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Dataproducts Races Down A Parallel Fast Track To Fuel The Aftermarket

18 Feb, 2001 imageSource

Dataproducts Races Down A Parallel Fast Track To Fuel The Aftermarket

It isn't as if printers and copiers have been around forever. The abbreviation “cc,” only a couple of generations old ¾once referred to carbon paper. And it wasn't all that long ago that “Original Equipment Manufacturer” and “Aftermarket Manufacturer” were as different as East and West. The two simply didn't meet -- at least on friendly grounds. Early on, one company went for the golden spike.

The company that began as Dataproducts, today offering high-end printers and copiers as Hitachi Koki Imaging Solutions, Inc. (HiKIS), travels in the same class as Hewlett Packard, Lexmark, Xerox and other major OEM's. The company has long been known for its technical innovations. The company has focused on bringing new machines to market that operate faster with improved print quality and offer more features for user convenience.

Ten years ago, however, Dataproducts took the unusual step of developing an aftermarket strategy that has it on a parallel track racing head-to-head with the largest aftermarket suppliers. Manufacturing and supplying aftermarket consumables under the well-known Dataproducts brand name, the company's products range from laser toner cartridges to ink jet solutions to all manner of ribbons - well over a thousand different products. The supplies are sold through channels that include copier dealers, IP dealers, office product dealers and retail giants like Staples. According to industry sources, Dataproducts’ ink jet supplies comprise over 40% of the total U.S. aftermarket. The company recently added copier and fax supplies to round out its product offering.

Originally, however, securing its place in the aftermarket presented Dataproducts a daunting challenge. Case in point¾remanufacturing all in one laser toner cartridges. The remanufacturing industry is comprised mostly of an assortment of printer and copier service specialists, “mom and pop” businesses with little technical expertise and traditional aftermarket suppliers. Though it began as a “drill and fill” industry, laser cartridge remanufacturing became one of the top entrepreneurial industries of the early 1990's growing to thousands of businesses in the US and worldwide.

Seizing An Opportunity For Progress

Despite accumulating an aftermarket share of 25% to 30%, according to industry analysts like CAP Ventures and Lyra Research, the remanufacturing industry has taken its share of lumps due to early product failures and unfulfilled overblown claims of performance and quality. Until recently, this hasn't been an area where respected OEM's felt comfortable. Some learned through costly failures that branching into the compatibles marketplace was loaded with obstacles that could derail their progress.

Ironically, the negative perceptions these failures created provided Dataproducts some of its best opportunities to gain the attention of potential customers. The company counters these perceptions with the strength of its printer manufacturing reputation, technical expertise, willingness to commit OEM resources to quality systems and processes, and ability to market in multiple channels to the largest and smallest users.

Although OEM's have collected empty cartridges and then recycled reusable components into their new products for years, Dataproducts was one of the first to offer publicly both a new and a remanufactured version of its own product. This was the LZR 15/20 laser printer cartridge, which through its compatibility with other popular printers like the Compaq Pagemarq 15 and 20 was marketed as a compatible. No “drill and fill” product, it took Dataproducts design engineers about one year to “reverse engineer” its own product, then to develop, to test and to retest materials and components before bringing the remanufactured version to market. The engineers even added an improvement not found on the original cartridge: a built-in corona cleaning tool that eliminates streaking, which is the most common problem associated with older laser cartridges.

As Dataproducts developed remanufactured versions of the Canon/HP and Lexmark toner cartridges, it also developed a reputation. According to Vice President of Engineering, John Morgan, “we became known as the 'lab rats' of the industry, constantly testing in all sorts of environments and making our suppliers fine-tune their products to match our specifications. We were not known as first to market, but we always worked to be best to market. It took us longer than some, because we tracked to the OEM specifications, where others may have used the first materials available to get to market more quickly.”

In addition to its own talents, Morgan points out that the company has drawn on the legendary technical expertise of its Hitachi parent, with Hitachi-trained engineers and physicists rotating duty through the supplies group. An example of this joint effort is the Dataproducts compatible version of the Canon P520 cartridge, better known as HP’s “27X” cartridge, for its LaserJet series 4000 printers. With toner particle size and toner dispersion more like the original than other aftermarket versions, the company claims print quality in gray scales, along with yields, that truly match the original.

While this meticulous development process has produced superior designed products, it’s also the stuff that makes the sales force grind their teeth. So the company is increasing the velocity of new product introductions to meet the demands of Dataproducts dealer channels, having introduced three times as many products in the past six months as in the previous year-and-a half.

Pride In Work And Attention To Detail

Even with this technical advantage, Dataproducts Senior Vice President and General Manager, Bill Barclay, wasn't satisfied that he could take his message to other major OEM's and to Fortune 1000 companies without adding another tier of credibility. Decision-makers, who depend upon minimal machine downtime, remain skeptical about using aftermarket products, especially if they have had negative experiences in the past. Seeing the value of Dataproducts’ European operation’s ISO 9002 certification – a necessity for doing business in the EC -- Barclay directed the supplies group's resources to achieving ISO 9001 certification, which has since been implemented throughout HiKIS.

“The commitment of personnel, time and resources to achieve ISO 9001 certification was huge - greater than we originally anticipated, “ recalls Barclay, “but the result was exactly what we were after. Not only did we improve processes down the line from design to consistent manufacturing to faster delivery, we also established greater credibility among our target audience. Doors opened more easily than if we hadn't gone through this certification process. All our facilities operate under our ISO 9001 quality system, and we have since automated our documentation on line.”

Dataproducts manufactures at its 80,000 square-feet, Mexicali, Mexico plant, a few hours Southeast of the Simi Valley, California supplies headquarters. Plant General Manager Ino Landa is a company success story. Starting his career on the old Chatsworth, California manufacturing floor, he ascended to his current position, where he created a model operation that manufactures supplies for the company’s own machines side-by-side with compatibles. Plant tours are, in fact, instrumental in closing large business opportunities.

The company’s equivalent manufacturing facility is located in Porto, Portugal. The facility manufactures for the European and Middle East markets doing as much private label contract work as producing for general distribution. European headquarters is in Dublin, Ireland.

Having firmly laid down its tracks as both an OEM and an aftermarket leader, challenges yet remain. Accelerating new product introductions demanded by customers, meeting constant price pressure from competitors and further penetrating the marketplace are a few. But the train has left the station, and Dataproducts is speeding to become the lead car.

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