OEMs Revisit, Rework, and Accelerate Strategies

Coronavirus, Economy Driving Factors in Latest Plans

06/22/2020

 

Office equipment manufacturers are preparing for a prolonged impact from COVID-19 in the way people work and print. This post will discuss several ways OEMs are reworking their strategies to address this reality, highlighting key examples.

 

Becoming a Digital Services Company

As part of its fiscal year 2019 results announcement, Ricoh released a presentation outlining revisited strategies for the year ahead and beyond. One of these is moving from being an office equipment manufacturer to a digital services company.

 

As shown in the image below, Ricoh is aiming to become a company that “supports workers’ creativity and provides services to meet changing workplaces.” It’s moving at an accelerated rate in this direction in response to the changing work practices driven by the spread of COVID-19.

 

Source: Ricoh

 

Digital services to focus on include a remote working service that is essentially a package to provide laptops, printers, guidebooks, training, and support as well as a virtual classroom service that is a bundle of devices and software for remote classrooms. In addition, Ricoh will prioritize services that digitally connect offices, homes, and “frontlines” (e.g., hospitals, schools, construction sites, real estate properties) as well as workflows.

 

Using IoT Technology to Prevent Infection Spread

Similar to Ricoh, Konica Minolta is also accelerating the delivery of solutions that enable remote collaboration. At the same time, the company is implementing a new strategy that leverages its imaging IoT technology to help prevent the spread of infectious diseases like the coronavirus. For instance, the company believes it can capitalize on thermal camera technology for body temperature screening at building entry points. This kind of solution can also integrate facial recognition and event-driven alert features.

 

Source: Konica Minolta

 

Konica Minolta also aims to use imaging IoT technology for services that predict and visualize “invisible” risks to help limit damage from future crises.

 

Improving Operations and Cash Flow

In the wake of the COVID-19 pandemic, Xerox is also planning to launch new digital services (e.g., those that enhance mobility and security as well as bundled packages for home workers) as well as invest in growing market segments like IoT. Other initiatives, which can also be found in competitor strategy materials, revolve around enhancing operations and cash flow.

 

Xerox’s first-quarter financial results revealed that its operating profit fell 64% from the previous year (from $239 to $87 million)—reflecting lower revenue (-15%) primarily due to the COVID-19 impact as well as other factors like an increase in bad debt expense, an increase in the cost of imported products, and pricing pressure on contract renewals. In addition, free cash flow fell 28%—from $207 to $150 million.

 

Source: Xerox

 

Xerox was already focused on operational enhancements through “Project Own It,” which included improvements around shared services centers, IT, the supply chain, organization design and benefits costs, procurement, delivery, and real estate. In early March, the company implemented an operational resilience plan with an even greater focus on cash management and preserving its balance sheet during the pandemic—including immediate cost-saving initiatives directed at discretionary spend.


Abandoning Low-Profit (or Unprofitable) Businesses

Brother has renewed its focus on operational efficiency through efforts like reducing working hours by automating standard tasks using robotic process intelligence and artificial intelligence. It is also improving operations by withdrawing from two businesses with “no prospect of profitability.” These are two businesses falling under the Printing & Solutions umbrella: the Omnijoin webconferencing system business and the AIRScouter head-mounted display business.

 

While COVID-19 has spurred growth in remote working and collaboration, it does not mean that collaboration and conferencing solutions are for all manufacturers to make. This is an example of an OEM cutting costs in non-core areas.

 

Source: Brother

 

Further Penetration into Key Verticals

In addition to further promoting digital solutions that aren’t dependent on page volume (e.g., document management and managed IT solutions), Toshiba Tec is looking to bounce back from COVID-19 through further penetration into the logistics, manufacturing, and retail (LMR) sectors. Toshiba America Business Solutions recently earned a BLI PaceSetter award in Logistics for its strong understanding of the logistics market, a strong portfolio including a double-sided label printer, and rapid response technical assistance.

 

According to Toshiba, the LMR space is not dependent on the office market; COVID-19 has even spurred demand for print-related logistics solutions to support operational efficiency as well as related offerings for stores and manufacturing sites connected through the supply chain.

 

Source: Toshiba Tec

 

These are just a few examples of how office equipment manufacturers are shifting, accelerating, or reaffirming their strategies in response to the COVID-19 pandemic and associated economic crisis. None of the strategies are completely surprising—in fact, many of the approaches have been in place for some time. But the sense of urgency and financial risk being conveyed by these OEMs is notable, suggesting that the pace of change within the industry may be faster than what we’re accustomed to.

 

It will be important for these OEMs to effectively manage the changes occurring in their organizations, whether they are shifts to new product categories or job losses to reduce costs. Key ways to do this include open and direct communication from leadership, support to help employees develop new skills and adjust to changes, and the fostering of a culture that espouses continual change.