Mach FTD - Relax presentation from Domino UK
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Domino UK printing solutions from a completely new perspective. For more information please visit our webpage: www.mach.ro
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Mach FTD - Relax presentation from Domino UK
- 1. Relax
- 2. Printing solutionsfrom acompletely new perspective
- 3. The Origins of Relax • Industrial ServiceContractsin Netherlands • Pay per codecontractsin Spain and France • Relax typecontractsin Mexico • 95% of businesswith Relax dealsin Norway • 80% of businesswith Relax typedealsin Chile
- 4. The Origins of Relax • Set up thebusinessdifferently than the competitors(Norway) • Customerswant to “outsource” coding equipment • Customersasking for acompletesolution by Domino • Customersasking for onecontact only for their coding equipment
- 5. Content of a Relax contract • Machine(A-SeriesClassic and plus, Macrojet/CaseCoder, JetArray, Bitjet+, K-Series, C-Series plus (Med/Hi Res), S-Series plus, DSL plus, M-Series, V-Seriesand now G-Series) • Accessories/Applications • Service • Consumablesdelivery (Spares, filters, inks, ribbons, labels, printheadsetc.) Monthly ratefor customer
- 6. Product Range • A-Series(Classic and plus) – Excl. Opaque/Foodgrade • S-Seriesplus • C-Seriesplus • CP (Bitjet+, DOD) • Print & Apply • TTO • TIJ(G-Seriesand L-Series)
- 7. Machine – Financing • Financing themachineswill bedonelocally through normal working capital • Machineswill beon local fixed assetsi.e. Domino retainsownership
- 8. Service • Regular maintenancevisitsbased on customer needs/running hours • All sparepartsincluded • Travel timeof engineer included • On sitetimeof engineer included • Qualified emergency callsincluded • Freesoftwareupdates • Back up machinespossible
- 9. Consumables • Low risk inks(cartridge, reservoir, make-up, wash) • Laser tubes, filters • Ribbons, printheadsand labels • Monthly delivery plan agreed with customer and handled automatically with system (if possible) • Delivery amendmentspossible • Half-year reviewson consumption
- 10. Accessories/Applications • Any accessories/applicationscan beadded into the contract including: – Network – Traversing head – DPXs – Brackets, touchscreens but – No complicated specials
- 11. Training • Mandatory if thecustomer isnew • Mandatory if thetechnology isnew to thecustomer • Training offered according to local offer including: – Operator training – User training • Oneoff training or regularly throughout contract
- 12. The Contract • Duration: 3-5 years • Payment: Monthly • Installation/training Built into monthly charges
- 13. At the End of a Contract Ideally: • Contract isprolonged – machinesareexchanged for new ones, or – keep existing machinesand just supply aftermarket – Either way requiresnew calculation of the contract Optional: • Saleat market prices • Contract ends, machinesaretaken back • Customer purchasesnew machinesusing capital route
- 14. The Concept – CustomerAdvantages • Cash isnot used on capital expenditure • Domino providefinanceat acompetitiverate • Total peaceof mind • Everything iscovered = service, machine, consumables, training (bundlesall product parts) • On timedelivery of aftermarket • Savecostsfor raising purchaseorders • Accounted for asarunning cost • Possibility to get new machineswithout budget process • Tax advantage(potentially “off balancesheet”)
- 15. The Concept – CustomerAdvantages • Free/regular scheduled consumablesdelivery without extrapurchaseorder • Regular consumables • Low effort and low administration costs • Customer’sengineerscan focuson other areas of theproduction
- 16. Main Interest of Customers in Relax • Cash isnot spent on capital expenditure • Third party financeprovidersratesmay be prohibitive • “Outsourcing“ coding equipment • Replacement of leasing (onefaceto the customer)
- 17. The Concept – Advantage forDomino • Customer isbrick walled for length of contract • Improved customer intimacy • Oneconcept approach through out Domino • Difficult for acompetitor to undercut price • Scheduled servicevisitsimprovesefficiency of service • Knowledgeof exact equipment timescales • Bundlesadditional after market productsinto the transaction (training, service, ink contract)
- 18. Target Customers • Largecustomer sites, MNCs • Competitor sites– esp. with high ink usage • Customerswith high ink usageespecially where technology doesnot provider refiller protection (C- Series) • Customerswith old equipment • Win back customers • Stablecustomers(regular paymentsrecord). Not to beused asa“last resort” when customer hasno cash and no sourceof third party financedueto poor credit references
- 19. Target Customers • High pressured accounts • 24/7 competitor accounts • Companieswith operational budgets • CustomerswhereGroup policy prevents buying Domino • Low margin products(e.g. dairy, sugar)
- 20. Systems/Administration • Schedulesand shipsregularly consumables • Reportson profitability by generating reports on revenue(paid monthly rateby customer) and costs(serviceengineer on sitetime, sparesetc.) • Possibly invoiceor credit notefor customer • Annual reviewsto adjust themonthly rate
- 21. Calculator • Printer specification • Customer/production specification • Credit worthinessof customer • Givesamonthly rate • Calculatestheconsumables • Discount check • Automatic quotation
- 22. Formore details For local strategiesand coveragefor Relax contact your local salesmanagement team. For further Relax detailsincluding thelatest calculator contact Mark Holland (mark.holland@domino-uk.com)
Editor's Notes
- Several countries around the world had some business with Relax type contracts. Mostly they were one off contracts that were set up for one customer individually. This made it difficult for salesmen to offer it as a standard option to customers. It took a long time to calculate and fix the contractual issues. So Relax contracts were only offered if the customer specifically asked for it. There were two countries which had developed Relax as a competitive advantage: Norway and Chile. To differentiate themselves against standard offers by competitors both countries started to sell Relax type contracts and have become extremely successful, profitable with it being the leader for coding and marking in their country.
- Today Domino sees that the market requirements for Relax type contracts are growing and there are good reasons why you should be able to offer Relax. Relax can clearly be a way of differentiating your offers from competitors. Norway has done this successfully. Their position in the market was very weak and they need something to differentiate against the strong competitors. So they created a Relax type contract and took that into the market. It was so convincing for customers that Norway does 95% of their business with contracts today. It has made them the market leader. There are additional reasons to offer Relax. Some customers don’t want to look after their coding equipment. With Relax Domino takes a lot of the responsibility away. Customers asked Domino to provide a complete solution out of one hand including the financing of the machine, service and ink deliveries. Relax includes all this. Domino can offer now a product with the name of Relax.
- Relax has to be seen as a fixed product as it is defined here. Any variations of this shall not be called Relax. There may be though variations in terms and conditions to suit laws and regulations of the country. The Relax contract contains the following services: Machine (A-Series, S-Series Laser, OCC, CP, PALM, TTO): This means that the machine is financed and owned by Domino (subsidiary or distributor) Accessories: brackets, shaft encoder, photo cell, stand etc. Applications: traversing head, special software Service: all service performances (will be covered more detailed on slide 7) Consumables: ink cartridge, ink reservoir, make-up, wash, filters, spares All the costs for this are calculated and brought together in a monthly rate, which the customer has to pay.
- The product range that can be offered may vary throughout the countries depending on their strategy or market requirements. The range mentioned here is based on the calculators which have been developed. Difficult inks like opaque and foodgrade have been excluded because the service effort to maintain these machines is much higher and irregular. That makes it difficult to calculate reliably.
- The financing of the machine is in the hands of Domino (subsidiary or distributor). This means that the distributor/subsidiary has to find the solution of financing the machine. The Domino UK head office is happy to give assistance on this if guidance is needed. Covering the financial part means in most countries that the machines will be on the local assets (this may vary from country to country). Financing the machine does not mean that this part can be covered by a leasing contract. The customer should have only one point of contact for a Relax contract: Domino.
- The listed service points are all covered in a Relax deal. This means not only regular maintenance visits are included but also unexpected break downs. Of course the break down is only covered if the machine was handled properly. So a qualified emergency call means that if the machine breaks down or has a problem the customer has to call the hotline or the service engineer first. It may well be that the help-desk can solve the problem by the telephone. If not the help-desk or service engineer will decide and plan a service call at the site of the customer. Break downs resulting in misuse of the machine, using non Domino service, spare parts or inks, destruction, force majeure (flooding, earth quick, lightning etc.) are not covered by Relax. Any repairs resulting from the mentioned reasons will have to be paid extra. The travel time to the site, the on site time of the engineer is included and is taken into consideration in the calculation of the monthly rate (see calculator). The back up machines are only offered if the customer needs them and are included in the monthly rate.
- All needed consumables are included in the contract. The delivered amounts are calculated with the calculator and are based on the production data (production hours, length of code etc.). The delivery dates will be agreed with the customer and shipped automatically by the Relax supplier. Every half year there should be a review with the customer on the consumption. Based on the consumption the monthly rate may change. The review helps monitor if the deliveries need to be adjusted and gives an indication for customer and Domino if the monthly rate needs to be adjusted. The easiest would be if the financial system used can automatically ship the consumables.
- A Relax contract can include accessories or applications. Following the concept of Relax accessories and applications stay in the ownership of Domino and are financed for. Difficult or specially built applications should not be included in a Relax deal. The risk of the warranty and in case the customer becomes insolvent Domino would have to take the whole equipment back not being able to sell the special application further on.
- Training can be offered as an option for the customer. For new Domino customers training is mandatory and also for customer for whom the technology is new. If they have already had training on the machines or know the technology it is optional. Based on the standard offers of the subsidiary or distributors the training will be included in the monthly rate. If training is not included in the contract it may as well be sold later and then has to be charged extra.
- The length of the contract can be offered for 3, 4 or 5 years. The payment can be made monthly or quarterly. The installation and the training can be charged as a one off payment by the customer or built into the monthly rates.
- At the end of the contract ideally the contract will be prolonged with new machines. The old machines are exchanged. A new calculation for the monthly rates has to be made. In some cases the customer will ask to have the option of buying the machine at the end of the contract. The machine price will be sold at market value. The price is really down to the subsidiary/distributor. In any case to keep the customer brick walled a service and ink contract should be offered. The most unfortunate event would be that the customer wants the contract to end and Domino has to take the machines back.
- The idea of Relax is not simply to offer a different pricing option. The main reason is to give the customer a total peace of mind. Domino manages the ink deliveries, sends service engineers on time and makes the financing easy. The customer can focus on other areas of the production. Domino delivers inks and service on time. This means the customer does not have to raise extra purchase orders. This is an area, where the customer easily can save money. Raising a purchase order might involve four or more people (production line engineer, production line manager, warehouse person, purchasing). With scheduled deliveries these costs can be neglected. Because Domino finances the machine and it stays on Domino assets the machine will be potentially off the balance sheet of the customer (this may vary from country to country and has to be carefully checked). If it is treated off balance sheet then it is accounted for as a running cost. Therefore there is no need for going through a long process of applying for a budget for coding equipment.
- The customer does not have to remember to place a purchasing order for consumables because Domino delivers regularly and on time. The administration costs are therefore reduced. The service engineer now may focus on other areas of the production because the printer is maintained by Domino.
- The main reasons why customers are interested in Relax contracts is because they don’t want to be bothered with maintaining coding equipment. The coder on the line has to function so the line engineers can focus on other things. Especially large companies are looking for solutions like this. Economic or company development may lead to cuts in budgets capital expenditures. In times like these it is difficult to sell equipment. Relax gives a perfect opportunity to overcome this because usually the monthly rates are treated as a cost because the equipment is not bought and does not sit on the assets of the customer. Some customers like to get a complete solution from one supplier including the finance solution. Relax covers that and can replaces an extra leasing deal. Setting up a leasing deal may also be time consuming because the leasing company is slow and need time for approval. With Relax the customer gets credit checked and based on that the decision can be made to go forward with the customer or not.
- One of the targets of CRM is to brick wall customers. This means that it is difficult for a competitor or a service/ink pirate to break into that account. Relax is a very good tool for protection because the customer is tied for the length of the contract. A competitor cannot buy out the machines and if service or ink pirates come in Domino reserves the right to take out the machines and cancel the whole contract. Relax also improves the relationship with the customer because Domino takes the complete responsibility for the coding equipment. That means trust and reliability has to be built up. With the Relax product Domino finally has one version which makes it easy to sell for all sales men. Since a Relax deal is based on a monthly rate a competitor cannot simply undercut the price because it is difficult to break down the monthly rate into its pieces for machine, ink usage, training etc.. So a direct comparison becomes difficult. Regular planed visits by service engineers improves the efficiency because their time can be planed and are not based on emergency calls. If the contract is drawing to its end it is easy to plan the next activity and start selling the next contract on time. With Relax the after market is automatically covered. No extra effort has to be taken to sell service contracts, ink contracts or training. All after market products are included in Relax.
- Large companies are may look for Relax type solutions so they can focus on other areas. Relax could be used to break into a competitor site because it gives the advantage of a different approach and the price cannot be easily compared. Customers with a high ink usage have to make sure that the inks get ordered on time. Domino takes that part by delivering regularly and on time and eliminating administration time and costs of purchasing. Customers who have been lost to an ink or service pirate may be won back with a complete approach. Customers who have a good record of paying on time are a potential target.
- With Relax Domino provides all consumables and service on time to the customer. So customers that are under high pressure don’t need to worry about their coding equipment. These are customers with a high number of product out put and long production hours. Competitor accounts that are running 24 hours a day, 7 days a week may have a high ink consumption and therefore make a good target. Some companies operate with operational budgets instead of capital investments. Some customers have a fixed supplier list. If Domino is not listed Relax could be a way to overcome this because the branch does not need to apply for a budget to make a capital investment. The decision on operational costs are local so they could decide for Domino. Current example of this is Unilever. Customers with low margin products, e.g.. dairy, sugar can allocate exact coding costs against their product because Relax gives them an exact monthly rate, which could also be broken down to the product.
- Some systems enable you to set regular shipment dates (ex. Oracle) for consumables. If this is not possible an alternative route/procedures have to be set up to ensure the deliveries. To monitor the contracts profitability it is necessary to generate regular reports which reflect the costs Domino has invested into the contract against the monthly paid rates of the customer. In an annual review the actual usage of consumables is compared against the agreed amounts in the contract. This is to check if the contract is profitable but also to adjust the monthly rates if needed. The annual review of the contract then may set a new monthly rate to cover the actual usage.
- The calculator for Relax is based on excel and calculates the monthly rate automatically based on production hours and the code printed. It also generates an automatic quotation and contract ready for the customer to sign.