Knowledgeable suppliers offer tips on securing lucrative selling opportunities.
It's no secret that some changes within the major directs are creating all sorts of lucrative selling opportunities for the independent supply channel.
What some distributors may not realize, however, is that many of them exist in serving federal, state and local governments' printing needs.
For Steve Buggy, vice president of Phoenix-based B&D Litho, and Bob McAleavey, president of Specialized Printed Forms, Caledonia, N.Y., government projects represent a steady workflow that promises future growth. "At most government levels, the majors have traditionally had fairly decent success with large contracts. But, that's changing as the majors continue to merge, shift strategies and, in some cases, disappear altogether," observed Buggy. "Independent distributors have had a good stake in local government business, and they appear to be making further inroads with state government work."
McAleavey pointed out that due to the major directs effectively touting their superior service and quality over the years, some government print buyers have refused to deal with independent distributors, requiring instead that the company providing product owns or leases part of the manufacturing facility. Strategizing with the vendor to create limited periods of common ownership is one way to surmount this obstacle. "In the past, I've leased time in our warehouse to distributors for one dollar for the duration of the production cycle, or I'll sell a share of stock for one dollar and buy it back once the project has been completed," he said.
However, McAleavey noted that this is becoming less of an issue as these buyers become more comfortable with the independent distributor concept. "Unquestionably, the independent supply channel does a much better job with service, and offers more flexibility and innovation in providing products to streamline operations," he said. "Once customers deal with an independent, I have never seen them go back to a direct."
Buggy stressed that governmental bodies have procurement rules that must be followed, and the independents have to become accustomed to working within these parameters. "But, don't lose sight of the fact that government print buyers are still people with business needs who appreciate a supplier that consistently delivers what's been agreed upon when it's supposed to be there," he said.
Making a Federal Case Out of It
Both manufacturers observed that government agencies use the same types of traditional products that other large vertical markets—such as finance and health-care—utilize, including unit sets, continuous forms, laser checks and continuous mailers. B&D Litho supplies unit sets that are often booked for traffic violation tickets, continuous mailers used for hunting and fishing license renewals, and unit sets for pet license renewals. Government applications supplied by Specialized Printed Forms include food vouchers, tax bills and a wide variety of pin-fed computer forms.
While special equipment capabilities are not usually necessary, Buggy noted that some products require higher-value technologies, such as consecutive bar coding and void pantographs. "I've seen consecutive bar codes used for jury summonses and variable jumbo numbering for temporary vehicle licenses," he said. "There are also high-security jobs—such as vehicle titles printed on specialized paper stock—that, for obvious reasons, cannot be elaborated upon here."
Specialized Printed Forms' OPAS system is a unique capability that frequently gives the company an edge. "The OPAS system enables areas of carbonless chemicals to be placed on products—perhaps for check-off boxes and return address areas—allowing an image to only go through onto the sensitized areas. The information doesn't carry through onto other regular bond areas," McAleavey explained. He added that jobs occasionally require process color. But, the buyers are typically more concerned with functionality than aesthetics. And, distributors' assistance with overall design isn't an issue with regard to existing forms, McAleavey continued, although their input is usually sought when creating new ones.
Getting Started
Most government work is handled through a bid process. To uncover opportunities, Buggy suggested starting at the purchasing officer level, which may then lead to other contacts within the agency or governmental unit. "There can be organizational differences in terms of product purchasing/bid management from one government body to another," he observed.
If targeting state-level work, McAleavey advised contacting the capital or working backwards beginning with the actual end-user to discover the procurement loop and who is responsible for sending out the bidding list. "Then, distributors should pick the top items that they and their manufacturer partners are best suited to bid on," he said. "For a local municipality, one vendor may be sufficient, but two or three different suppliers may be required to service a larger state contract."
Quality and Pricing
Both gentlemen stressed that government print buyers are quality-conscious and price-sensitive. "Distributors need to be price-competitive to get in the door in almost any bid situation," Buggy observed, "and those experienced in selling to state and local government agencies know that they have to watch their mark-ups."
But, it's not always strictly about pricing. "When they find a vendor that is price-competitive and that also delivers consistent quality in product and service, the agencies may find ways to ink longer-term deals with that vendor and avoid having to put it out to bid again and again," he continued. Stand-out product quality and service can also open other doors within related government agencies.
McAleavey noted that some government agencies require a pricing matrix. "In this case, savvy distributors know to go very skinny—selling at cost plus a few percentage points—with generic or commodity items, using the specialty items or products not available from most manufacturers to make the good profit margins. For example, when a distributor is bidding on an entire package, 10 of the items may be at cost, and three or four may be under cost, while the rest are at cost plus 25 percent, making the deal profitable overall," he said.
Another strategy that McAleavey shared involved getting product specs changed to include a manufacturers' unique capabilities. For example, a distributor can suggest design enhancements—without affecting cost—that are enabled by a particular production capability and have it factored into the specs. "This really locks you in because you will be the only one bidding on it," he said. "We do this frequently with regard to the OPAS system, and sometimes even run free samples. The key is to offer a better product at approximately the same cost."
At the end of the day, being price-competitive, following through on the requirements of the order or contract, and meeting agreed-upon delivery dates are the surest ways to get good marks as a government supplier and be considered for future bids.
By Maggie DeWitt