cfaomaha.com.

12

•

www.enxmag.com | February 2016

L I N E S

Tell Us Who’s Making a Difference!

This May, ENX will highlight the document imaging industry’s difference makers, and we need your help identifying them. We’ve been doing this for a couple of years, but this year, we’re doing it with a twist.

To ensure that this year’s feature doesn’t fall into the realm of predictability by celebrating many of the same people as we have in past years, we’ve established a new rule: If someone was highlighted in 2015, they are ineligible for inclusion this year.

Our intent this year is to identify the difference makers throughout the document imaging industry that might have been overlooked in the past or just aren’t on the industry radar, but still remain key contributors within their organizations and can also be viewed as key contributors to the document imaging industry as a whole. Some may not be considered prominent names in the industry, but they’re still making an impact and are worth knowing.

You can assist us in identifying these difference makers. E-mail your suggestions to susan@enxmag.com.

You may recommend as many as you feel are worthy of consideration, along with a sentence or two (no more than a paragraph) as to why and/or how they are making a difference. You’re welcome to nominate someone within your own organization, a business partner or a colleague within the industry who you feel is deserving of this recognition. You may also nominate yourself. Brief profiles of those selected will be featured in the May issue of ENX. The deadline for recommendations is March 10, 2016.

Technical Article Contributor Britt Horvat | Britt Horvat works for The Parts Drop, a company whose primary business is providing parts, supplies and information for Xerox brand copiers, printers and fax machines.

You can find more information, including many of Britt’s past ENX articles on their website, www.partsdrop.com.

T H E

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NBS / ENX | February 2016

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State of the Industry

Establishing Credibility in the Light Production & Production Print Markets Scott Cullen

A

s the OEMs unveil more light production and production devices with advanced finishing capabilities, new opportunities and markets await the dealer marketing these devices for the first time. At the higher end of the production spectrum, dealers will be chasing an entirely new market (commercial print), while in light production, they’ll often be targeting some of the same customers and prospects they’ve been selling traditional office equipment to all along.

Either way for first timers to the space, it’s going to be a challenge, and one of the biggest challenges is establishing credibility. What can a dealer do to establish their credibility as a provider of production devices with current customers and prospects as well as customers in the commercial print market who they might not have been calling on in the past?

Advanced Office Services in Santa Ana, CA has been selling Ricoh production devices for years.

Richard Van Richard Van Dyke Advanced Office Dyke, co-owner, Services reveals that the company has a more cautious approach to marketing production these days. By narrowing its focus to certain types of customers, Advanced has been able to establish credibility with customers while also turning a profit.

“There was a time when we were so gung ho with selling more Ricoh production than any other entity, but we started to pull back because it was difficult to compete profitably, primarily on the aftermarket side,” reveals Van Dyke. “We are far more selective in the markets we [target] and want to ensure we’re picking markets where we can compete and earn an aftermarket profit.”

That means avoiding most commercial printers, print for pay, and school print shops, for example.

“We’d find ourselves having to sell against direct price per page, which is a losing proposition,” contends Van Dyke.

Advanced’s long-term relationship with Ricoh and its products adds another element of credibility.

“We’ve been with Ricoh for a long time and know their people well; we understand their products, we understand design, and we do a good job on the service side,” notes Van Dyke. “We want to make sure anything we sell—production in particular— that we can deliver a level of service that far exceeds what the competition offers today. That’s key in production.”

Cornerstone Office Systems, Kalamazoo, MI has been selling Sharp production devices ever since Sharp introduced them a few years ago. The dealership started by targeting existing customers.

“We went to some of our more trusted customers who had a need [for a light production device] and it worked Alan Valence out beautifulCornerstone Office Systems ly,” states Alan Valence, general manager, Cornerstone Office Systems. “You already have trust and credibility with them.”

Virginia Business Systems in Richmond, VA sells Konica Minolta and Xerox light production machines. Here too the credibility of the manufacturer within the production space rubs off on the dealer.

“Konica Minolta has done a good job of getting the word out about their products through trade magazines James Dotter Virginia Business and end user Systems advertising,” says James Dotter, president of Virginia Business Systems. “When customers hear ‘Konica Minolta’ it’s not the first time. They’re familiar with the product, the awards they’ve received, and the capabilities [of the product].”

Virginia Business Systems and its sister company Edwards Business Systems in Bethlehem, PA recognized early on that they had to implement certain strategies to stand out from the competition when selling production devices, and by extension build their continued on page 22

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Establishing Credibility in the Production Print Market credibility in the market.

“We addressed items that were important to end users such as guaranteed response time, having parts and supplies on hand to keep [the device] up and running, and being able to run jobs if the customer’s systems were down for an extended period of time,” states Dotter.

“It’s easy to say you can provide a loaner, but when the device is the size of a wall, that’s difficult to do.”

So when a customer’s device is down or a part is on back order, Virginia Business Systems steps in to ensure that the customer’s job is completed without their customer being impacted.

“From a marketing aspect, we invested in marketing pieces for production print so it’s not just, ‘By the way we also sell that.’ We’ve created some nice pieces Rick Lingon Virginia Business that accent the hardware, the front-end solutions, Systems and our servicing capability,” adds Rick Lingon, vice president of sales, Virginia Business Systems.

Edwards and Virginia also have an inside Help Desk that is adept at solving network issues and getting customers quickly back up and running. That too helps with credibility.

The commercial print market certainly poses a challenge for first timers, but that doesn’t mean it’s a market that they shouldn’t pursue.

“The first thing a dealer looking to establish credibility in the production market needs to do is demonstrate a commitment to the market,” opines John Corely, president, Channel Partner Operations, Xerox. “This is the big leagues and one of the most demanding markets.

The output is either sold or consumed in-house and customers are looking for a production print professional that understands and is committed to the market.”

This is why the Boy Scout motto “Be Prepared” works wonders for establishing credibility.

“Add staff with experience in sales, solutions and technical know-how,” 22

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www.enxmag.com | February 2016

recommends Corley. “Understand what you’re getting into. Customers demand remarkable image quality consistently with outstanding support. Particularly for service bureaus, it’s a mission critical capability. They need continuous uptime, sometimes 24/7 service.”

First timers can also emulate those dealers who are already selling to commercial printers.

“They offer great equipment and position themselves as a trusted advisor,” states Corley.

“Develop a strategy to differentiate yourself.

What difference will you John Corely Channel Partner bring to the table?”

Operations, Xerox If you ask Brian Dollard, director of marketing with Canon U.S.A., the greatest challenge for a first time dealer selling production print equipment is establishing credibility from the outset.

“When you go into these commercial printers, in-plants, and transactional environments and sit down to talk to these people, they’re going to sniff you out quick to understand whether or not you know what you’re talking about,” says Dollard.

He cautions against going into these customers and calling the device you’re selling a copier. That undermines any credibility in their eyes.

“The second you call it a copier, you’ve just written yourself off,” maintains Dollard.

Training and education often serve as the foundations for building credibility.

“The dealer needs to make sure his people are trained with an underBrian Dollard standing of their customCanon U.S.A. er’s business, their applications, and their pain points so they can tailor a solution engineered towards solving their problems,” states Dollard.

And you need a solid understanding of your competition.

“You have no chance of doing that if

you don’t have an intimate understanding of the applications or the technology,” emphasizes Dollard. “My advice for anybody getting into this for the first time is go out and find people who have been there and done that.”

“It goes beyond securing leading edge equipment,” says Jim Coriddi, vice president, Dealer Division, Ricoh Americas Corp. “Adding production print portfolio capabilities (both monochrome and color) and services offerings are routes for many dealers to open up new market opportunities and level the playing field, but to do this properly (and establish credibility) requires a level of commitment and investment. At Ricoh we work one-on-one with our dealer community taking a long close look at their businesses and collaborate with them on business plans that can help them expand their production print footprint. Based on those relationships, we believe that the two most important areas for dealers to focus on to establish themselves in the production space include staffing and partnering with the right vendor.”

Coriddi also emphasizes the importance of staffing.

“Dealers need dedicated professionals that understand the nuances of the production print business. Establishing a production print team that consists of a specialist Jim Coriddi who can work with the Ricoh Americas Corp. general line sales team, an analyst to work on pre- and post-sales activities and tenured technicians to maintain products in the field, help ensure success in addressing the special needs of production customers. At Ricoh, we work with our dealers to help train staff to be those ‘experts’ on production print and/ or help them in the search for that type of expert to add to their staff.”

Kent Villarreal, senior product manager, product planning and marketing, Sharp Electronics Corp. feels that it’s important to let customers know that you have the support of your manufacturer such as sales and service training. Service continued on page 24

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Establishing Credibility in the Production Print Market and response time are critical in the production space and Villarreal says it’s important to promote two-hour response time with 24-hour around the clock service.

Certification on Fiery products is another key for building credibility. That begins with Fiery Pro Certification and then making sure that certification logo is on the business cards of certified reps and techs.

“That gives instant credibility for customers that have Fiery,” states Villarreal.

He also cautions against selling off a price sheet. Instead, bring in Kent Villarreal Sharp Electronics samples of output from the production device.

Corp.

Equally important in Villarreal’s view is having a demo model on the showroom floor where sales reps can produce samples of their customer’s or prospect’s output.

“Assuming they’ve done their due diligence, researched their marketplace, made the determination it’s a good fit for them and their business, and understand the investment because it’s a larger investment than with your traditional workgroup products, the first thing they need to do is hire the right staff that can speak the production print lingo,” contends Joe Contreras, director, product and solutions marketing, Toshiba America Business Solutions.

He advises against training existing sales reps about the unique requirements and intricacies of the production print market, not that it can’t be done.

“When you’re talking to a customer, they need to know what they’re talking about,” emphasizes Contreras. “This isn’t something where you can wing it and fake it ‘til you Joe Contreras make it.”

Toshiba America Business Solutions EFI, a key player in the production space with its Fiery products, adds their perspective.

“Credibility has to be earned,” affirms John Henze, director of marketing for Fiery business, EFI. That means understanding the customer’s business, business model, business environment, pain points, what they’re trying to accomplish, and what services and offerings they provide to their customers.

Henze emphasizes the importance of hiring production print subject matter experts, particularly when targeting commercial print.

“I’ve seen it done well and I’ve seen it done poorly,” he concedes.

“You can’t be a dealer that’s played for a number of years in an office John Henze Fiery Business, EFI environment and then just decide you’re going to get into production print and the next day start selling it.

You’re going to fail. It’s bringing in the talent, or training the talent to get that experience.”

He emphasizes that it’s not just in sales, but equally or maybe more importantly, support and service staff.

“You need someone who can talk credibly with the customer about their business needs up front and you need the people to put together the right solution,” says Henze. “And you need people on the back end to answer the questions or fix the problem.”

Manufacturer Support The most important asset to any dealer entering the production market for the first time is support from their manufacturer.

Virginia Business Systems isn’t shy about using Konica Minolta’s resources when necessary.

“Konica Minolta has done a great job with their production print team,” states Dotter. “They have sales specialists, engineers, almost anything you could ask for at our disposal. And they work exclusively with the dealer channel. They’ve been tremendous.”

As for Xerox, Dotter appreciates the company’s lead-generation program

that provides the dealership with a spiff should they turn them onto a large business opportunity.

“Dealers can tap into the Xerox experience to help establish credibility in the light production and higher end product markets,” says Corley. “As a market leader, Xerox has a vast array of resources to support our dealers and to help get them started. We can help with plan development, training and marketing support.”

Canon can help dealers with the education component and has what Dollard describes as a sophisticated and robust training organization.

“When we sign on a new dealer there’s an on-boarding process for their sales and technical support people, and in some cases administrative as well as management to understand fully what the products are, how they fit into the market, and what our value proposition is,” reveals Dollard. “But we take it a step further than that. It’s not just a matter of having that knowledge transferred; at Canon we supplement that with a team of production sales consultants. These are people that are out there to ease that ramp up and transition into production.”

Canon’s production sales consultants go into the field with the dealer’s sales people, assist with product demonstrations, and help design systems that are tailored to the customer’s specific needs.

“Even under the best of circumstances if you go out and hire people in this regard, that experienced person may come in with an understanding of the market but they may not have the intimate knowledge of the Canon products and how we address all the pain points in the market,” states Dollard.

Canon has discovered that the average dealer getting into production relies heavily on Canon’s production sales specialists for the first six to 12 months. After they’ve had some time and experience they become self sufficient.

“They never really completely wean them off that resource and that’s okay, we definitely want to help our least experienced dealer’s ramp up, but we also want to be there for our most experienced continued on page 26

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www.enxmag.com | February 2016

We Saw It In ENX Magazine

Establishing Credibility in the Production Print Market dealers when they have critical opportunities and feel a helping hand from the manufacturer would be important,” says Dollard.

Ricoh has a wealth of offerings to assist the dealer community in establishing themselves in the production print markets.

“The most common concern for most of our dealer partners is the initial investment,” opines Coriddi. “But what we say to them is that based on the opportunity, they can’t afford not to get involved in this space. After all, it is the one part of the business where print volume continues to increase and continues to be an area where customers are constantly looking to grow.”

Understanding this, Ricoh is determined to helping educate its dealers on the value production print can bring to their portfolio, and how to best engage with their customers. This includes: • Comprehensive training of their staff, in order to help them understand the many available features on each piece of equipment as well as differences between general office sales and the production environment.

• The CHAMPS Program, which features comprehensive cloud IT services, allowing dealers to expand their IT portfolio offering to customers without a large upfront investment. Services they can utilize and offer their customers include Total IT Help Desk, Server Management, hosted Exchange e-mail, and e-mail archiving. In addition, CHAMPs provides production and commercial imaging services that dealers can repurpose for their customers.

• Marketing tools. Through Ricoh’s Avanti investment and MarcomCentral (formerly PTI) acquisition, it has been providing solutions for years to help printers find additional revenue streams, such as offering fully integrated marketing campaigns.

Sharp has a bounty of resources for its dealers who are selling production devices, including collateral that touts the third-party awards they’ve won in the space. This establishes credibility 26

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www.enxmag.com | February 2016

for the dealer and the Sharp equipment.

Sharp also creates case studies and other materials that illustrate the quality and performance of its products.

“We’re trying to build that credibility in this market since we’re a new player to the game from a color standpoint,” acknowledges Villarreal.

He also emphasizes the service and sales support that Sharp provides.

“When we first launched our Pro Series lineup, we hired regional production print specialists,” explains Villarreal. “They evangelize the product, help dealers look for opportunities, and assist with demo days in their dealership with confirmed prospects.”

In addition, Sharp production print specialists, who are Expert Certified by EFI, can help demo the equipment. This strategy has been particularly effective with Villarreal reporting that Sharp dealers are enjoying a 50 percent close ratio when that happens.

Cornerstone has received plenty of help from Sharp, particularly from Sharp’s production specialist and the regional EFI rep.

“He did a phenomenal job of putting the customer at ease,” says Valence about the Fiery rep. “This was a big confidence booster for us to make sure we got off on the right foot.”

Toshiba has an extensive program in place for both sales and technical personnel to help get the dealer ramped up.

“We understand it’s a unique product and selling and supporting it is going to be different than your standard workgroup office product,” states Contreras.

“From a technical standpoint we ensure the dealer’s technical staff understands how to service it and how to maintain it, because these are critical devices within an organization.”

As one would expect, Toshiba also trains sales reps about the nuances of the product and production print requirements.

“We also participate in joint sales calls to help them win sales opportunities,” adds Contreras.

EFI offers an array of resources for

its Fiery business, including 26 different interactive e-learning courses that help dealers better understand the products EFI provides along with step-by-step how-to guides that explain how to impose a job, create a color profile, etc. The company also has short videos in its partner portal plus its certification program with two different levels of certification.

Henze reports that there are probably more than 1,500 Fiery certified professionals selling Fiery products with many in the dealer community being Pro Certified.

“Dealers have grabbed onto that because it creates knowledge and helps differentiate them, and now they market it by telling customers, ‘I have Fiery certified professionals on my staff,’” says Henze.

EFI also provides the dealer with presales technical support to post-sales break-fix support, to upfront services on designing the right workflow or helping automate repetitive tasks. This can help reduce support calls because now the dealer can resolve more issues on their own.

“The Fiery business itself has 100+ field folks/subject matter experts on Fiery products throughout the world plus a huge support organization. [Dealers] know if there’s a problem they can call somebody and get an answer,” concludes Henze. ♦

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News Market Intelligence

In 2015, Manufacturer Sales Slowed and Profits Fell. So, What About this Year?

F Charles Brewer

or most companies in the hardcopy industry, 2015 was not a banner year. As a whole, hardware and supplies vendors grappled with persistent issues of overcapacity as print volumes fell. While the economy in the United States grew modestly last year, other regions were not as fortunate, and vendors recorded declining sales. Markets that once seemed to hold promise like Brazil and Russia struggled with recession, and they are expected to continue to do so this year. Even China’s economy has cooled and many fear it will cool even more in 2016.

Most OEMs had not reported their final numbers for 2015 as of this writing, but much of what I saw from last year indicates hardware vendors saw sales and earnings decline. Unfortunately, the news was particularly bad in the second half of the year suggesting that problems will linger into 2016. Sales were down along with unit shipments and profits at most printer and copier companies contracted. Neither the U.S.

nor the Japanese firms appear upbeat about the current year.

The market for hardcopy equipment in the U.S. was perhaps the strongest in the world in 2015, but the domestic industry and the channels that support it felt the adverse impact of fierce global competition. Many companies were compelled to slash prices, which squeezed already slim margins. In what was clearly a buyer’s market, consumers started bargain hunting, which lead to further price reductions.

Making matters even worse for U.S. companies doing business overseas, the dollar strengthened last year. This was especially difficult on the U.S.-based hardware vendors—Hewlett-Packard, Lexmark, and Xerox—because they had to compete against Japanese firms marketing products priced in the ever-weakening yen. But even Japanese hardware manufacturers showed signs of distress in 2015 as the year progressed.

I don’t want to sound too negative, however, especially for companies selling equipment in the U.S. Despite the jittery stock market, the U.S. economy continues to generate jobs albeit at a rather slow rate. Overall, hardcopy generation is inversely proportional to the unemployment rate so if more people are working, there’s more printing. The difficulties vendors continue to endure both here and abroad notwithstanding, the global hardcopy industry

still generates tens of billions of dollars each year. People print trillions of pages annually, demonstrating their reliance on hardcopy—a reliance that is not going away even if the industry is in decline.

HP Reveals Tough Market Conditions With a unique fiscal year that ends on October 31, Hewlett-Packard is the only hardware manufacturer that had reported its full-year FY 15 results and the firm’s performance—like most of its competitors—was not good. The slump that HP’s printer business has been in for nearly 5 years continued in 2015 and in November the company reported declining printer sales for 18th consecutive quarter.

For the year, total sales of HP’s printers and supplies dropped 9 percent to $21.2 billion in 2015 from $23.2 billion in fiscal 2014. Supplies sales fell 6 percent from $14.9 billion in FY 2014 to $14.0 billion last year and commercial hardware revenue was $5.4 billion, down 10 percent from over $5.9 billion.

Consumer hardware revenue in FY 15 was only $1.9 billion, a drop of some 20 percent from $2.3 billion the year prior. Total printer hardware units for the year were down 7 percent on a 9 percent decline in commercial hardware units and a 6 percent decrease in consumer hardware units.

With its top-line results sagging, the profitability of HP’s printer business showed signs of pressure. Although the Printing continued on page 30

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In 2015, Manufacturer Sales Slowed and Profits Fell business’s operating margin for fiscal ogy generate 6 to 7 percent less revenue 2015 stood at 18.2 percent—the same as than 2014. For FY15, Xerox’s Services in FY14—the full-year operating profit margin is expected to be approximately 8 fell to $3.9 billion from $4.2 billion, a 9 percent, while the margin for its Docupercent decrease compared to the year ment Technology business will be in 11 prior. to 13 percent range.

Dion Weisler, president and CEO of As noted, Xerox is now contemplatthe newly formed HP Inc., which now ing an asset sale but we don’t have many markets HP’s printers and PCs, indicated details. Ms. Burns says that Xerox is that the printer business suffered from “not currently considering the sale of the currency fluctuations that “accelerated company but all other options are being pricing pressures even more than we considered.” Needless to say that we at expected in certain profitable segments Actionable Intelligence will be watching of the printing markets.” He added that the firm closely this year. the overall the printer market was also Lexmark also had bad news for its weaker than expected in the calendar investors. During the three-month period third quarter thanks to economic woes ending on September 30, total revenue in certain regions. Mr. Weisler pointed dropped 7.3 percent to $851.1 million out that some of HP’s competitors in the compared to $918.1 million the year printing business reported similarly bad prior. Lexmark had a Q3 operating loss of news last year in$21.6 million versus cluding its two U.S. ...Xerox is “not currently considering an operating profit rivals, Lexmark the sale of the company but all other of $54.5 million in and Xerox, which options are being considered.” the year-ago period each announced and it failed to hit the independently that guidance it gave in Q2 of revenue growth they would reevaluate strategic options between +/- 1 percent. Overall laser hardthat could result in asset sales. ware revenue plunged 16 percent year-

Mr. Weisler Didn’t Lie

Almost a month before HP reported its FY15 performance in November, Xerox and Lexmark had disclosed crummy Q3 FY15 results to their shareholders.

With falling revenue in both its Services and Document Technology businesses, Xerox suffered its first quarterly net loss since 2010. For the third quarter of 2015, Xerox revenue totaled $4.3 billion, down 10 percent from $4.8 billion in the third quarter of 2014. The firm’s gross margin tumbled 9.4 percentage points to 22.8 percent compared 32.2 percent in Q3 FY14 while its operating margin slipped 900 basis points to 8.7 percent. For the quarter, Xerox had net loss from continuing operation of $31 million versus net income from continuing operations of $258 million in the third quarter of 2014.

The firm projects total 2015 revenue to be down 3 percent, as Services sales decline 1 percent and Document technol-

over-year to $164 million in Q3 FY 15 as laser supplies revenue fell 13 percent to $461 million. Lexmark said it expects its total revenue to decline by 4 to 6 percent year-over-year during the fourth quarter and for the full fiscal year revenue will be off by 3 to 4 percent compared with fiscal 2014.

Just days before its earnings call, Lexmark told investors that its Board of Directors had “authorized the exploration of strategic alternatives to enhance shareholder value.” The Wall Street Journal reported the news on October 23 and suggested the company maybe looking for a buyer. After releasing a spate of posts about various sale scenarios, the Kentucky-based market research firm Photizo Group report on December 23 that it had “received an unsolicited letter postmarked December 23, 2015 stating that ‘Paul Rooke, Jeri Isbell, the executive officers of Lexmark, and the Board

of Directors are preparing to sell Lexmark to Konica Minolta…’” Although the report set chins wagging, no further word of a KM buyout had come during the opening week of 2016 and neither Lexmark nor Konica Minolta confirmed a sale is pending.

Japanese OEMs Struggle Too Although revenue appeared to continue to grow at many Japanese firms last year, a look behind the numbers reveals the weakness that is now inherent in the current market. Much of the revenue growth that Japanese companies reported last year came from favorable currency exchange rates and sales would actually have declined if these rates had remained constant. Like the U.S. vendors, the Japanese are coping with the ill effects of regional economic downturns and price compression.

Take Canon, for example: Its total revenue increased for the second consecutive quarter during Q3 FY15, which ended on September 30. Nevertheless, when it reported Q3 earnings in October, Canon revised its full-year forecast downward, which was the third time Canon changed its FY15 guidance last year presumably because of ongoing market volatility.

During the summer, when reporting Q2 results, Canon said it expected total net sales of ¥3.93 trillion for the year with an operating profit of ¥380.0 billion and net income ¥245.0 billion. When reporting its Q3 performance, however, Canon cut all three of these figures. Net sales for the year are now expected to total ¥3.82 trillion and operating profit and net income will be ¥365.0 billion and ¥225.0 billion, respectively. If Canon achieves these targets, it will mark a 2.5 percent yearover-year increase in net sales but only a 0.4 percent increase in operating profit, and a 11.7 percent decrease in net income compared to its fiscal 2014 results.

According to Canon, the economic recovery continues in the United States and in Western Europe, but a “rapid slowdown” in the Chinese and Southeast Asian economies adversely affected continued on page 32

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This is a MUST Read To All Dealers: I sold in the Office Equipment Industry from 1981-2001 at three Cleveland, Ohio dealers, finishing as a partner at Blue Technologies, a $50 Million dealer, and moved on to Konica Minolta as a Midwest DSM covering four states. Upon leaving KMBS in September 2009 as a top performer at 102.7% of YTD quota, I started Pinnacle Sales, Inc., a wholesale distributor and leading source of imaging supplies.

Since our inception October 1, 2009, our business model has been and still remains 100% drop-shipping of all products, whether to you the dealer or your end-user customer. We truly are experts at this process and an industry leader.

With direct relationships to multiple top manufacturers and importers, we can supply every product that every dealer needs whether it’s OEM, remanufactured or compatible. It provides Pinnacle the leading edge on price, quality, fulfillment, and delivery which we back up with the best service and customer support in the industry.

Quite simply, we’ve collapsed the supply distribution chain to its most fundamental and basic principle – getting product to where it needs to be, on time, every time, at the lowest cost possible.

To make the process simple and efficient, Pinnacle developed and built a software pipeline that integrates our ERP System with e-Automate which has completely automated the entire order processing cycle. We capture the PO from e-Automate, push tracking back in, post receivers and vouchers, and then close out the invoices. The processes are unattended and at NO COST to the Dealer.

With all this being said, don’t you think it’s time to contact Pinnacle Sales and let us “Manage your fulfillment transparently and make you look good”?! Please email me at jim.loparich@psi-ohio.com or call 440-734-9195. Thanks and have a Great Day. Regards, Jim Loparich, President

C A L L : 4 4 0 - 7 3 4 - 9 1 9 5 O R V I S I T W W W. P S I - O H I O . C O M

In 2015, Manufacturer Sales Slowed and Profits Fell regional markets. Canon’s sales climbed 6.1 percent from ¥872.2 billion in the third quarter of 2014 to ¥925.8 billion in the third quarter of 2015. In addition to the continued favorable currency exchange rate, Canon also benefited from its acquisition of the network video surveillance company Axis AB and sales of semiconductor lithography equipment and flat-panel display lithography equipment. Flagging sales of office multifunction devices (MFDs), laser printers, and inkjet printers in China and Southeast Asia along with Canon’s ailing camera and lens business hampered the firm’s overall revenue, however. The company explained that demand for office MFDs and laser printers is expected to continue to grow in developed markets, but sales of these products in China and Southeast Asia “will likely face prolonged stagnation.” Inkjet printer sales are also expected to decline to weak demand in Asian markets.

Regardless of any regional weakness, overall sales of office equipment like MFDs, laser printers, laser MFPs, and Big Iron devices like digital production printing systems and continuous-feed printers rose 5.9 percent to ¥510.7 billion in Q3 FY15 up from ¥482.3 billion. The operating profit was ¥67.2 billion, a 16.2 percent increase from ¥57.9 billion last

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year and operating profit margin grew to 13.2 percent from 12.0 percent the year prior. But this growth owes much to the favorable exchange rate and weaker yen.

While shipments of color copiers grew 13 percent, total copier unit shipments declined 1 percent year-over-year in Q3 as monochrome copier unit shipments fell 10 percent resulting primarily from weaker Asian markets. Overall copier net sales were up 5.0 percent compared the same period in 2014, but again the increase came from the favorable exchange rate.

Canon said that in local currency copier sales were down 0.8 percent.

With its legendary relationship as HP’s supplier of LaserJet print engines, Canon’s printer business reflects the cool down in its U.S. partner’s printer business. Overall laser unit shipments at Canon were down 12 percent in Q3 as color unit shipments grew a modest 2 percent but monochrome unit shipments took a 15 percent nosedive. Net sale of Canon’s printers grew 4.7 percent in Q3 FY15 compared to 2014, but in local currency net sales were actually down 7.7 percent.

Canon’s inkjet printer unit shipments were also down 8 percent year-over-year in Q3 and while inkjet printer revenue rose 1.7 percent due to the positive FOREX benefit. Inkjet revenue actually fell 4.2 percent in constant currency.

Canon’s Not Alone Almost all of the Japanese hardware vendors that we follow at Actionable Intelligence lowered their guidance for the current fiscal year last October. With fiscal years ending on March 31, Brother, Epson, Konica Minolta, OKI, and Ricoh each recalibrated their expectations downward as they reached the mid-point of the year. In general, the companies blamed their lower outlooks on the malaise in emerging markets including those in Brazil, China, Russia, and Southeast Asia. Some companies such as Konica Minolta and OKI indicated that increased price competition in developed markets will also have an adverse affect on revenue growth during the current fiscal year.

Like the news that Lexmark and Xerox were interested in selling hard copy assets, we also heard some rumors that a leading Japanese manufacturer is considering putting its copier business on the block. In the closing days of 2015, The Japan Times reported that Toshiba Corporation, reeling from an accounting scandal that forced the resignations of the company’s top officers over the summer, is considering proposals to sell its office-equipment subsidiary, Toshiba Tec Corp. {TTEC}. The validity of the claims was challenged, however, in the U.S. Immediately after the news broke in Japan, Bill Melo, Chief Marketing Executive at Toshiba America Business Solutions was quoted in the Industry Analysts’ online newsletter as saying the news was “not associated in any way with TTEC or with Toshiba America Business Solutions.” I guess time will tell if Mr. Melo or The Japan Times is correct.

Fujifilm was the lone Japanese company that managed to buck the trend of making downward revisions. The company maintained the fiscal-year forecast that it provided when announcing its full-year results for the prior fiscal year in April 2015. The company expects modest gains in its revenue and net income, and forecasts its operating income will grow over 10 percent. Fujifilm’s Document Solutions business, which is operated continued on page 34

We Saw It In ENX Magazine

Only Print Quality Remanufactured Cartridges Use Genuine Future Graphics OEM Replacement Parts

FOR FURTHER INFORMATION CONTACT FUTURE GRAPHICS TODAY Email: info@fgimaging.com Sales: 1 800 394.9900 Int’l Sales: +1 818 837.8100 Tech Support: 1 800 466.0246 Visit our website: www.fgimaging.com © 2001 – 2016, Mitsubishi Kagaku Imaging Corporation dba Future Graphics. All rights reserved. Future Graphics is a distributor of compatible replacement parts for imaging equipment. None of Future Graphics’ products are genuine OEM replacement parts and no affiliation or sponsorship is to be implied between Future Graphics and any OEM. Trademarks and brand names are the properties of their respective owners and used for descriptive purposes only.

In 2015, Manufacturer Sales Slowed and Profits Fell by the Fuji Xerox Company, reported revenue growth of 3.9 percent for the first half of the year, as revenue climbed from ¥570.4 billion in the year-ago period to ¥592.6 billion in the six-month period ended September 2015. Contrary to what we expected, the firm reported revenue growth from operations in the Asia-Oceania region and export shipments to its U.S. partner Xerox.

Although revenue grew we did see some weakness in Fujifilm’s Document Solutions business. The group’s operating income, for example, fell from ¥49.7 billion during the first half of the previous fiscal year’s to ¥48.3 billion, a 2.7 percent decrease. The operating margin for the first half of the current fiscal year was 8.1 percent, compared with 8.6 percent during the year prior. Fujifilm also said the Document Solutions business was negatively impacted by increased costs for imports due to the appreciation of the U.S. dollar against the yen. Xerox’s poor performance also suggests that Fuji Xerox’s sales will slow as the Japanese firm’s U.S. partner orders fewer machines.

Remans Show Signs of Suffering My company follows the third-party supplies industry closely on its website, www.Action-Intell.com, and we wrote a lot about the activities of various companies either in or aligned with the global aftermarket industry in 2015. Much of what we reported suggested the aftermarket is feeling many of the same pressures that dogged the business at the OEMs last year and both groups are trying to successfully cope with a shrinking market.

When the publicly-traded German remanufacturer Turbon AG reported its Q3 earnings to shareholders in October, the news was quite similar to what hardware vendor had reported. For the first nine month of FY 15, Turbon said its sales were flat relative to the year prior, which caused the firm to miss it earlier revenue projections. Earnings before interest and taxes (EBIT) were off 34 percent and stood at $5.4 million down from $8.2

million during the same period in 2014.

In addition to reporting its earning, Turbon also said it had acquired all shares of the Austrian third-party supplies vendor Embatex AG. The acquisition is yet another sign that consumables companies serving Western markets continue to struggle to stay in business, a trend that’s been ongoing for more than 10 years.

We continued to see M&A activity on this side of the Atlantic last year, as well. In May, we learned that the Zhuhai, China chip maker Apex Microelectronics would acquire its long time rival Static Control Components, one of the remanufacturing industry’s largest suppliers of toners, drum, chips, and other components. The sale was another indication that the market is contracting. Reuters put Static Control’s price tag at $63.0 million, which seemed low for such a well-established company with a global brand and footprint. However, reports out of China at the time of the acquisition indicated that Static Control’s revenue had dipped below $200 million in 2014 and were presumably going to fall even lower last year. And Static Control was not the only aftermarket supplier forced to cope with declining revenue last year. Mitsubishi Kagaku Imaging Corporation (MKIC), which also runs the aftermarket parts supplier Future Graphics, announced company-wide restructuring in March, which resulted in staffing cuts. Later in 2015, MKIC announced it would stop manufacturing toner at its Chesapeake, VA plant in March of this year and move that production back to Japan.

Before China’s economy began to sputter and its stock exchanges contracted, it looked as if Chinese aftermarket companies might engage in a bit of a spending spree. Shortly after Apex announced its acquisition of Static Control, news broke that the Chinese OPC-drum manufacturer Suzhou Goldengreen Technologies (SGT) had acquired an undisclosed (but presumably significant) stake in Cartridge World. Business at the global franchiser of third-party supplies retail stores seems to have declined over

the past decade. After bursting on to the scene in the late 1990s and early 2000s, Cartridge World enjoyed hyper-growth and it opened over 600 stores in the United States alone. About ten years ago, the firm’s growth slowed and then took a turn for the worst when banks stopped lending and investment capital for franchises dried up during the recession. Since SGT has become a major Cartridge World shareholder, the franchiser has changed its senior management team and indicated that it plans to grow again in the near term. Despite any bullish claims, there were no signs of material improvements at Cartridge World like new store openings or massive marketing campaigns in the U.S. last year. Maybe that will happen this year.

Not Much Relief in 2016 Reviewing the events and trends in the hardcopy industry last year leads me to believe that companies will not have it any easier this year. The U.S. will continue to be a bright spot in the global hardcopy industry and presumably markets in Europe will improve some this year too.

But, I don’t expect emerging countries to recover much this year so OEMs will not be able to tap these markets for growth in 2016. The recession in Brazil and Russia are expected to continue and China is showing no sign of getting back to the strong GDP growth it once experienced not that long ago.

While I don’t predict there will be many big changes this year and I do expect there will be some discernable differences. Thanks to the improving economy in the U.S., the dollar will strengthen more. Economists are also beginning to see signs that the yen may begin to strengthen this year as well, which should be good news for the vendors. It seems at the very least prices will stabilize in 2016 if not begin to nudge upward. Regardless if the yen does or doesn’t strengthen, Japanese hardware vendors seem to have wrung as much benefit out of the weaker currency as they could. The performance I noted earlier indicates that lower prices continued on page 35

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In 2015, Manufacturer Sales Slowed and Profits Fell have already put Japanese vendors in a bit of a bind so ongoing price cuts seem unlikely. In fact, we did note some price hikes in 2015 like those on inkjet supplies in the second half of last year by Canon and HP. I expect to see additional increases in consumables pricing this year as vendors look to improve profits.

Another way that OEMs are looking for improved profitability is by eliminating as much infringing consumables as they can from the large established markets. The trend toward more infringement lawsuits being filed in various regions continued last year as it will in 2016 and there was OEM activity in the U.S. and in Europe as well as other regions. One new trend that emerged in the U.S. last year was an increase in seizures of imported infringing supplies from China. As 2015 drew to a close, the U.S. International Trade Commission (ITC) issued its 60th

seizure-and-forfeiture order up from just a handful in 2014. OEMs will continue to look to the ITC to protect the U.S. market from infringing products going forward.

Ridding the market of cheap infringing supplies is imperative if OEMs are to have any shot at improving their profitability next year.

As it has over the past few years, ongoing legal pressure on the enormous Chinese aftermarket industry will push companies in China to focus more on exporting to regions where patent-right protections are not enforced. Chinese firms have successfully penetrated many of these markets including those in India, South America, Russia, and others. While these markets are nowhere near the size as those in established economies, the growth potential is huge because many of these markets are still experiencing organic growth. Consumers in these

We Saw It In ENX Magazine

regions are also more price sensitive than those in more established markets and they are drawn to the small price points associated with non-OEM products. Actionable Intelligence did a comprehensive study of the Chinese industry and found that despite less-than appealing market conditions worldwide, most third-party supplies vendors in China are doing well.

I fully expect that to continue in 2016 regardless of the threat of OEM lawsuits.

In closing, I’d like to repeat that while conditions are not ideal, the hardcopy industry remains humungous. We expect the industry will remain quite active in 2016 and we’ll stay busy covering all the action. ♦

February 2016 | www.enxmag.com

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Business Profile

Mail Superiority: Paitec USA, a Dependable Source for Quality and Affordable Mailing and Paper Handling Solutions

I

f there’s one thing that Peter Nguyen—President and Chief Technology Officer—and Art Waganheim— Vice President of Operations and Chief Financial Officer—of Paitec USA understand about the office technology dealer channel, it’s that dealers are leaving money on the table if they’re not selling mailing and paper handling solutions, particularly pressure seal equipment.

That may sound biased coming from co-owners of a company that manufacturers this equipment, but both Nguyen and Waganheim possess a keen understanding of the dealer channel since each owned mailing solutions and office technology dealerships in Miami Lakes, FL prior to starting Paitec USA in 2008.

After their dealerships were acquired by their manufacturers, the two embarked on a joint venture: starting a company that manufactures pressure seal equipment.

“When we looked at the products we used to sell when we were dealers, there was this niche product that we were never satisfied

(from left) Art Waganheim, VP of Operations and CFO, and Peter Nguyen, President and CTO

with the quality of the equipment: pressure seal machines,” recalls Waganheim.

If you think that sounds crazy in a world where e-mail and other forms of electronic communication seem to be supplanting snail mail, you might have a valid argument. You might also have a legitimate argument that the mailing industry didn’t need another manufacturer of pressure seal equipment, especially since most of the pressure seal products currently on the market were being marketed by some of the more recognizable names in the mailing equipment industry.

However, after eight years in business, Paitec USA has proven the naysayers wrong. Turns out snail mail isn’t dead yet and the industry did need another pressure seal equipment manufacturer after all.

After finding an offshore manufacturer partner that would build the equipment to their specs, Waganheim and Nguyen now had the kinds of machines they wished they had when they were mailing equipment/office technology dealers.

Paitec USA also created a tag line showcasing its products as being environmentally friendly.

The company has been marketing its products as “a greener way to mail” because no envelopes are needed.

According to Nguyen, “Our machines have made heroes of office managers and procurement officers all over the country who

can tell their bosses they no longer need to order tens of thousands of custom printed envelopes for mailing checks, statements, and other single-page documents.”

Nguyen recalls one government agency which started saving the cost of over 50,000 envelopes per month for its monthly utility bills to customers.

“Without the need to insert documents into those envelopes, the customer can also replace their old and temperamental folder inserter machines with faster processing pressure seal machines,” adds Nguyen. “For those customers who still need #9 return envelopes, there are pressure seal solutions which have built-in return envelopes in them so, again, no inserting is necessary.”

The Equipment If you’re not familiar with pressure sealers, you’re not alone. It’s a good bet, however, that you’ve seen their output. If you’ve ever received a check or bill in the mail where you had to bend three sides of the mailing piece to open it, you’ve received a document that’s been run through a pressure seal machine.

The mailing piece is actually a special form that is printed on a printer or MFP and then run through the pressure sealer for folding and sealing. The forms are specifically made to seal under pressure. The pressure seal forms have dry cohesive glue around the edges so when a form is folded and pressure applied, the piece is sealed. In order for sealing to continued on page 38

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We Saw It In ENX Magazine

Looking For New Ways To Grow Sales? Follow These 4 Steps To Make Money With Pressure Seal Machines.

If you have customers who print and mail large volumes of single page documents, help them be a greener mailer with pressure seal self-mailer technology and then profit from machine, service, and ongoing form sales.

1. Pinpoint Prospects Based On These Types Of Needs And Applications Payroll And Accounts Payable Checks

Cancellation Notices

Single Page Statements

Class Schedules And Grade Reports

PIN Number Mailers

Mortgage Solicitation Mailers

Medical Appointment Reminders

Utility Bills

Traffic Tickets And Jury Notices

Municipal Business Licenses

Property Tax Notices

W2 / 1099 / ACA Tax Forms

Insurance Solicitation Mailings

Voter Registration Cards Other Single Page Documents

2. Determine Your Machine Recommendation Based On Their Volumes Standalone Pressure Sealers

Inline Pressure Sealers

ES2000

ES5000

ES5500

IM8100

ES8000

MX9000

MX13000

GFI20-CO

IM9100

GFI20-KM

3. Call Paitec USA To Help You Close The Deal. Really, We’re Good At It! 4. Consider Selling The Ongoing Supply Of Forms. Ask Us How. 877-295-SEAL [7325] info@paitec.com www.paitec.com

Not Currently A Paitec USA Dealer? Call Us Today.

Mail Superiority: Paitec USA, a Dependable Source take place properly, there are fold perforations to ensure the fold lines up to create a single-page document and mailing piece.

The glue is not affected by the high temperatures of a printer or MFP and the latest generation of forms don’t require water like earlier versions of the technology.

IM9100

Although Paitec USA doesn’t manufacture the paper, being in the pressure seal business, they’ve become quite astute about the paper that’s run through their machines and are more than willing to share that knowledge with their customers.

Paitec USA’s pressure seal systems and paper jogging machines are manufactured by PAI Trading, Inc. The line includes standalone and in-line pressure seal machines and paper jogging machines engineered for specific mailing needs and volumes. The company’s pressure seal machines meet its goals of innovative and dependable designs with their oversized sealing rollers that allow for maximum pressure, a patented angle seal feed design, heavy-duty cycle volumes, and patented reverse-feed motor technology.

Compared to the machines sold by most of Paitec USA’s competitors, its equipment is equipped with more electronic controls while selling at a comparable price. For example, features such as double-feed detection and exit sensors aren’t typically found on competitors’ lower-end machines.

Common applications for pressure seal equipment encompass utility bills, paychecks, tax forms, and statements. While some companies are starting to electronically deliver those documents, Waganheim believes there’s still a need for the hard copy pressure seal forms, which helps explain the upward trajectory of Paitec USA’s sales during the past several years.

In Step with Inline Machines Paitec USA has seven machines in its standalone pressure sealer line and has been 38

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expanding its offerings with the introduction of inline machines. Those devices are resonating with office technology dealers.

The inline machines enhance the workflow involved when processing forms.

Typically, these forms are printed on a printer or MFP then manually removed from the output tray and either hand jogged or placed in a jogging machine to square them off before being placed into the feed table of a standalone pressure seal machine where they’re run through the device and sealed.

“People kept asking us; can you automate the process so [the forms] go directly from the printer to the auto-seal machine?” recalls Waganheim.

“Imagine the joy of a customer knowing that they no longer have to retrieve printed documents from the MFP or production printer, hand jog the forms, and then place stack after stack of forms into the feed table of the pressure seal machine,” adds Nguyen. “With an inline solution, the job is completed when the print job is completed.” And, of course, there are labor savings from eliminating manual work.”

GFI20 Inline With KonicaMinolta

ucts are production machines,’” observes Waganheim.

At Your Service Having co-owners with decades of experience as dealers in the mailing equipment business is an asset.

“We’re a manufacturer, but are still dealers at heart,” concedes Waganheim.

That means keeping things as simple as possible for its dealers. For instance, prior to shipping equipment, Paitec USA does a final test and preset of the machine so that it’s practically plug and play.

“We think seriously about how to make it easier for the service techs,” says Waganheim. “They love us because our equipment is ready to use out of the box.”

Whenever mechanical equipment is involved, ensuring that the equipment is serviced promptly and accurately is essential. That’s why Paitec USA goes above and beyond to ensure that virtually all key machine parts are available to its dealers and resellers when needed. Requests for parts that arrive by 3 p.m. eastern time are shipped the same day. With customers from Maine to Hawaii, Latin America, and Canada, the company responds to e-mails and phone calls morning, noon, and night.

It Works

GFI20Inline With OCE

Those requests led to the development of a low-volume inline machine and a mid-volume inline model. Now Paitec USA is expanding the line with a new high-speed inline machine that works with high-volume equipment from Konica Minolta, Océ, Canon, Kyocera, and Ricoh.

“Copier dealers were telling us, ‘We sell a few printers, but our primary prod-

Although sales represent a valid method for tracking how well Paitec USA is doing, there’s still nothing like customer feedback and the company receives plenty of positive feedback. Waganheim recalls the mailing equipment dealer who was purchased by his national vendor and when asked by that vendor why he sold Paitec USA pressure sealers and not the vendor’s line his response was, “Because the Paitec machines work.”

“That’s the best compliment we can get,” says Waganheim. “Pressure seal machines can be temperamental. The folds have to be correct, the glue correct, and we take great pride that our machines work.”

Reaching Out to the Office Technology Dealer Channel Paitec USA continues to partner with more office technology dealers in addition to mailing equipment dealers and graphic arts resellers, but Waganheim knows there are many more who can benefit from the company’s products who have yet to discover Paitec let alone pressure seal equipment.

We Saw It In ENX Magazine

“They’re leaving money on the table if all they’re doing is selling printers and copiers and not looking at the finishing end,” he says. “This can open up a new revenue source.”

MX13000

Dealers who sell Paitec USA products often provide their customers with the forms too—another viable revenue source.

Then there are the additional clicks.

“Since the forms are being run through their copiers and printers, that counts toward the per-click maintenance because they now have a new use for their machines,” adds Waganheim.

He firmly believes that dealers need to keep an open mind about selling pressure seal equipment. He recalls the dealer who once told him they never run into opportunities for these devices.

“The reason they never ran into it was because their sales reps were talking to the mailroom manager and didn’t go down the hall to see the accounts payable manager or the payroll manager,” says Waganheim.

“The target market is not the mailroom manager or manager of the print shop; there’s business out there but they don’t believe it because they never run into it, and they never run into it because they don’t think out of the box.”

How might a dealer hone in on those opportunities, whether low volume, mid volume, or high volume? Waganheim suggests starting with their existing customer base and calculating how many are taking a single piece of paper and folding and inserting it into a number 10 envelope.

“Pressure seal forms were created to be a single-page self mailer,” observes Waganheim. “Customers just doing that single page, there’s your prospect.”

Helping Dealers Be Successful Paitec USA does its part to help its dealers

sell too, much of it rooted in Waganheim’s realistic view of Paitec’s product line.

“Pressure seal equipment is a niche product and has always been a niche product,” acknowledges Waganheim. “We do not expect any of the sales representatives at any of our dealers, whether they are mailing equipment dealers, graphics arts dealers, forms resellers, or office equipment dealers to be experts.”

That’s why Paitec personnel are available as needed for conference calls with customers and to conduct video demos of their equipment. To ensure that a customer will be confident that the equipment they’re purchasing will meet their needs, Paitec encourages its dealers to send them customer’s forms that will be run through the machine.

The company will then create a video, which is posted on a private website so the customer can see their forms being run on the machine. The company will also do live video demos as well as provide dealers with references from satisfied customers.

ES8000

“Between the reputation we have and the ability to get on a conference call with a customer at any time and our video demos, we provide sales reps with all the tools they need to succeed,” affirms Waganheim.

That’s why Paitec USA updated its website to make it more mobile friendly last year.

“Because our product is a niche product it’s important that the dealers and their sales reps could pull out their tablet at the customer site to view video demos of the equipment,” says Waganheim.

Paitec USA also has dedicated web pages showcasing the benefits of pressure sealing along with comparisons of its various machines so dealers and customers can identify the best machine for their applications and volume.

Waganheim has some additional advice that can help ensure success centered

We Saw It In ENX Magazine

around matching the customer with the appropriate machine for their applications and volume.

“A lot of people rate their machines based on monthly volume,” explains Waganheim. “Monthly duty cycle is important, but what kind of volumes are your customers doing [at a time]?”

He explains that a customer running 5,000 forms a month probably isn’t a good fit for a machine rated for 5,000 forms a month if they’re running 5,000 forms in one batch because that machine will be too slow.

“We make sure there’s no miscommunication and can help our dealers fact find and make sure they have the right machine for the right audience,” notes Waganheim.

It’s not unusual for Paitec to turn down a sale because they aren’t comfortable their machines will meet a customer’s expectations. One time a dealer’s customer sent them forms to run through the machine, but the forms were of such poor quality that Waganheim had to let the dealer and the customer know that they weren’t comfortable running those forms through their machine.

“We’re picky in who we sell to and who we deal with,” concludes Waganheim. “Every machine has to work for our customers if Paitec USA will continue to grow and maintain its great industry reputation.”

Finally, he emphasizes that Paitec USA is not just into box sales even though what they’re selling is primarily a box.

“We’re not into what’s your numbers this month vs. last month? It’s how many satisfied customers have you made that you can build your reference base with?

We’re serious about that.”

For more information about Paitec USA call (877)295-7325 or visit www. paitec.com. ♦

February 2016 | www.enxmag.com

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Dealer Spotlight

A Conversation with Advanced Office’s Richard Van Dyke

H

ere’s a simple recipe for creating Ricoh’s largest customer in southern California: Take three separate independent dealerships, combine them together, and voila, a very large independent Ricoh dealership in the region.

Actually, that’s the origins of newly named Advanced Office, a Santa Ana, California-based dealership that serves five southern California counties: Los Angeles, Orange, San Diego, San Bernardino, and Riverside.

The three co-owners of Advanced Office, Tim Wickers, Mike Dixon, and Richard Van Dyke, possess more than 100 years of industry experience between them with Van Dyke with the shortest tenure—just about 30 years in the business.

Van Dyke got his start in the early 1980’s as the founder of a medical imaging company that also specialized in color computer graphics. This was good experience for someone who would eventually enter the copier business, especially when one considers what the industry looks like today. Van Dyke started his copier dealership after realizing that the office space offered more opportunities than the medical market and that it would be easier to compete against other

office technology dealers than the larger players he was going up against in the medical imaging market.

Meanwhile, Van Dyke’s partners took more direct routes into the copier industry with Wickers, a previous manufacturer’s representative for copiers and faxes, initially starting a fax dealership, Amerifax Imaging, while Dixon, the founder of Advanced Office Services, originally sold and serviced typewriters and then fax machines and copiers.

“We all had something in common,” recalls Van Dyke.

“We were all obsessed with the customer in southern California, and all had offices in many of the same cities and markets, and we carried many of the same product lines. It made sense to pull ourselves together and optimize ourselves in these markets. That made a huge difference.”

Combining the three dealerships not only created one of the largest independent Ricoh dealerships in the region, but offered a substantial footprint for all of southern California with a significant ability to service customers over geography only available previously to direct operations.

Now that we’ve established the back story for Advanced Office, let’s pick things up today by talking with owner/partner Van Dyke who updates us on the current status of the dealership along with some of the reasons for its continued success.

What kind of a year was 2015 for Advanced Office?

VAN DYKE: We had a very

good year. In addition to nice growth, we made a number of internal improvements to ensure even better service delivery and metrics above what the industry has considered good. We’ve also gotten far more involved in solutions and have upped our game in MPS. What segments of your business are doing particularly well for you besides MPS and solutions?

VAN DYKE: Mid-range office color is booming. We continue to see the transition from black & white to color-enabled devices and it’s made a huge difference in terms of our aftermarket. If not for color and production, our aftermarket would be flat or down.

What segments would you like to see improve?

VAN DYKE: While production has seen improvement, we would like to see production do even better and for us to be able to compete in more markets. Our key market is the in-plant/CRD space first and foremost. We’re very selective with the markets we target for production print.

Why do customers choose Advanced Office?

VAN DYKE: Everybody talks about how great their service is.

Two of the three partners came from the service side and one of us from the sales side, with a very heavy emphasis on service. We’ve all been attuned to the customer from day one and doing the right thing. We have metrics on the service side that blow away all the directs. Of the five California counties, we have an average

Richard Van Dyke

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A Conversation with Advanced Office’s Richard Van Dyke response time of 2.6 hours. Service for production equipment is even better than that. That’s from the time we get contacted to the time we walk in their door, and that’s over a huge geography.

That, coupled with fixing it right the first time by having the right parts and having trained tenured technicians, enables us to have very high first-call effectiveness in all we do. We bring high touch to the customer and we treat them like family to a level that none of the direct branches can.

In addition,we offer money-back guarantees if we miss our response time or uptime guarantees. We’ve only had to give money back once in five years.

Service is clearly our differentiator and we focus outside of our box and more on what’s going on inside the customer’s box for challenges today and into their future. Assisting customers improve what they do is our focus. And lastly, treating employees like family, not just because it keeps our turnover extraordinary low, but because it is the right thing to do.

Who do you view as your main competition in your market?

VAN DYKE: In most cases it’s the direct manufacturers. It’s a race to the bottom with little profit with many of the directs in certain markets, so we’re very careful when we compete with them. This market

is strange in terms of who has market share. The direct branches view this as such a beachhead, so competing with them is definitely a challenge. While we lose to them on occasion, far more often than not we are able to convince customers to switch.

You carry Ricoh and Lexmark. Why are those two brands a good fit for you?

VAN DYKE: We’ve had long-term experience with Ricoh products and their people. Given the depth of their product line, their excellent products, and their great support, they have products that cover every major segment. Quite frankly, our customers and technicians love their products. It’s best of breed.

On the Lexmark side, their A4 products are very competitively priced. Their hardware acquisition price is very low and this provides great value to the customer, and we’re able to make good margins on their products.

You offer Managed Print Services and Document Management, are you doing anything different in marketing those segments?

VAN DYKE: On the MPS side, it’s just part of our regular offerings. We’re attempting to take away any pain in regard to printing. MPS is just a natural for us to offer, but we’re not doing anything

Advanced Office Partners, left to right: Tim Wickers,Mike Dixon, Richard Van Dyke

special [or different] with MPS; we’re just handling more of the customer’s output management needs.

Document management has always been important to us. We’ve had a number of document management vendors over the years, but most recently we started offering Square 9. Our big push is towards workflow and business process improvement and most of our document management proposals now have some workflow component to them.

The industry is moving in that direction and that was discussed over and over again at Square 9’s [recent] conference. Small companies can now gain productivity improvements that were far more common for the enterprise accounts in the past.

How did you settle on Square 9?

VAN DYKE: We’re a member of Select Dealer Group and Square 9 was a sponsor.

One of our dealer members has been in document management for a long time and is very knowledgeable. He did a comparison of Square 9 with other [document management programs]. We then checked them out and checked references. More than anything I was surprised at their willingness to invest in the best people in our market. They’ve hired quite a few people who are there to support us.

The truth is we’re not going it alone.

They are there to do as much of the transaction on the sales side as we need them to, but more importantly, they’ll take on as much of the professional services as we would like and we can take on as much as we like. We can cherry pick which accounts we’ll do professional services versus the ones we totally hand over to Square 9. We feel confident in their ability to do that.

While we have sold document management for years, our pipeline has grown significantly with their support. We have a lot going on with them and we’ve never seen anything like this in terms of support.

I’m very impressed with their people.

There’s always something new going on in this business with new technologies, services, and solutions emerging. Is there anything new that you’re looking at that has you excited, like 3D printing? continued on page 46

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A Conversation with Advanced Office’s Richard Van Dyke VAN DYKE: Coming from the early days of color computer graphics and medical imaging, I took on a lot of new stuff over the years. How do you tell the pioneers?

They’re the ones with the arrows in their backs. My partners and I don’t want to offer the latest and greatest such as 3D printing or MNS. We choose to partner with others that are experienced in those areas vs. building it ourselves. We’d rather focus on our core competencies. By doing that, we feel we can focus on the customer in a much higher way. Quite frankly, there are a lot of opportunities for growth and profits in our core industry, but one has to focus on the right customers to have profitable growth and that’s important to us.

in a declining market and have so much manufacturing capacity off shore and everybody has gotten so good at manufacturing, there’s this big push to just blow out numbers.

Everybody is fighting for the same diminishing market share and reducing the number of manufacturers would assist us in not being on top of each other. Clearly, this is not what the manufacturers are thinking, they have too much to protect, so it is clearly an “if ” scenario.

What do you like best about doing what you do?

VAN DYKE: We can help most businesses of any size in any industry. I get to know so many business owners and managers in different industries, and I enjoy finding out what they do and how they do it and seeing how we may assist them in their improvement. It’s great to have products and services that everybody needs.

What’s your most memorable trip?

VAN DYKE: Outside the US, it would be a safari in South Africa. That’s one of the sweet spots of being a dealer, having that opportunity. Inside the US, it was riding our Harley cross-country on Route 66.

What a great country we live in.

Since you’ve been doing this, what change or changes in the industry have had the biggest impact on you in a positive way?

VAN DYKE: The most positive effect was when the vendors were able to connect their products to networks. Initially, it was to get color off that color screen. Over time, one in 10 [devices] was color, two in 10 were color, five in ten were color, etc., so color was the main reason to interface with the network.

Then scanning became the killer app. The products we sell in general have become high productivity network appliances that people can’t do without and are critical to their day to day productivity. It never used to be that way and wasn’t such an integral part of all they do.

What do you do for fun when you’re not working?

VAN DYKE: I love traveling with my wife, road cycling, skiing, photography, and riding our Harley.

If you could do anything else other than what you are doing now and be just as successful, what other career might you pursue?

VAN DYKE: Helicopter ski guide! I’ve gone helicopter and Snow Cat skiing numerous times with a bunch of buddies.

If I could be a helicopter ski guide, make money, and be able to retire comfortably, I would have thrown in the copier hat a long time ago.

What’s in store for Advanced Office for the rest of 2016?

VAN DYKE: An increased focus on production products, services and solutions, and business process improvement with those solutions. ♦

If you could change anything about this industry, what would that be?

VAN DYKE: Well, there are just too many manufacturers chasing too little business.

It would be great if a couple of manufacturers exited the business. When you’re

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We Saw It In ENX Magazine

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Managed Services News Briefing

Creating Your Transformation To Managed Services

T

here are primary and fundamental steps to consider when pointing your business to managed services.

Business owners are often the go-getters from days gone by and can be in the habit of turning their ship in a snap. Jumping ahead of competitors can be a great advantage if done correctly.

However, if the statement, “Let’s do it!” describes your entire planning process for including managed services in your business (as it does with many), it’s not hard to see why one might fail to launch the program.

Managed service programs are a great addition to your offerings if done right. They do require different strategies and execution plans in order to project their values properly to those who buy them. Here are a few of the primary considerations you should consider when creating your transformation plan.

1. Your First Move The very first thing you can do to successfully launch managed services is to make sure your core business is rock solid.

This isn’t to say that it has to be perfect, but it has to provide the financial stability necessary to carry you through the learning curve of managed services. If your company doesn’t deliver consistent sales results, then you may want to improve your sales results before stacking more on top.

Managed services can be an excellent source of additional revenue, but not if it injures your existing business and or your company’s reputation.

2. Telling the World Many dealers include managed service deliverables on their website, but most hide them behind the view of their copiers. That’s absolutely OK if you’re not in the transition mode, but if you are, you need to reorganize your thoughts. Few truly understand how to position or prioritize their website’s presentation. This typically exposes a weak or missing go-to-market strategy and is most likely applying a menu approach hoping that if you land on their site, you’ll take the time to click through their menu. I’ve seen as high as a 70 percent bounce rate on a home page. If you don’t make them feel it, they simply leave your site.

Your website should be an exact presentation of your go-to-market plan. Navigation drives more detail and secondary products or services, but your home page should speak to your primary target, showing your top competencies and supporting images.

3. Planning You can’t drive a successful transformation with wishywashy effort. Sit down with your management team and create how to blend these services into your business. Managed services require a different go-to-market strategy. Your focus isn’t just hardware profit and teaching clients how to push a print button anymore; it’s getting paid well for managing a segment of someone’s business to a better cost or performance position.

Identify the client profile that best fits your services and design

your entire approach with them in mind. Remember you will go through a learning curve so walk through every step to find the holes in advance.

Most importantly understand YOU DON’T HAVE TO BUILD EVERYTHING YOURSELF! Use those companies that can deliver the backend, while you focus on sales and penetrating your marketplace. Penny pinching here can bog down your organization and unnecessary backend burden that stresses your company’s bandwidth is something you don’t need. Set milestones and define what success looks like. Realizing that 10 managed service deals of the right size can exponentially grow your company’s revenues.

4. Igniting Your Sales Team Managed services are mostly a strategic value and thus a C-level deliverable. It’s not easy to get to the C-level, especially if your company is just beginning with managed services, so you have to find sales talent who are capable.

Sales reps that sell managed services are receiving nice compensation plans that include a base, commission and even residual income. That’s how you attract them. It’s important that you align your compensation to pay for the activity and results that make your company successful. Don’t try to tweak a hardware profit comp plan for managed services and don’t be stingy!

Also, if you haven’t figured out costs and profit margins, you surely can’t create a proper sales continued on page 50

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Creating Your Transformation to Managed Services commission and comp plan, so build a financial model.

5. Business Development Sales cycles are different with managed services. I recommend that you transform your sales team model to drive 100 percent managed service to all new business first appointments and build an account management team to manage the hardware customers. If you use hardware reps to try and sell managed services, most fail typically because their 30-day hardware quota pulls them away from the longer sales cycle. So build it to succeed.

This is so very important: I either find brilliant storytellers who aren’t interested (at all) in prospecting or someone who can set appointments but isn’t capable of delivering a great first appointment presentation. Use their capabilities to your advantage and build a team that delivers sustainable opportunity, because you simply don’t find both skillsets in the same person very often.

Many believe that getting C-level appointments is impossible. It’s not! It is more difficult to do if you’ve put all of your sales payroll dollars into outside hardware sales reps that most likely will be gone in 6 months. Take that same money and build an inside appointment generation team with at least 3 appointment setters and set appointments for your storyteller. Accelerate your business development towards C-level targets.

There can be a lag in the beginning, so build your team and comp plan to endure this process.

By shifting dollars from failing outside reps to this appointment setting team model, you stay inside your current budget and accelerate your pipeline development. The 3 to 1 ratio keeps your storyteller busy with appointments and maintains a high energy and interest level while they learn the managed service sales cycle process.

If they’re sent on 5 to 8 first appointments a week, you will grow your business exponentially.

6. Automation I will never forget when we first started selling and implementing MPS; everything was completely manual. Shipping, 50

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setups, installs, billing, demos, scheduling, meter reads, service dispatch and supply replenishment was all done on the fly. It was so easy to lose your shirt, and who knew how much supply inventory was out at the customer’s location?

What a nightmare. Today, everything is automated and being profitable can be as simple as engaging only prospects that have an environment that proves out your financial model and outsourcing the logistics to an expert.

In MPS, you should outsource your service and supply logistics to a company that most aligns with your business and performance requirements. The same goes for I.T. services and remote monitoring.

Do you realize that just like your clients, you can benefit greatly by outsourcing the managed services backend?

If you don’t outsource in the beginning, think of the massive amount of new processes you have to manage and hire for. Think about it, you jump into the managed I.T. services for example and take to market remote monitoring and other like services. You want to build it yourself, internally (as many do). You’ll tell your customers that your solution is safe, secure, and redundant and they’ll never go down. Right? The only thing is you have to hire at least two (significant payroll uptick) network guys to keep your promise. This talent doesn’t come cheap and these aren’t shade tree copier techs that like to dabble. These are very smart geekified brainiacs that are properly trained and educated and will be necessary from your first client on.

Once they’re onboard, you’re under the gun to find enough network business to break even. Why create that pressure?

Buy the services you want first and then, when the timing is right, bring it inhouse if that’s what you want. Why sell outsource services if you don’t believe in it yourself.

7. Accountability and persistence.

more out of the reps. That’s not what I’m talking about here. In most dealerships, the hardest working person in the building is typically the owner, and if the owner is in a glide path, so is everyone else.

I don’t mean that you can’t find earnest, hardworking employees in the company; I do mean that the dealer sets up the cadence and momentum, and everything moves as fast or as slow as they do.

Transitioning is very hard work and when your sales team hits that massive learning curve wall (and they will), you owe it to them not to buckle, but to lead them through to success. Be persistent and hold everyone accountable for his or her part of the plan. I see many companies bail immediately when sales people start complaining about how hard prospecting to C-levels is. Don’t fall for it; lead them through it.

8. Determination If you’re financially sound and you’ve sat down with your team to design your plan, defined success, and picked your partners and built the sales process that gets it done, be determined that nothing will stop you. Focus on those 10 accounts that are out there somewhere and start building your future. Do you feel that old feeling?

Who knows where determination comes from? It’s clear that many people don’t have what it takes to drive a company to success, much less to lead that company through the challenges that today’s competition and economic times bring.

If you’re on top of such a company and you’ve lived through a season or two, stand tall, you’re absolutely one of the few! Transforming your business isn’t impossible and I would say, today, it’s absolutely necessary for your company’s future. It’s your determination that’s going to get it done, and everyone will lean on you to make it happen. You can do it! ♦

Every time I bring up the word accountability, most business owners jump on their bandwagon and start preaching to the sales manager about how to get We Saw It In ENX Magazine

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Service Excellence Diamond Award Winner

Office Technology Service Excellence Award

DIAMOND LEVEL

Even Through Expansion, All Copy Continues to Excel at Service

D

ale Scheuerman, director of service for All Copy Products in Denver, CO spends a fair amount of time on the road traveling between the dealership’s eight branches scattered across four states. One day you may find him at the home office in Denver, another day at the Kansas City branch, while the next week may find him in Phoenix or Fort Collins. Managing All Copy Products’ service operations is a demanding job, but fortunately for Scheuerman, he has a talented team working with him, all of whom are adept at keeping customer’s equipment up and running at peak efficiency.

All Copy Products, which last year celebrated its 40th anniversary, is an independently owned office technology dealership dedicated to providing customers and its team members with what the dealership’s mission statement calls “an unparalleled experience.” It achieves this through superior service, flexible and creative programs designed to improve efficiencies and increase customer’s profitability, community involvement, developing outstanding people, an ongoing investment in partner relationships to provide state of the art technologies and support, and excellence through its work ethic.

Customers choose All Copy Products over comDale Scheuerman, Director of Service, petitors primarily All Copy Products

because of its people and the level of service they provide.

“We want to set the standards in what we do and the service we provide, from sales to service to administrative, all teams combined to get the business and maintain the business,” states Scheureman, a 30-year industry veteran who joined the dealership in 2003.

All Copy Products is enjoying a growth spurt, driven in part by a series of acquisitions during the past few years. When the company was first acquired by current President and Owner Brad Knepper in 1999, it had seven techs. When Scheuerman joined 13 years ago, there were a dozen techs on staff. Today, All Copy Products employs 72 techs in the various markets it serves.

Ensuring that its customers receive the highest levels of service can be challenging sometimes—especially with all the acquisitions—but time and time again, All Copy Products has done a remarkable job of raising the service excellence of those organizations to meet its high standards. One of the tools that the entire All Copy Products’ service team has in their toolkits, and is an integral component for ensuring that service levels are where they should be, is the BEI Services’ program.

It’s made a big difference and today All Copy Products ranks 14th in the country out of the 175 dealers using the program. Overall, the dealership’s numbers are impressive and have led to All Copy Products receiving the BEI Services/ENX magazine Service Excellence Diamond Award status. The dealership’s Hold for Parts Rate is at 11 percent while

its FCE (First Call Effectiveness) consistently rates between 58-60 percent. What’s even more impressive is that those numbers reflect the excellence of 72 technicians who are responsible for servicing a total active machine population of 25,600 devices.

All Copy Products represents Konica Minolta, Canon, Sharp, HP, and now Toshiba—the result of a recent acquisition. Techs working in the Denver metropolitan area specialize in specific brands and their territories are specific to those brands. Techs at the branches are often generalists who are cross trained on all the brands that the branches in those regions sell.

Servicing so many different brands poses a minor challenge, but as one might expect, techs are factory authorized to service that equipment. All Copy Products also has two trainers on staff, allowing techs to be trained locally without having to take time off to travel to manufacturers’ training classes.

“It helps speed up that process since we don’t have to wait for a class to open up,” reports Scheureman. “We can send our trainer to the class where he becomes authorized to train on that particular model.”

Scheuerman does an excellent job of managing his service team thanks in large part to the BEI data, but he still gives credit where credit is due for All Copy Products’ outstanding service.

“I put in a lot of effort, but it comes with a lot of good people who help me.”

The BEI program has been a huge asset in terms of raising All Copy Products’ service levels. The original intent behind continued on page 54

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All Copy Continues to Excel at Service implementing the program was to reward technicians for the job they do in the field. This has had a ripple effect and has been instrumental in retaining customers.

“Technicians have a customer base and if we hang onto them, through the bonus program, they get a piece of the pie,” explains Scheuerman. “We’re always looking at the numbers and how we can improve. The number one thing is customer service. If we provide the customers with the best service they’re going to stay and we’ll get more customers.”

Having been around the industry for 30+ years Scheuerman can appreciate how service has changed…for the better.

“The technology is changing so fast and there are many more tools that give technicians an opportunity to understand [what some of the issues are] before they even get there,” he says. “This way they can be better prepared by having the parts they need before arriving at the customer’s office. When I was a technician I didn’t have that. You had a car stock and you hoped what you had was what you needed.”

One strategy that has been helpful for driving All Copy Products’ Hold for Parts numbers down is providing techs with company cars.

“That made a difference because the technicians were reimbursed for their miles,” observes Scheuerman. “[Their] small vehicles couldn’t hold many parts, or enough for the territory [they were responsible for]. Company cars have standardized the car size so they can maintain a good car stock for their territory.”

More often than not once techs start receiving bonuses for their performance, they’re bound to keep a close watch on their numbers from that point on. Indeed, All Copy Products’ techs are usually aware of how they’re doing each month based on the calls and clicks they’re completing, but they’re still anxious to see the numbers posted in black and white. Just as motivating as seeing their monthly or quarterly stack ranking within the dealership are the monthly one on one meetings techs have with All Copy Products’ field managers. These meetings are critical for building morale and 54

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helping techs pinpoint areas for improvement. This data makes Scheuerman’s job easier too, and he reveals that customer complaints have gone down drastically.

“We’ve been advocating the importance of that one-on-one coaching session with each of the technicians on a monthly basis,” says BEI’s Steve Sharkey. “The difference between a good company and an exceptional company is that exceptional companies do the coaching. The good companies manage by the numbers and have the reports, but they’re not having those one on ones with the technicians and providing feedback.”

According to Sharkey, every one of the Service Excellence award winners offers one-on-one coaching.

One might think that a one-on-one meeting would be commonplace in all dealerships, but it’s not.

“We’ve had a couple of acquisitions over the last six months and the technicians we brought on board from those acquisitions were blown away because we sit down with them monthly,” reveals Scheuerman. “They weren’t used to that.”

Techs who follow the numbers closely have discovered those numbers are what’s driving them to improve.

“They’re very competitive,” notes Scheuerman. “I’m competitive too and want us to have the best service department out there.”

Given the fact that All Copy Products has a large territory to cover, one of the latest enhancements from BEI that Scheuerman appreciates is the Territory Mapping tool. Another enhancement that he expects will make a difference is a Tech Assessment component.

“It’s all about helping field managers and supervisors stay organized with their coaching,” explains Sharkey. “You go in and have a page for each technician; you can set goals, expectations from call backs, hold for parts levels, first call start time, last call completion time. As you’re setting these expectations and goals we provide a means for the manager to compile notes for the discussions that are taking place with the technician at the time these goals and expectations are established.”

That information is then archived so managers can go back and see exactly what conversation they had with the tech six months ago, for example, getting this first call at 8 a.m. or call back numbers on a given model. Here’s where he was and here’s where he is today, and did he meet the goal the service manager set for him?

“It’s the slickest thing we have in the toolbox right now as far as helping the management aspects of the service department and getting organized and staying on top of the coaching and counseling that has to happen,” says Sharkey.

Scheuerman is more than willing to recommend BEI’s program to other dealers who might be looking for a way to enhance their service operations.

“When I go to conferences and networking seminars that’s huge, and when I talk about how we do things, [the BEI program] is a big part of that as far as the data it provides and how we can motivate technicians with the bonus.” ♦

All Copy Products President/Owner: Brad Knepper Director of Service: Dale Scheuerman Number of Technicians: 72 Active Population of Devices Serviced: 25,600 Why All Copy Products is a Diamond Award Winner: • Ranks 14th in the country overall out of 175 dealers in the program • 11 percent Hold for Part Rate • FCE rate consistently ranks between 58-60 percent

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Jim Zipursky

Exit Strategy

Do Your Diligence Before You Go To Market

A

s discussed in previous articles, there are lots of different factors which can kill a deal, most of which can be easily avoided. Last month, we looked at Working Capital Adjustments. This month, we look at another potential deal killer: due diligence.

What exactly is “due diligence” as it pertains to deals? We hear the term all the time and have heard various definitions, including:

Finance Associates have learned the two top deal killers are time and surprises. Time kills deals more often than any other factor, but surprises are a close second.

No one really like surprises, especially surprises uncovered during the due diligence process.

For example, several years ago we represented a seller client whose CEO and majority shareholder had a criminal record from his youth. His was a very successful business and growing rapidly.

• Due diligence is the He was going to sell to a Private opportunity for buyers to Equity Group who was very beat up sellers on price, or; excited about the business and • Due diligence is the made a fabulous offer to acquire opportunity for lawyers and and recapitalize the company.

CPAs to kill deals, or; Our client was to stay and run the • Due diligence is the time company for the acquirer as well for sellers to come clean as retaining a minority shareholdwith the truth about their er interest in the business. companies Unfortunately, during due diligence, the CEO’s felony record While each of the aforemencame out in a background investioned definitions is humorous, tigation ordered by the buyer. Ultinone are technically correct nor mately, this “surprise” to the buyer accurate. According to Websters, proved fatal to the deal. Sadly, the “due diligence is (1) the care a head of the Private Equity Group reasonable person exercises to said, “If we had known about the avoid harm to other persons or problem in advance, no problem. their property, or (2) research and However, finding out the way we analysis of a company or organidid and when we did made it imzation done in preparation for a possible for us to move forward. business transaction.”

We wondered what else the seller In our world of mergers and was hiding from us.” acquisitions, both definitions Given the costs to buyers and apply. Most often, due diligence is sellers, both in terms of money the detailed process we go through and emotions, involved with once buyers and sellers have closing a deal, we strongly recomagreed upon transaction terms. mend all of our seller clients go But, due diligence is also the pro- through a pre-market due dilicess where sellers need to exercise gence process…before they ever reasonable care not to hurt their begin speaking with buyers or shareholders or the acquirers of investors. We have identified four their businesses. specific areas in which our clients Over the years, we at Corporate can help themselves by ferreting

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www.enxmag.com | February 2016

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out problems and surprises before they turn into deal killers. What are these four areas and some of the potential problem spots you should investigate?

Financial • Do you have audited financial statements? If you expect to sell to a public company, you may need audited statements.

• Are your financial statements true, accurate and prepared according to GAAP? All sellers will be expected to represent their financial records as true and accurate. Many buyers also require statements prepared according to GAAP. If you have problems or errors, clean them up now.

• Do you have personal expenses you run through the business?

If so, these should be identified and segregated.

Contracts and Intellectual Property • If you have contracts with key customers or key vendors, review the contracts to see if they are assignable. We have seen many deal closings delayed or even killed when vendors or customers were uncooperative regarding contract assignments.

One way to avoid this is by selling the stock of the company, but most buyers of middle-market companies prefer asset purchases.

• Do you have valid, current contracts in place with your vendors and customers? We have had several instances where our clients said they had a contract with a customer or vendor only to find out the contract had expired several continued on page 58

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Do Your Diligence Before You Go To Market years before. While a handshake may be good enough for you, it will not be good enough for the buyers and/or their legal advisors and lenders.

• Do you need any third party approvals to sell your business and/or the assets?

Most, if not all OEMs reserve the right to approve the sale of the dealerships and distributors. Review your contracts with your OEMs to determine how you need to work with them in the sale process.

• Do you own any intellectual property?

Think again if you said “no,” since you probably have registered your trade name and use a website. If you do use a trade name and it isn’t registered, you might have a problem.

Assets • Do you own motor vehicles or trailers?

If so, do you know where the titles and registrations are kept? Are all titles in order? We recently closed a deal

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www.enxmag.com | February 2016

where we learned our client did not have proper titles in place for its rolling stock; this delayed closing by 30 days.

• Do you lease your equipment? If so, and the buyer expects you to pay down the leases prior to closing, check to see how to pay off the leases. Several years ago, we had a closing delayed because our client had more than $2 million in lease obligations to one of the major automakers (the client had a fleet of 200 service vehicles on lease).

Unknown to us, the OEM’s finance arm would not accept a wire transfer and had to have a certified check four days prior to closing.

• Do you own the property personally in which the business is located? If so, is your lease up to date and at market value?

erty? If not, it might help to order one now. We had two transactions delayed this year because of environmental issues which came up in the Phase I survey. Had we ordered the surveys before we went to market, the issues would have been obviated.

Of course, our pre-market due diligence list is much more encompassing than what is presented here. But the picture should be clear: do your own diligence so there are no surprises in the due diligence process.

I am happy to answer any of your questions regarding this subject or any previous articles. In my next article, I’ll discuss the subject: Is Now the Time to Sell? ♦

Environmental • Has a Phase I environmental survey recently been completed on your prop-

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Service Management

Evaluating Service Performance

I

Hold for Parts (HP) is a return visit made necessary because the technician did not have the part available.

Recall or Call Back (CB) is a return visit made on a machine within a predetermined period after the initial call. In many cases, dealers use some fixed number days or number of copies. These definitions are flawed, because different segment machines will need service at differing rates.

This value needs to be defined per model, or per segment basis.

A production print machine in a How to Define FCE high-volume location may need I will use the same definitions a PM every two weeks, where and formulas as used by BEI a segment one machine in a Services to determine the FCE. low-volume office might need I chose this method because a PM every 2 years. Obviously, it more clearly identifies the the parameters for a recall would performance factors involved, need to be different. and it does not get diluted by For a more detailed description including courtesy calls, installs of FCE, see Wes McArtor’s post or network calls. This is known as from BEI Services in December a results-based FCE. on ENXmag.com (http://www.

Call back (CB) is enxmag.com/twii/the-weekCB%= CB/ (Emergency (EM) + in-imaging-twii/sales-and-serScheduled Calls (SC)) vice/2015/12/when-is-a-repeatvisit-a-call-back/). (Thanks to Hold for Parts (HP) is HP%=Hold for Parts (HP) + No Parts/ Guy Worzel from BEI Services for his valuable insights in this area.)

(NP + SC + CB) n the last article, I discussed the importance of Mean Copies between Calls (MCBC) this may also be referred to as Mean Calls between Visits (MCBV). Since that is number one factor in the cost of a copy, every service manager needs to focus his attention on growing that number. In this article, we will look at several factors that affect that metric. These factors can be measured using First Call Effectiveness (FCE), and this is the easier metric to measure.

FCE would be the balance of the CB% and HP%.

Defining the Terms Used: Emergency Call (EM) is a call caused by a problem with the device; it would not include courtesy calls, set up and delivery, or other non-equipment related calls.

Scheduled Call is a call caused by a problem with the device and scheduled for a specific time. It would include PM type calls.

No Parts Call (NP) is a follow up visit made when a technician returns to a machine for the same problem and doesn’t install parts.

•

www.enxmag.com | February 2016

Understanding the Numbers

Below you will see two sets of values. These numbers are the dealer with the lowest CPC on a model and the dealer with the highest CPC on this model. As you can see, there is a difference of .00254 in the CPC rate between the two companies.

When you look at the data, you will also see the difference in the

The first stage of improving your service department is to be able to analyze where your departments performance is. Ideally, you would want to be able to see the following information per model, per technician, and average for department: • Number of calls • Number of No Parts calls • Number of Hold for Parts calls (HP) • Number of recalls • Mean Copies between Calls Once you can easily access the information, the next step is to try and identify the areas where there is the greatest opportunity for improvement. It may be that some of the technicians are struggling

CB % HP % FCE %

MCBV

Parts CPC Labor CPC

CPC

36% 2% 62% 60% 16% 24%

54,715 24,623

$0.00048 0.002146 $0.00092 0.004249

0.00263 0.00517

Real World Data

Values courtesy of BEI Services.

Chart 1

60

FCE between the two dealers. If they are competing in the same marketplace, the dealers with the lowest CPC will either generate significantly more profit or be able to sell the copies at a significantly lower price.

As we compare the two companies, we can see that the worse-performing company actually goes back slightly more than 3 extra times for each failure of machine, while the best-performing company goes back less than 1 extra time for each failure.

These differences are typical across the board when comparing performance on the same models between dealers. It highlights the need to focus on improving FCE and the MCBC. For most dealers improving these numbers is the key to improving their profitability.

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with troubleshooting a model. You may find that some models have a very high HP rate. You may find that some technicians need improvement across the board.

Identifying the Needs To achieve the most rapid improvement, you will want to identify the areas with the worst performance. You can think of it like trying to plug leaks in a dam, find the biggest leak and patch it, and then move to the next one. In this case, you are looking for the models and technicians with the worst performance.

After identifying your biggest issues, you will need to try and understand the cause. With equipment that has a high number of recalls, or hold for parts, you could look at which parts are causing the hold for parts. For recalls, you would want to try and identify why the technician didn’t fix it the first time. Is it a lack of training? Is it a lack of aptitude? Was it a perceived lack of time?

Most of the questions listed above come into play when analyzing your technicians. When a technician has poor performence, you also need to see if it is across the board, or just some models. Are your current evaluation metrics contributing to the issue?

In the following articles, I will discuss how to develop a plan to resolve the issues and improve your numbers. ♦

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p

5, CM3530, M551, M575

Associated printer series: LaserJet M600 series (M601, M602, M603, M604, M605, M606) LaserJet M600mfp series (M630MFP) LaserJet 700 series (M712, M725MFP) LaserJet M4555 MFP

Error and is unable to print. This y one of the following three condi-

HP maintenance kit count resets have previously been in a startup or pre-boot menu but the following applies to the addressed printer series.

up and cannot rotate. transfer-roller-disengagement) is bad. er drive gear. Typically, a grinding or eard during boot up.

ION: t the ITB and power-cycle the printer. sists, an HP Certified Technician r further troubleshooting. ng the ITB completely out of the the flag rotates (callout 1) when the allout 2). See the Figure following.

HP Future Smart Firmware Printers Monochrome Maintenance Kit Reset Procedure

From printer’s home ready screen: Scroll down to > “ADMINISTRATION” > “MANAGE SUPPLIES” > “RESET SUPPLIES” then select “NEW MAINTENANCE KIT” The LaserJet M800 series (M806 and M830MFP) have the maintenance reset built into new fusers and will reset the If the ITB flag is broken, damaged, or does count not rotate maintenance uponreplace fuser replacement/power up. the ITB (CC468-67907). Otherwise, continue with step 3.

This Printer contributed by Laser Pros 3. Test Sensor SR17. Perform the Manual SensorTech Test.Tip In isorder Email any questions to to run this test successfully, make (www.laserproscom). sure the Fuser, ITB, Cyan marketing@laserpros.com

• www.enxmag.com | February l January We Saw 2016 It In ENX Magazine 66 2015

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Technical Tip

Xerox® Phaser® 3635 and WC-3550 Technical Information

I

t’s high time we get back to these Phaser 3635 and WorkCentre 3550’s. These two monochrome multifunction printers continue to be a force in the field. A previous article in the April, 2015 ENX magazine introduced these machines, and we took a gander at the main consumables and the meanings of the fault codes. Now, let’s revisit these two models and see what diagnostic functions are available from the control panel.

We’ll check out the component controls (for testing sensors, motors, solenoids, and such—and we’ll also look at the memory setting adjustments (NVM Read / Write).

The first thing you’ll want to know is how to access the System Administrator Tools.

System Administrator Tools The Administrator Tools give you lots of choices and control over the machine’s setup in a relatively easy to follow menu.

The two models have different approaches for how to get into this “Tools” mode: Phaser 3635: Press the “Log In / Out” button and enter the Administrator Password (the default is ‘1111’). Then press the “Machine Status” button and select the “Tools” tab.

WC-3550: Press the “Machine Status” button, scroll down to “System Setup” and press the “OK” key. Enter the Administrator’s Password (the default is ‘1111’) & then press “OK” again.

To do any good troubleshooting, print reports or test patterns, or make adjustments, you’ll need 68

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www.enxmag.com | February 2016

to get into the Diagnostic Mode (or Tech Mode).

Entering Diagnostics The two models have different approaches for how to get into diagnostic mode: Phaser 3635: From the powered-on state, press and hold down the “#” button and while still holding #, press the “Log In / Out” button and a password screen will appear. Enter the password “1934” followed by “OK”.

WC-3550: Press the “Menu” button, and then press the “#” button and a Password screen will appear. Enter the password “1934” followed by “OK.”

Diagnostic Mode – Main Menus Once you’re in “Diagnostic Mode”, you’ll find a menu of choices depending on the model you’re working on: Phaser 3635: The first menu level will include: “Copier Routines,” Network Routines,” “Fax Routines,” and “Other Routines.”

We’ll concentrate on the functions in the “Copier Routines” menu.

WC-3550: The first menu level is a longer list. Here, you’ll want to scroll down and choose “EDC Mode” to get to a submenu with the good stuff in it.

Now you can choose from the following:  Copier Routines on a Phaser 3635 (or… EDC Mode on WC-3550):  dC 131 NVM Read / Write (memory setting adjustments)  dC 132 NVM Initialize (Remember that if you need to do this, you will lose all of the memory settings in We Saw It In ENX Magazine

the machine, so don’t do this without first recording all the address book entries, etc. for the customer so they can be re-entered later).  dC 305 UI Test (User Interface / Touch Screen)  dC 330 Component Control (for testing sensors, motors, etc.)

Exiting Diagnostics: When it comes time to leave Diagnostic Mode later, here is how to get out: Phaser 3635: Touch “Exit”, then “Call Closeout” and choose “No” so that the machine does not lose the Last 40 Faults in memory.

WC-3550: Press “Menu” button twice to get to the Tech Mode screen. Then use the arrow buttons to scroll to “Diagnostics Menu” choice and click “OK.” Then scroll to “Exit Diagnostics” and click “OK” again. You’ll have a choice here to reboot the machine or not. If you made changes to the memory in NVM Read / Write, you will want to choose “Yes” here. If no changes were made, then choosing “No” will skip the full reboot and you’ll get out of diagnostics quicker.

Component Control (testing

sensors, motors, solenoids, etc): Read above about how to get into Diagnostic Mode and then choose either “Copier Routines” (on a Phaser 3635), or “Machine Diagnostics” followed by “EDC Mode” (on a WC-3550). Next, choose “dC 330 Component Control.” Then enter the code from the lists below. For the “Input Components” (sensors and switches), the display will show the state of the input component,

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Xerox® Phaser® 3635 and WC-3550 Technical Information and you can go actuate or deactuate it to see if the display shows it being switched on and off or not. For an “Output Component,” the motor, solenoid, clutch, or other moving part will turn on for short time each time you energize it.

For Phaser 3635: Touch the “Add Component” button, and enter the code from the lists below, then touch that button again to add the component to the “Component Name List.” You can add up to 6 components (as long as they are permitted to be chosen together) to this short list. Then from the “Component Name List,” you can choose the component control code and touch “Start” to energize or test it.

For the WC-3550: you will choose the component from a scrolling list and then press “OK” to energize or test the chosen component.

Input Component Control List: Code 01-100 05-100 05-120 05-130 05-140 05-160 06-110 07-110 07-210 07-510 08-100 08-500 08-600 08-700 08-720 09-310 10-200

Component Name: Front Cover Inter-lock Switch Document Present Sensor Document Paper Length Sensor Document Registration Sensor Document at Scan Sensor Doc. Door Open Sensor LSU Motor Ready (Laser / ROS) Tray 1 (bypass) Paper Empty Sensor Tray 2 (cassette) Paper Empty Sensor Bypass Paper Empty Sensor Paper Feed Sensor Paper Registration Sensor Paper Exit Sensor Duplex Jam 1 Sensor Paper Out-Bin Full Sensor Transfer High Voltage (THV) Bias Read Fuser Temperature (at Thermistor)

Notes: Closed or Open High = document present , Low = no doc. detected High = document present, Low = long doc not detected High = document present, Low = no doc. detected High = document present , Low = no doc. detected High = door open, Low = door closed High = Laser Motor slow, Low = at normal speed High = tray empty, Low = paper present High = tray empty, Low = paper present High = tray empty, Low = paper present High = paper present, Low = no paper detected High = paper present, Low = no paper detected High = paper present, Low = no paper detected High = paper present, Low = no paper detected High = out-bin full, Low = out-bin not full Displays Transfer Roller THV value = xxx Displays temperature in degrees Celsius = xxx continued on page 70

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February 2016 | www.enxmag.com

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Xerox® Phaser® 3635 and WC-3550 Technical Information Output Component Control List: Code 04-100 04-120 04-220 04-200 04-210 04-300 05-200 05-201 05-300 05-310 05-320 06-100 06-200

Component Name: Main BLDC Motor Main Fan (3635 only) Exit Motor - Reverse Exit Motor - Forward (fast) Exit Motor - Forward (slow) Duplex Motor - Forward Document Scan Motor - Forward Document Scan Motor - Reverse Document Pick-up Solenoid Document Registration Solenoid Document Lift Solenoid LSU (laser unit) Motor LSU (laser unit) LD (Laser Diode)

Code 08-800 08-810 08-820 08-850 08-920 09-100 09-200 09-300 09-400 09-500 10-100 10-500 10-600

Component Name: Bypass Feed Solenoid Tray 1 (bypass) Pickup Solenoid Tray 2 Pickup Solenoid Registration Clutch Tray 2 Feed Motor Charge Bias Voltage on Developer Bias Voltage on THV (Transfer Roll) + bias voltage on THV (Transfer Roll) - bias voltage on Power Supply Cooling Fan (SMPS) Fuser Heat on to op. temp. 180 degrees Fuser Cooling Fan Fuser Bias Voltage

Now finally onto the NVM Read / Write (memory adjustments). Go into Diagnostics as explained earlier and find dC131 NVM Read / Write. Then refer to the list below and choose the “Chain” (that’s the first two digits of the code), and then scroll to the exact Code (that would be the final 3 digits of the NVM code) and touch that code choice. A new screen for making adjustments will appear if the code is not a read-only code.

NVM Read / Write (Memory Adjusments): Code 06-100 06-110 07-100 / 07-110 07-120 / 07-130 07-140 / 07-150 07-200 / 07-210 07-220 / 07-230 07-240 / 07-250 07-500 / 07-510 07-520 / 07-530 07-540 / 07-550 09-100 09-110 09-120 09-130 09-140 09-205 09-230 10-200 10-300 10-310

Component Name: Range / Step Vertical Magnification (lead edge to trail edge) Range = 1-13 Horizontal Magnification (left to right) Range = 1-13 Lead Edge / Side Edge - Registration (tray 1 simplex) Range = 1-13, 1 step = 0.5mm Lead Edge / Side Edge - Registration (tray 1 duplex, 2nd side) Range = 1-13, step = 0.5mm Lead Edge / Side Edge - Registration (tray 1 duplex, 1st side) Range = 1-13, step = 0.5mm Lead Edge / Side Edge - Registration (tray 2 simplex) Range = 1-13, step = 0.5mm Lead Edge / Side Edge - Registration (tray 2 duplex, 2nd side) Range = 1-13, step = 0.5mm Lead Edge / Side Edge - Registration (tray 2 duplex, 1st side) Range = 1-13, step = 0.5mm Lead Edge / Side Edge - Registration (Bypass simplex) Range = 1-13, step = 0.5mm Lead Edge / Side Edge - Registration (Bypass duplex, 2nd side) Range = 1-13, step = 0.5mm Lead Edge / Side Edge - Registration (Bypass duplex, 1st side) Range = 1-13, 1step = 0.5mm Laser Diode Light Level Range = 200-600 Charge High Voltage (MHV) Bias Control Range = 108-145 Transfer High Voltage (THV) Bias Control Range = 41-220 Developer High Volage Bias Control Range = 408-607 Detach High Voltage Bias Control Range = 80-160 Print Cartridge Life Page Counter (READ ONLY) Transfer Roller Life Page Counter (READ ONLY) Fuser Life Page Counter (READ ONLY) Paper Pickup Time Interval Range = 0-100 msec.

Paper Pickup Time Interval Delay (for Special Paper) Range = 0-100 msec.

Default 3 3 3 3 3 3 3 3 3 3 3 350 126 76 522 123 read only read only read only 0 0

Resetting the Fuser Life Count: (for Clearing Fault Codes 10-500 & 10-510) This is only necessary on the Phaser 3635 because the 3550 doesn’t bother keeping count of the number of prints made on the fuser. Once you’re in diagnostics mode, select “Service Info” and then touch “HFSI” (High Frequency Service Items). A chart with the two HFSI’s which this model tracks will be shown (the fuser and the Document Feed Head are the only two choices).

Choose “Fuser” and touch “Reset” followed by “OK.” You can also change the “Max Value” if you want to. Setting the “Max Value” to “0” will effectively make the HFSI not tracked, meaning the machine will never call for that HFSI again.

Well, that should do the trick. You now have all the main ins and outs for these two models. Good luck in your repairs! ♦ 70

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