Back in the late 80’s Xerox implemented a program aimed at quality improvement. Then in 1989; after a great deal of effort and resources spent, Xerox received the Malcolm Baldrige award for quality improvement. I must admit, that at the time we were being trained for the skills and analytical tools used in the process, I viewed most of what we were being taught as a bureaucratic waste of time. Having said that (sorry Malcolm!), I will admit that there were certain underlying concepts that made a lot of sense to me, and became incorporated into how I have conducted myself ever since. The big one was a term called The Cost of Nonconformance. Essentially, these are all the non-obvious hidden costs associated with not doing a task the best way possible. Although one may apply very complicated analytical tools to arrive at the approximate cost of nonconformance, your gut can do a pretty accurate job as well.
Let me apply the concept to one of the parts I sell. For my example, I will use the fuser gear for a Xerox 510. The dealer cost for this part is approximately $24 each. Let’s say that an average Xerox 510 may go through two of these gears per year. The obvious cost to replace these two gears would be $48 per year. Not a big deal. Now think about the hidden costs:
1. The cost to have a technician respond to the service call is on average $100 per call.
2. Then there is the extra time the technician will spend onsite talking with the customer, and performing other maintenance functions. So we add another $30.
3. Next are the customer costs. These are a bit trickier to calculate, and may be quantified throughout a wide range depending upon a range of factors. Instead of quantifying that number, let’s think about the worst case scenario. The customer is considering replacing their wide format machine. The fact that their 510 is down AGAIN, causes them to contact another vendor. They look at a competitive product, and before you have even opened the conversation about a replacement machine, they have signed a contract with your competitor. Tell me this has never happened to you!
So in this example, if we had an alternative to the faulty gear, but did not choose to utilize it; our cost of nonconformance would be a minimum of the following:
Two Gears $48 + 2 service calls $260 + Customer Dissatisfaction = a minimum of $308 up to the cost of replacing a customer!
Those are the costs of nonconformance. Apply this concept on a regular basis, and I guarantee that you will never look at your business the same way again. I also think you will come to thank Malcolm for your newly acquired insights!
Saturday, July 4, 2009
Am I cazy?
When I describe the rationale behind my design philosophy, people often look at me like I am crazy. See what you think….
When redesigning parts, my ideal goal is to design the part so that it will never fail. Of course by extension; this means that once dealers have purchased enough of a particular part to refit every one of their machines, I will never sell another of that part again. (Not necessarily the best long term business model one might say.) On one level, I would have to concede that designing myself out of a market may not seem to make sense. However, I look at things a bit differently. (Perhaps that is my insanity speaking!) I feel that doing the right thing is always the best way to go. My feeling is, that there are plenty of parts that can stand improvement. So if I exhaust the market in one part, there will be plenty of others to take its place. I also love the idea of stemming the tide of failed parts enlarging our landfills. The idea of preventing waste and saving my customer’s money seems like a worthy alternative to me. In fact for me; choosing to design a part so that it intentionally does not last forever, is crazy!
When redesigning parts, my ideal goal is to design the part so that it will never fail. Of course by extension; this means that once dealers have purchased enough of a particular part to refit every one of their machines, I will never sell another of that part again. (Not necessarily the best long term business model one might say.) On one level, I would have to concede that designing myself out of a market may not seem to make sense. However, I look at things a bit differently. (Perhaps that is my insanity speaking!) I feel that doing the right thing is always the best way to go. My feeling is, that there are plenty of parts that can stand improvement. So if I exhaust the market in one part, there will be plenty of others to take its place. I also love the idea of stemming the tide of failed parts enlarging our landfills. The idea of preventing waste and saving my customer’s money seems like a worthy alternative to me. In fact for me; choosing to design a part so that it intentionally does not last forever, is crazy!
Friday, July 3, 2009
Becoming a part of the solution
It is great to see that collectively, our society is becoming increasingly aware of the impact we are all having on this delicate planet. As for me, a sensitivity to the environment began as a child with my experiences in Boy Scouts. We were taught the simple things: When you are in the woods, leave it better than you found it. If you see trash that someone else left behind, pick it up. Treat the environment with respect at all times.
Now that I am a grandparent, I have observed the gradual decline of our air and water quality. Not to mention the affects of global warming. I have to wonder what kind of world the next generation will inherit from us. I am a strong believer in the premise that “if you are not a part of the solution, you are a part of the problem.” Activism has never been my style. Instead I have always tended to play a part by doing whatever I can to make my own positive impact. This approach is at the core of why I am so excited about the business I have recently created.
Evergreen Technologies was created to provide greener alternatives to organizations servicing Xerox wide format equipment. The basic premise being that high dollar parts should be rebuilt instead of discarded when they become worn out. Also, that high failure items should be re-engineered to make them last longer. Toward that end, we are building a growing list of parts that we are rebuilding or redesigning. It feels great to be playing a part in diverting waste from our nation’s landfills. The best part of this new venture is that unlike most green programs, participating in this process does not cost a service organization more money. Instead, they actually save money! If you are interested in finding out more, visit Evergreen at www.goevergreen.net
I suggest that you think about this question: What little things can you do each day to become part of the solution? Together, we can do a lot!
Now that I am a grandparent, I have observed the gradual decline of our air and water quality. Not to mention the affects of global warming. I have to wonder what kind of world the next generation will inherit from us. I am a strong believer in the premise that “if you are not a part of the solution, you are a part of the problem.” Activism has never been my style. Instead I have always tended to play a part by doing whatever I can to make my own positive impact. This approach is at the core of why I am so excited about the business I have recently created.
Evergreen Technologies was created to provide greener alternatives to organizations servicing Xerox wide format equipment. The basic premise being that high dollar parts should be rebuilt instead of discarded when they become worn out. Also, that high failure items should be re-engineered to make them last longer. Toward that end, we are building a growing list of parts that we are rebuilding or redesigning. It feels great to be playing a part in diverting waste from our nation’s landfills. The best part of this new venture is that unlike most green programs, participating in this process does not cost a service organization more money. Instead, they actually save money! If you are interested in finding out more, visit Evergreen at www.goevergreen.net
I suggest that you think about this question: What little things can you do each day to become part of the solution? Together, we can do a lot!
Thursday, January 24, 2008
Making the leap to a digital large format printer
Time and progress marches on, generally taking us all with it. Twenty to thirty years ago, most small to medium sized engineering firms were making copies of their large format drawings using an ammonia based process. Choking back the smell of ammonia was simply a way of life. At the time, a xerographic copier cost more than $40K. Then the Xerox 2510, a xerographic copier costing $7,000 was introduced. Other manufacturers followed suit, allowing the industry to give up their ammonia belching machines in favor of this cleaner economical alternative.
The world of digital printers is now undergoing a similar paradigm shift. Thousands of companies who purchased those first generation analog wide format copiers are now finding these machines are finally giving up the ghost. Most manufacturers stopped supporting these machines years ago. This is causing replacement parts to become very expensive, or simply unavailable. Companies owning these machines are now faced with the decision of what machine to replace their old relics with. The choices are a new analog copier, or make the leap to a digital system.
A new analog copier today costs between $5-7K. This is a relatively painless way to replace the old work horse. However, this new machine will offer very little improvements in capability over the old machine it would replace. Typically, these low priced analog machines will simply allow you to make size-for-size copies of an original. On the other hand, a digital machine will provide coping with reduction and enlargement capability. In addition, the digital machine may be used to scan drawings to file, as well as print digital files.
The ability to print from file is of particular help to most contractors. Unlike the old days when a bid set would be provided in hard copy form, most bid sets these days are being provided in the form of .PDF files on a CD. This fact alone is usually the main determining factor for most companies to make the move up to a digital machine.
Not long ago, the least one could expect to spend for a digital copier/printer was $30K. These digital systems usually took up a lot of valuable floor space, and required special electrical circuits to power the equipment. However, there are now several manufacturers providing a single footprint wide format digital printer/scanner/copier with a starting price half of what the older digital systems cost. These machines require less power, and may be plugged into standard electrical circuits.
Once the decision has been made to go digital, the next choice is which manufacturer to choose. At RPG, we have tested all of the systems available on the market today. We have found the Xerox model 6204 to be the best over all value. Two key factors affected this choice: ease of use and product quality.
One thing that Xerox excels at is designing their equipment to be user friendly. The Xerox 6204 is very simple to use. This is true whether scanning images to digital file, printing to the machine over a network, or making copies. Most functions are very intuitive, so little training on the part of the user is necessary. The 6204 is also very reliable, which allows the user to be more productive. The best way to learn about this new breed of digital wide format system is to request a personal demonstration. For more information, go to www.rpg.com or call our sales team at 301-498-3225.
The world of digital printers is now undergoing a similar paradigm shift. Thousands of companies who purchased those first generation analog wide format copiers are now finding these machines are finally giving up the ghost. Most manufacturers stopped supporting these machines years ago. This is causing replacement parts to become very expensive, or simply unavailable. Companies owning these machines are now faced with the decision of what machine to replace their old relics with. The choices are a new analog copier, or make the leap to a digital system.
A new analog copier today costs between $5-7K. This is a relatively painless way to replace the old work horse. However, this new machine will offer very little improvements in capability over the old machine it would replace. Typically, these low priced analog machines will simply allow you to make size-for-size copies of an original. On the other hand, a digital machine will provide coping with reduction and enlargement capability. In addition, the digital machine may be used to scan drawings to file, as well as print digital files.
The ability to print from file is of particular help to most contractors. Unlike the old days when a bid set would be provided in hard copy form, most bid sets these days are being provided in the form of .PDF files on a CD. This fact alone is usually the main determining factor for most companies to make the move up to a digital machine.
Not long ago, the least one could expect to spend for a digital copier/printer was $30K. These digital systems usually took up a lot of valuable floor space, and required special electrical circuits to power the equipment. However, there are now several manufacturers providing a single footprint wide format digital printer/scanner/copier with a starting price half of what the older digital systems cost. These machines require less power, and may be plugged into standard electrical circuits.
Once the decision has been made to go digital, the next choice is which manufacturer to choose. At RPG, we have tested all of the systems available on the market today. We have found the Xerox model 6204 to be the best over all value. Two key factors affected this choice: ease of use and product quality.
One thing that Xerox excels at is designing their equipment to be user friendly. The Xerox 6204 is very simple to use. This is true whether scanning images to digital file, printing to the machine over a network, or making copies. Most functions are very intuitive, so little training on the part of the user is necessary. The 6204 is also very reliable, which allows the user to be more productive. The best way to learn about this new breed of digital wide format system is to request a personal demonstration. For more information, go to www.rpg.com or call our sales team at 301-498-3225.
Wednesday, January 23, 2008
Should I buy a service contract on my Engineering Print System?
I regularly have conversations with customers who are weighing the decision of whether to purchase a service contract on their Engineering Wide Format machine. All prudent business people want to run their business as effectively as possible. Purchasing a service contract may on the surface appear to be an unnecessary expense. This is what I have found:
Customers who have a machine covered under a service contract do not hesitate to place a service call if the machine is operating below standard. In contrast, when a printer is not covered by a contract, the customer will typically put up with problems long before they place a service call on the machine. Sometimes these problems are endured for weeks or months before a service call is placed.
When servicing a contract machine, technicians thoroughly diagnose, clean, and replace worn parts on each service call. In the case of a Wide Format machine that is serviced on a time & materials (T&M) basis, the customer typically prefers to spend as little as possible on maintenance of their machine. Therefore the technician will simply fix the immediate problem, with little or no regard to preventative maintenance.
In the short term, the T&M customer often realizes a cost saving with this approach. However, as usage and neglect continues, the machine’s overall condition inevitably declines. As a result, output quality and reliability continues to suffer. Eventually, the machine often becomes too expensive to bring back to normal operating condition. In these situations, the perception on the part of the end user of the system is that “the machine is a piece of junk.” When in reality, had the system been maintained at a consistently higher level, it would have performed far more acceptably. The contrast in perception regarding the performance of a contract verses T&M machine is often striking. Most contract customers appreciate and value their equipment for the useful life of the product. Whereas many T&M customers endure their machine until it finally dies.
Comparing bottom line cost is often surprising as well. In the first year or two, a T&M customer will almost always come out ahead compared to the cost of a service. However, it is often after this initial period that problems begin to surface with the equipment due to normal wear and tear. Most businesses expect to realize 5-10 years of useful life from of a Wide Format printer. As the equipment sees more use, it is typical that more expensive parts begin to fail. Due to the failure of an expensive part, I have seen T&M customers spend as much in a single service call as the cost for a service contract for two years!
You might be thinking, “So why not skip the service contract until the machine begins to give me problems?” Most service companies will want to inspect a machine prior to placing it under a service contract. The intent of the inspection is to ensure that the machine is operating up to OEM standards. If there are parts that show signs of wear, these will have to be replaced at the customer’s expense prior to placing the machine under contract. After a few years of minimal maintenance, it is not uncommon for this cost to run $1-2,000.
So if you are weighing the decision whether to purchase a service contract, I ask you this simple question: “Are you feeling lucky?”
Customers who have a machine covered under a service contract do not hesitate to place a service call if the machine is operating below standard. In contrast, when a printer is not covered by a contract, the customer will typically put up with problems long before they place a service call on the machine. Sometimes these problems are endured for weeks or months before a service call is placed.
When servicing a contract machine, technicians thoroughly diagnose, clean, and replace worn parts on each service call. In the case of a Wide Format machine that is serviced on a time & materials (T&M) basis, the customer typically prefers to spend as little as possible on maintenance of their machine. Therefore the technician will simply fix the immediate problem, with little or no regard to preventative maintenance.
In the short term, the T&M customer often realizes a cost saving with this approach. However, as usage and neglect continues, the machine’s overall condition inevitably declines. As a result, output quality and reliability continues to suffer. Eventually, the machine often becomes too expensive to bring back to normal operating condition. In these situations, the perception on the part of the end user of the system is that “the machine is a piece of junk.” When in reality, had the system been maintained at a consistently higher level, it would have performed far more acceptably. The contrast in perception regarding the performance of a contract verses T&M machine is often striking. Most contract customers appreciate and value their equipment for the useful life of the product. Whereas many T&M customers endure their machine until it finally dies.
Comparing bottom line cost is often surprising as well. In the first year or two, a T&M customer will almost always come out ahead compared to the cost of a service. However, it is often after this initial period that problems begin to surface with the equipment due to normal wear and tear. Most businesses expect to realize 5-10 years of useful life from of a Wide Format printer. As the equipment sees more use, it is typical that more expensive parts begin to fail. Due to the failure of an expensive part, I have seen T&M customers spend as much in a single service call as the cost for a service contract for two years!
You might be thinking, “So why not skip the service contract until the machine begins to give me problems?” Most service companies will want to inspect a machine prior to placing it under a service contract. The intent of the inspection is to ensure that the machine is operating up to OEM standards. If there are parts that show signs of wear, these will have to be replaced at the customer’s expense prior to placing the machine under contract. After a few years of minimal maintenance, it is not uncommon for this cost to run $1-2,000.
So if you are weighing the decision whether to purchase a service contract, I ask you this simple question: “Are you feeling lucky?”
Subscribe to:
Posts (Atom)
