When the machinery doesn’t perform as promised
Commentary written by Lasse Krogell;
As part of my consulting, I have a role as an authorized goods and services inspector. The system is run by Finland Chamber of Commerce and the idea is that the inspector makes a deep analyze of a case and writes an impartial technical report when the seller and the buyer have not succeeded in agreeing in a case. The idea is not to find who is guilty of something but to report if the case corresponds to made agreements, industry standards and or common practices. And if not, where are the deviations.
A couple of months ago I got the request of a case where the customer was of the opinion that the performance and reliability of a toner based digital press line with integrated folding and stitching / trimming was far worse than agreed. The seller did not agree on the claims. I got the production statistics and compared those to figures I got from other similar installations. Some months the uptime had been under 70 %. The problem was that the stitcher / trimmer part of the press line was planned and also specified for clearly smaller volumes than the specifications of the digital press part. This fact was not easily found in the sales documents and according to the customer this fact had not been clearly expressed by the seller. The customer believed they had bought a high-volume line which was not the case.
Two points of importance from this case:
1. Integrated production lines or separate production units?
In an integrated production line, the whole line stands still when there is a problem in only one part of the line. When you decide to invest in an integrated line secure that the “smaller” and often cheaper parts of the line are dimensioned, if possible, stronger than the main / most expensive part of the line. Never try to save money on these peripheral parts.
Analyze, would an off-line solution be a better alternative than the in-line solution. Most often an off-line solution means more manual work but for example in this case, the digital press normally runs without any constant auditing so the operator has time to run the off-line stitcher / trimmer.
2. Write a tailored purchase agreement. Don’t accept the seller’s standard agreement.
Normally the seller has his standard purchase agreement that is written with the interest of the seller. In these cases it is often difficult for the customer to claim for compensation when something does not meet the expectations and “verbally agreed” details. In particular for a smaller printing company without legal expertise it is much easier to just accept the text in the standard agreement. I definitely recommend using outside expertise to write a contract that also secures the interest of the customer. Points that should be specified in the agreement are among other; product range possible to produce, performance spex like speed, volume and such, seller and buyer responsibilities, agreement of the acceptance of the investment and not to forget; termination of the contract and compensation for caused expenses if the made investment does not meet the agreed specifications.
During my time in the role of negotiating investment purchasing agreements, it once happened that the seller stood up and declared that they can not accept the text we wanted to have in the agreement. Also, in that case some words were modified, and the agreement was made. After securing that the contract covers also the unlikely cases when things go wrong you can feel comfortable to sign the contract.
To conclude: The most important thing is that both parties have a clear and identical picture of what has been agreed. What is the agreed price and what does it include. What is the performance, the quality level expected and the time for delivery and final acceptance.
Don’t forget to save November 8th and 9th in your calendar for the next NOPA meeting.