My firm manages over 50,000 pieces of mailing equipment for the largest companies in the US. What is always surprising when we take on new clients, is the lack of information they have about their mailing spends that can lead to bad decisions and higher prices. We want to arm you with the tools to know what to look for and what questions to ask to put yourself in a power position to reduce costs. Here are 10 questions that you should ask your mailing equipment vendors that we feel are essential to managing this category that should help you save money for the future.
1. When does my lease expire?
We estimate 80-90% of all mailing equipment (Outside of the smallest postage meters) are leased. The typical terms range from 3-5 ½ years. You may be able to dig up your original contract and assume that you can calculate the end date based on when you signed the agreement, but this is not the case. There could have been time remaining on your old lease or other processing delays that could change the start date by 1-9 months based on the type of agreement you signed.
Knowing the end of lease date is incredibly important because most mailing equipment agreements have evergreen clauses that extend by one year or more if you do not notify the company of changes 90 days prior to the end of term. To make matters worse, the end of lease date will typically not be visible on your invoices.
2. What are my current costs?
Mailing equipment costs are broken down into the following categories and all need to be factored:
· Lease
· Meter Rental
· Maintenance
· Scale Rate Changes
All of these costs may be included in your equipment lease but you should validate in case you are getting separate bills for these services. If you have other equipment from your vendor like folder and inserters, letter openers, envelope printers, tracking systems etc., make sure to get these costs quantified as well.
3. How much postage have we ran over the last year?
All of the mailing vendors should be able to give you detail on the amount of postage you have added to your mailing equipment. We are always looking at the price of the equipment compared to the postage use and find the numbers are frequently out of proportion. You should never be paying more than half as much for the equipment as the postage being used. If you have medium to larger mailing systems, this number should be less than one quarter.
4. Can you explain the fees we are paying on our bills and how we can avoid these for the future?
This industry has lots of fees that most customers do not fully understand. Here is a list of the most common that you should validate if you are paying and ask for advice on how to eliminate for the future.
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5. How do we get access to our data? (Inventory, Invoices, Postage Activity)
Your mailing equipment account manager should be able to provide you some of this data, but the real question is can you get set up to access this information on the vendors website? Find out if they can set this up for you or at least provide you the core data (Account Numbers, model and serial numbers) and instructions to get you started. Most of the vendors have really good online tools that will allow you to see the following:
· Inventory - Listing of equipment with models, serial numbers, descriptions and installation dates.
· Invoices - Lease, meter, maintenance and supply invoices.
· Postage activity - Refill dates, amounts with associated meter and account numbers.
6. What equipment models do you have that fit our application?
We are averaging 63% savings for our clients mostly because they are not choosing the right levels of equipment. It is important to get at least 2-3 machine choices from your mailing vendor and push them to explain the differences between the systems. There is very little information available outside of the vendors websites on what this equipment is supposed to cost and volumes that systems can handle. You need to validate that you have as many options as possible to make the best decisions.
7. What is included in the new agreement?
When you are acquiring new equipment, validate that the following items are included or that the pricing is broken out so you can understand the charges.
Leases - We recommend all inclusive agreements that include equipment, meter rental, meter resets (The fee to add money to your meter), postage advances (The fee to have the vendor loan you the funds until the statement date), maintenance and scale rate changes.
Purchases and Rentals - Make sure to validate the amounts for all of the items mentioned above with leases, because most will be charged individually.
8. Which items on the equipment description are chargeable?
When you look at the typical mailing equipment lease agreement it will show you a bunch of line items that together make up the mailing system. The problem is the price of each line is not broken out and you have no way to know which are chargeable or included. We often times find chargeable items that can easily be eliminated if they were properly understood. We recommend going through each line item with the vendor and validating what it is, what are the incremental costs and if it is needed. This will help reduce the costs of the agreement.
9. Can you provide purchase prices and 2-3 lease terms?
Most mailing equipment transactions are renewals of current agreements. The vendors may try to do the easiest path and get you to renew the current or new equipment at similar terms. We recommend doing a cost comparison between leasing and purchasing as well as looking at 2-3 lease terms. To make it easy for you, ask the vendor to provide purchase pricing as well as 36, 48 and 60 month lease terms so you can make the best decision.
10. What can we do to get the price reduced?
It never hurts to ask the question to try to get lower pricing. Here are some things to try that may help?
· Are there any special programs running?
· Do you have any remanufactured or demo versions?
· What if we waited until the end of the month or quarter?
· Are you adding in any remaining balance from our current agreement and if so what would be the cost if we waited until the end of our current lease to renew?
· What if we had a quote from another vendor?
· What would be the cost if we kept what we have today?
· Can we set up national pricing that includes multiple sites?
Hopefully from this list you can see that there is a lot more you may need to know to make sure that you are maximizing your mailing equipment vendor relationship. When you have the information above, it puts you in a power position to better manage your current account and future renewals. All of which can save you money.
Adam Lewenberg, CMDSS, MDC, President of Postal Advocate Inc., runs the largest Mail Audit and Recover firm in the United States. Their mission is to help entities with large numbers of locations reduce mail related expenses, recover lost postage funds, and simplify visibility and oversight. Over the last year, they have helped their clients save an average of 63% and over $3 million on equipment, fees and lost postage. He can be reached at (617)372-6853 or
Hopefully from this list you can see that there is a lot more you may need to know to make sure that you are maximizing your mailing equipment vendor relationship. When you have the information above, it puts you in a power position to better manage your current account and future renewals. All of which can save you money.Adam Lewenberg, CMDSS, MDC, President of Postal Advocate Inc., runs the largest Mail Audit and Recover firm in the United States. Their mission is to help entities with large numbers of locations reduce mail related expenses, recover lost postage funds, and simplify visibility and oversight. Over the last year, they have helped their clients save an average of 63% and over $3 million on equipment, fees and lost postage. He can be reached at (617)372-6853 or adam.lewenberg@postaladvocate.com
I’m going to take a wild stab in the dark that chances are your business will at some point have the need to purchase equipment. (Was I right?!) Perhaps it’s time to ‘Office Space’ that old printer, get a new company truck, or finally get that air conditioner so Dave stops complaining about sweating through his wool suit (in August).
In the world of food production, this usually includes food processing equipment. Maybe yours is a large corporation where purchasing decisions are centralized with long-standing contracts. Or maybe you’re the sole proprietor looking for the most economical option. No matter where in the mix you fall, the following considerations are helpful in planning to make the best purchasing decision.
1. What is the nature of your relationship with the OEM?
The basis of business transactions lies in relationships. Will this be a one-off purchase for a specific application? Or a long-term project with multiple components? In either case, maintaining a mutually beneficial relationship is essential for long-term success. Even if your purchase is an “off the shelf” standardized piece of equipment, it will most likely require service at some point in its lifetime. When that day comes, will the original OEM be able to provide replacement parts? Answer technical questions? Provide service calls for repair or modification? Knowing that an OEM strives to maintain positive, long-term relationships with its customers provides added value and peace of mind.
2. Does the OEM understand your industry and specific needs?
Being a jack-of-all-trades is a desirable quality in many cases, such as traits you look for in a maintenance manager. But when you know there are specific niche applications that pertain to your industry alone, you want to work with a manufacturer with expertise in that area. For instance, you might not want your local McDonald’s to serve a fancy surf n’ turf steak and lobster meal (even though they probably could). Similarly, any metal fabrication shop worth its salt would be able to produce an inspection table. But if they haven’t built one for a food production facility, where the materials used and the wash-down ready design are important for food safety, you might end up with a component that is not suitable for your needs.
3. How is their communication & customer service?
We are inherently social beings. Even at a time where commerce is constantly being pushed toward automation and purchases are being made with less human interaction, customer service and open communication are more important than ever. Working with an OEM, especially on applications that require a high degree of customization, means collaboration. A positive collaboration includes open and honest communication among all parties involved. Are they being upfront and realistic about their core capabilities? Can they actually meet the proposed timelines? Put another way, excellent customer service can be summed up in the phrase “under-promise, over-deliver.” Be mindful of OEMs that promise something that sounds too good to be true (because it often is).
What truly sets companies apart in terms of customer service emerges not when everything goes right, but rather when unforeseen issues occur. It’s during these moments that you need to be confident that your OEM is going to respond immediately when challenges arise. A healthy collaboration can often produce a better result than the original design.
4. Does the OEM sell directly, or through a 3rd party vendor / distributor?
There are pros and cons with both methods, and sometimes the buyer has no choice. The general advantages of going through a distributor include convenience (especially when purchasing a wide variety of equipment), the ability to purchase in smaller quantities, reduced lead times if items are already warehoused (think Amazon), and possible cost savings if the equipment is older or used.
Working directly with a manufacturer however generally means lower costs, you have complete control over the sales process, and you have access to the people who actually design and build the equipment. It “cuts out the middleman” and allows for increased collaboration and customization. It also means partnering for future projects, maintenance and upgrades.
5. Where is the OEM located?
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As I write this heading into the summer of 2022, fuel prices are predicted to hit an all-time high in August. Suddenly components from far away don’t seem that inexpensive or may not even be available. Coupled with quality issues, time zone challenges and lack of support and it suddenly it makes more sense to source from a domestic manufacturer (if possible). Working with local companies benefits not just the parties involved, but also the communities in which they are located. But it also just makes good business sense. If you need a new conveyor belt right now, waiting a few weeks for someone to install it will not help your downtime. Even if they’re not located next door, knowing that they have similar working hours is extremely beneficial, especially when issues arise.
6. What are the OEM’s capabilities and certifications?
Verifying that the OEM you’re working with can handle the job should be a no-brainer. But double-checking their lists of equipment, past project builds, and qualified capabilities is simply good due diligence. You wouldn’t go see a doctor without a medical degree, so why trust a panel supplier without UL-508A certification?
Along similar lines, it behooves you to ask for a full list of capabilities in case the OEM can do more than you may be aware of. (For instance, they may be promoting their powered lug washer, but they also make conveyor and infeed equipment.) Having a single OEM manage a full line project saves time, communication headaches, and money.
7. What value-added services does the OEM provide?
Every project manager knows that sourcing the equipment is just part of the picture. What if the equipment needs modification, either during the design phase or after installation? How will it be transported to the facility? What if the new machine needs to be integrated with existing equipment?
Having expert help with other steps of the process can add huge amounts of value to a project. Consider the following example: Manufacturer A’s equipment pricing is higher than Manufacturer B. At first glance, the obvious choice seems to go with the lower-priced option in A. But being a great project manager thinking about the total cost of acquisition, you would also be investigating logistics, integration, and future support. It turns out that A’s unit will cost much more to ship, and being that they’re based internationally, they would have to contract out for field repairs and support, bringing the total cost A well above B. So, it is important to ask: Is the OEM able to assist in other areas than just manufacturing?
8. What is their capacity and lead times?
Finding the right solution for your facility can be downright exhilarating. But that excitement can be immediately stymied once you realize that the equipment you found, that perfect one that ticks all the boxes, has a lead time of 18 – 24 months. And your team needed it yesterday.
At the time of writing, Global supply chain issues continue to hamper operations near and far. After all the work put into getting a major piece of capital equipment approved, only to find out at time of purchasing that the manufacturer won’t be able to commit to your timeline, can be downright heartbreaking. Even worse is a situation where the manufacturer claims to have capacity to hit your deadline but comes back after the PO has been accepted to inform you that there will be a delay. No one is perfect, and sometimes delays are inevitable. But probing questions and asking for testimonials in the exploration phase will help ferret out suppliers who are not truly able to deliver on time.
9. Can the OEM be flexible and scalable to your project needs?
Finding the right OEM for your needs might be a little like Goldilocks trying porridge: you want the fit to be just right. A smaller OEM will likely be more responsive to your needs, but they won’t be able to handle the volume of a large project. Larger multi-national OEMs are ready to handle larger undertakings, but you’ll be competing for their attention against their other customers. Ideally, you’d like the OEM to be both scalable enough to handle all of your projects, but not so large that you’re just another number lost in the mix.
10. Is the OEM able to customize their equipment to fit your needs?
Manufacturers, as a general rule, prefer to produce multiples of the same design to maximize efficiencies. The larger the OEM, the more efficiencies needed to remain profitable. These two general principles combined mean that large OEMs will be less able or willing to customize individual equipment, especially if the volume is low. A smaller OEM on the other hand has the capacity to be much more flexible and is more available to accommodate customization, even on a single piece of equipment. If the application has a very unique design need, an OEM may even work with you on a completely custom build.
11. Is the OEM able to provide examples of their work?
Every OEM wants to claim that their equipment is the best. But what do their customers say? Are they willing to allow a site visit or demonstration to you, a potential customer? If the OEM’s clientele is so impressed with their choice that they’re eager to share their experience, that’s a very strong indication of complete satisfaction. If, however, an OEM has difficulty providing examples, the opposite would be more likely.
OEMs come in all shapes and sizes, and not every one is the best fit for every application. But by asking questions and performing due diligence, you should be able to determine if they are the right fit for your business.
Do you have an application? Get in touch with us to see if we’re the right fit for you!
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