OFFICE SUPPLY EXPENDITURES BUSINESSES

Transcription

1 Incur Annually 2013 Research Report

2 Table of Contents Office Supply Expenditures Businesses Incur Annually Research Report 1 Summary 3 Introduction 4 Company s Expenditures Overview 5-6 Employee Evaluation of Office Supply Expenditures Print Costs 7-8 Analyzing Print Costs Annual Office Supply Expenditures 8 Past/Present Market Trends 10 Wholesalers Demand for Office Stationary & Supply Declines Technology & Purchasing Trends Office Supply Market Conclusion 11-12

3 Summary Office supply expenditures incurred by businesses to perform daily functions is estimated to be in the billions of dollars of the global market. In the United States, wholesalers total revenue is estimated at $22 billion, according to an IBIS World Industry Report. This Office Supply Expenditures Businesses Incur Annually 2013 Research Report is focused on small companies spending trends on office supplies; a company s expenditures; type and cost of office supply expenses; print costs; and solutions for print management, control, and costs. Some of the information included in this research report was acquired from IBIS Research, Gartner, IDC (International Data Corporation), LyraResearch, and other sources Key Factors In general, e-retail spending by consumers in all categories is projected to increase by 62% by 2016, which amounts to approximately $327 billion. Consumers, including companies of all sizes, home-businesses, and personal households, spentover $44 billion just on office supplies during Although there were billions of dollars spent on office supplies,while total revenue sales decreased from by an average of 2.4%, theyincreased by 2.1% in Spending and purchasing trends transformed over the years due to the recession, new technology, and print management. Mid-size and small businesses are transitioning and/or including the use of mobile devices (BlackBerry and Smartphones) and tablets to the workplace. Office supplies experienced a decrease in sales of items including the following; carbon paper, stationary products, cut stationary (folders, paper rolls, report covers, etc.), and envelopes. Pencils, mechanical pencils, and pens (ballpoint and refills) remained stable over the years. The demand for other office supply items, greeting cards, rubber erasers, wrapping paper, and tape declined. Ink and toner cartridges sales increased over six years. To promote a global green environment, ink & toner cartridges are being recycled and re-manufactured at a higher rate than ever. Recycling has created new businesses that offer quality recycled ink/toner cartridges and consumer incentives. Remanufactured cartridges and MPS (Managed Print Services) efficiently reduce office supply costs. Office supply expenses account for 5% - 15% of expenses incurred by businesses. Companies which monitor office supply expense accounts save their businesses thousands yearly; companies failing to monitor those accounts, decrease their profitability. A small business average annual cost of office supplies ($756.93), including print costs ($1,366.77) used by just one (1) knowledge employee, and is approximately $2,123 (based on a 4-employee office). According to the Global Managed Print Service Market News Report, the market for MPS services is a demand and is expected to grow in the future. Companies are requesting services to control, manage, and reduce printing costs. Page 3 of 12

4 Introduction Small and mid-size companies office supply items include the following; copier & printer paper, ink & toner cartridges, paper clips, staplers, staples, pens, pencils, markers/highlighters, business cards, envelopes, file folders, and similar items. Of all office supply items, the most costly are ink and toner cartridges. Copier/fax/printer paper is the next item that can be very costly. Monitoring the consumption of office supplies is a strategic way to help control costs. The cost of office supplies are often overlooked in terms of usage and controlling employees consumption. During the most recent recession, wholesalers and retailers experienced a reduction in sales of office supplies, with the exception of ink & toner cartridges continued to experience a steady increase. The office supply industry has evolved in the last decade to include wholesalers and retail stores. The market of today now includes companies that remanufactured and sell ink and toner compatible cartridges, only the best of which offer quality services and products. Consumers and companies are increasingly relying on online e-retailers to purchase office supplies to reduce overall product costs and staff operational expenditures. Companies are now recognizing the need to manage and control these expenditures, and this is creating an increased demand by small and mid-size companies. Previously, the trend of purchasing office supplies was only through catalogs and ordering by telephone/fax or visiting an office supply retailer or superstore. The emergence and acceptance of Internet E-commerce has made shopping convenient, accessible and efficient. New technology, including the Smartphone and tablet, are being installed with apps and used in the workplace to include print and shopping accessibility anywhere and anytime. This report examines the expenses of a small business, the different types and costs of office supplies, print costs, past/present market trends of the office supply industry, and solutions for print management. Page 4 of 12

5 Company s Expenditures Overview The beginning startup process of a company consists of creating a budget of all potential sales and expenses. Office supplies is a category of expenses companies incur to start a business and for daily operation. Other expenses include expenditures such as, payroll, taxes, equipment, and miscellaneous (unexpected) expenses. Although office supply expenses account for only 5%-15% (10% average) of all expenses incurred by a company, it can be very costly, and requires control and monitoring, which can save thousands of dollars yearly. Figure 1 below shows the different types of expenses and the percentile of each item included in an actual expense account.the main expenses that a corporation incurs on a yearly basis are salaries/wages, property lease, equipment, taxes, office supplies and other miscellaneous expenses. The amount of expenses varies according to a company s spending habits, type of business, and the number of employees. Office supply expenses can be very costly due to paper waste, theft, lack of document control & monitoring, and lack of print management. Expenses Salaries/Wages 40% Equipment 25% Taxes 20% Office Supplies 10% Misc. Expenses 5% Figure 1: Accounts of Expense Value Employees Evaluation of Office Supply Expenditures There are different methods companies and corporations use to evaluate office supply expenditures. To evaluate office supply expenses of a small startup business, a budget is an essential tool. The expense budget includes estimates of expenses based on the number of employees and the amount of each expense item. Table 1 is calculated according to 4 knowledge employees. Print expenses are evaluated separately because this reports primary focus is on the most costly expense - ink & toner cartridges. Page 5 of 12

6 When analyzing office supply expenses, recurring items including toner & ink cartridges and printing paper are purchased on a monthly or quarterly basis. The information in Tables 1 and 2 below assumes the small company reorders supplies on a monthly basis because it is a startup business. There is one laser printer in the office that uses 4 toner cartridges (black, cyan, magenta, and yellow). When estimating office supply expenditures, this report has only selected a small sampling of common consumable items. Many businesses require much greater demand for office supplies than is estimated here. The overall goal of this report is to provide actuate but conservative estimations based on an average knowledge worker within small and mid-sized companies. Company Size No of Employees Actual Monthly Print Cost Actual Annual Print Cost Small 1 4 $181 $725 $2,172 - $8,700 Medium $3,620 - $13,575 $43,440 - $162,900 Large 100 2,000 $18,100 - $362,000 $217,200 $4,344,000 Table 1: Employees Actual Monthly and Annual Costs of Printing Supplies. Office Supply Expenditures Budget Office Supply Purchases Estimated Costs Actual Costs Business Cards (4-250ct box) CDs (1 pack) Calendars (desk & wall) Letter/Clasp Envelopes (500ct & 100ct) File Folders (4-100ct pack) Pens (24ct)) Pencils (12 ct & 4 lead refills) Labels (750ct) Notepads (24ct) Paper: Copier/Fax/Print (5,000ct) Paper: Glossy Photo (100ct) Paper Clips (4-Jumbo & 200ct) Postage Stamps (100ct) Ruler Stapler & Staples Staple Remover Self-adhesive notes (4/12pk-100sheets) Tape Dispenser & Tape (refill-10ct) Miscellaneous $ $ $32.40 $27.54 $39.92 $33.93 $47.50 $40.38 $39.96 $33.97 $21.98 $18.68 $35.00 $29.75 $20.00 $17.00 $24.00 $20.40 $49.99 $42.49 $35.00 $29.75 $41.92 $35.63 $45.00 $38.25 $19.96 $16.97 $63.96 $54.37 $23.96 $20.37 $59.96 $50.97 $43.99 $37.39 $50.00 $42.50 Table 2 Page 6 of 12

7 Print Costs Printing is a daily task for both operations and administration. Print management helps avoid waste, monitors employees consumption, and avoids downtime. Downtime occurs when printing processes are interfered with because of having to replace cartridges and/or printer malfunctions, causing productivity to decrease. The implementation of print management analyzes related printing costs associated to cost-per-page, regular maintenance, and consumptions of ink and paper. Color Coverage TONER COST PER PAGE Monochrome Coverage TONER COST PER PAGE 1% Color 13% Color 18% Color 38% Color 2% B&W 2-5 cents cents cents cents Table 3 6% B&W 10% B&W 11% B&W 2% B&W 10% B&W 11% B&W 26% B&W 1-2 cents 3-5 cents 4-6 cents 9-14 cents Analyzing Printing Costs For each knowledge employee, the cost-per-page for printingis shown in Table 4.The total costper-page for each knowledge employee yearly is approximately $1,113 or $93 monthly. To print one black/white page is cents per page. The total consumption of paper printed for one (1) employee is estimated at 10,101 sheets yearly. On a monthly basis each employee uses nearly 842 sheets for an average business. Printer-heavy businesses (like law firms, healthcare facilities and CPA offices) incur much higher costs than those shown below. Knowledge Employee Print Cost-Per-Page Office Supplies Actual Cost Page Yield Cost-Per-Page Monthly Costs Yearly Costs Black Toner $ , $0.02 $13.45 $ Cyan Toner $ , $0.02 $26.44 $ Magenta Toner $ , $0.02 $26.44 $ Yellow Toner $ , $0.02 $26.44 $ Total $ $0.09 $92.77 $1, Actual Cost Sheets Yearly Usage Monthly Costs Yearly Costs Copier/Fax/Printer Paper (Case) Glossy Photo Paper (Pack) Total $ ,000 9,000 $7.08 $84.98 $ ,101 $27.27 $ ,100 10,101 $34.35 $ Table 4: Knowledge Employee Print Cost-Per-Page Monthly and Yearly Costs Page 8 of 12

8 The total estimated printing costs for 1-4 knowledge employees when adding color can increase dramatically based on page print coverage. (see Toner Cost Per Page) This estimate can conservatively range from $127 $508 and the yearly printing costs can observe the difference in costs for a small company s printing and office supplies. The printing costs for one knowledge employee are $1,525 and $171 for office supplies. The total office supply expenditures for the year are $1,697 for one employee and $6,786 for four employees (Table 7). Knowledge Employee Printing Costs Knowledge Employee(s) Office Supply Costs No. of Knowledge Employees Monthly Costs Yearly Costs No. of Knowledge Employees Monthly Costs Yearly Costs 1 $ $1, $ $3, $ $4, $ $6, Table 5: Printing Cost per Employee 1 $14.26 $ $28.52 $ $42.78 $ $57.04 $ Table 6: Office Supply Cost per Employee Annual Office Supply Expenditures (Office Supplies & Print Costs) No. of Employees Office Supply Expenditures Printing Expenditures Total Yearly Expenditures 1 $ $1, $1, $ $3, $3, $ $4, $5, $ $6, $6, Table 7: Annual Office Supply Expenditure Account Annual Office Supply Expenditures Use the figures above, a small business incurs total office supply costs of $6,786 (with 4 knowledge employees), with printing (ink/toner and paper) as the most costly expenditure at 90% of all office supply expenditures. Page 9 of 12

9 There maybe variations in cost because of consumption of supplies and standard print page coverage. The page yield is an estimate of the number of standard pages that can be printed with one cartridge at 5% page coverage. If the page coverage exceeds the standard coverage of 5%, the consumption of ink and toner cartridges will increase, as will office supply expenditures. Most photo printing coverage is almost 100%. Annual Office Supply Expenditures Value Office Suppy Expenditures Printing Expenditures Past/Present Market Trends Wholesalers were the top competitors before and have loss revenue sales to superstores such as Office Depot, OfficeMax, and Staples. The superstores are considered as the largest office supply industry competitors in the United States according to the Market Research Report, Office Supply Stores in the U.S. (September 2012). Today, superstores are losing toner sales to compatible and remanufactured companies like Cartridge World, InkMart and Rapid Refill, which are providing both direct B2B and online sales to consumers. Re-manufacturing companies of ink & toner cartridges are introducing quality products, print management, installation, maintenance, and repair services. The target market focus includes home businesses and small to mid size businesses. Wholesalers Demand for Office Stationary & Supply Declines Despite billions spend on office supplies; wholesalers have seen a decline in revenue sales, especially because the Office Stationery Wholesaling industry demand for office stationery and supplies declined in past years as more individuals and businesses are printing their own, rather than sending it out to professional printers. Wholesalers are challenged with higher rate of competition including consumer on-demand printing accessibility and office supply superstores offering additional print services. Online alternatives will continue to impact the office stationary and supply wholesalers due to constant technology changes and global environmental consciousness. Statistics and data revealed that in 2011 there were 7,894 wholesalers in the United States with total revenue of $42.4 billion. Page 10 of 12

10 Technology & PurchasingTrends Office Supply Market Because of technology printer advancement, new trends of office supply selling, specifically print services and supplies has transformed and are being used to control costs and excessive consumption. Companies are using Wi-Fi, touch screen interfaces and double sided printing. Wi-Fi technology has spread globally and is now an important feature in today s printers. These features are found in high technical models. The touch screen interface improves productivity and work flow of daily business processes. Consumers purchasing trend has changed within the last 20 years. Catalog and telephone ordering arerapidly becoming things of the past. E-commerce is the primary source to shop and purchase office supplies. Online purchasing of office supplies save time and money with the various programs offered to companies. Discounts are often offered to customers purchasing in bulk quantities. There are over 30,000+ office supply items, furniture, and equipments offered from an online retail store. According to the Global Managed Print Service Market News Report (November 26, 2012), the major influential factor for the global MPS market growth is to reduce costs. The market is expected to grow at an estimated rate of 20.61% from to Some of the key competitors include, Canon, HP, Ricoh, Xerox and others. Smartphone and tablet devices are being deployed more and more in the workplace today. Such mobility permits knowledge employees to create a high performance workspace according to Gartner, Inc. Technology Research. It transformed the office environment and changed how employees can work anytime, 24/7. Mobile and tablet devices have allowed them to efficiently network and print anywhere with Wi-Fi connections. Conclusion The office supply market today is shared amongst retail stores, superstores, and wholesalers. The billion dollar office supply industry is competitive even after a slow economy, with ink/toner cartridges and paper the top selling products. In 2010, the desktop ink jet cartridge revenue was $29 billion. This is expected to grow to $33 billion by 2015, with approximately 445 million units expected to be shipped to consumers in What makes the office supply market competitively viable? The demand for on-site printing is increasing e-commerce acceptability by consumers e-retailers ability to increased inventory and convenience Greater recycling awareness by consumers Volume and bulk purchasing incentives Free or priority shipping options Page 11 of 12

11 Print management services help control and manageconsumer costs. InkMart, for example, offers solutions including maintenance, repairs, copier/fax/printer paper, ink/toner cartridges, PMS, printer equipment & parts, fuser & maintenance kits, and other office supplies. Consumers conveniently order products and services online, call a toll-free number, or visit a retail store near them. Next day shipping and other economical shipping options are offered. Most businesses incur office supply expenditures to run an office efficiently. The annual office supplies and printing costs for one knowledge employee can be as higher as $2,123. Printing supplies make up the majority of the office supply expense items, so the total annual printing expenditures are $1,367 (or $114 monthly) per knowledge employee. Cost of office supplies varies according to the size of a business and number of employees. The data in this report was determined for a small business that employs four employees. Print management helps to resolves issues of excessive usage of office supplies, environment conscientiousness, high costs, quality of products, and performance. Table 3. A basic business letter can cost around $0.10 to print: black printing only, bold in the address and signature lines, a little underlining, perhaps a simple logo, some emphasis in a different font, and this is when using a well-built toner cartridge. Even changing the font from Times New Roman to Arial increases the print cost. (Pharos Systems) IBIS World. Office Supply Stores in the U.S.: Market Research Report. (2012): 15 Dec < Haber, Lynn. Lyra Research Report on Cartridge Markets. 11 Nov SBWIRE. Global Managed Print Service Market News Report. 2012: 29 Dec < Gartner, Inc. Technology Research. 15 Dec. 2012: < Page 12 of 12