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Brief Discussion on TAA and the Federal Office Supply Market

Today, Robert Woodside, Program Manager of the FSSI OS2/3 PMO met with representatives from Untied Stationer Supply Corporation, an office supply wholesaler. They discussed the effects of the Trade Agreements Act (TAA) and it's overall impact of the the federal market for office supplies.
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fssios3blogger
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<p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px; text-indent: -0.25in; mso-list: l0 level1 lfo1;"><!--[if !supportLists]--><span style="color: rgb(31, 73, 125); font-family: Symbol; font-size: 11pt;">&middot;<span style="font: 7pt/normal &quot;Times New Roman&quot;; font-size-adjust: none; font-stretch: normal;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></span><!--[endif]--><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;">The Wholesalers Catalog contains approximately 25,000 items.&nbsp; From those active items:<o:p></o:p></span></p><p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px 1em 1in; text-indent: -0.25in; mso-list: l0 level2 lfo1;"><!--[if !supportLists]--><span style="color: rgb(31, 73, 125); font-family: &quot;Courier New&quot;; font-size: 11pt;">o<span style="font: 7pt/normal &quot;Times New Roman&quot;; font-size-adjust: none; font-stretch: normal;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></span><!--[endif]--><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;">About 4,000 have been determined to be Essentially the Same as AbilityOne<o:p></o:p></span></p><p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px 1em 1in; text-indent: -0.25in; mso-list: l0 level2 lfo1;"><!--[if !supportLists]--><span style="color: rgb(31, 73, 125); font-family: &quot;Courier New&quot;; font-size: 11pt;">o<span style="font: 7pt/normal &quot;Times New Roman&quot;; font-size-adjust: none; font-stretch: normal;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></span><!--[endif]--><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;">About 9,000 come from countries that are not TAA Compliant<o:p></o:p></span></p><p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px 1em 1in; text-indent: -0.25in; mso-list: l0 level2 lfo1;"><!--[if !supportLists]--><span style="color: rgb(31, 73, 125); font-family: &quot;Courier New&quot;; font-size: 11pt;">o<span style="font: 7pt/normal &quot;Times New Roman&quot;; font-size-adjust: none; font-stretch: normal;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></span><!--[endif]--><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;">This leaves about 12,000 items that dealers can sell to the Federal government customer &quot;on contract&quot; from our catalog (about half)<o:p></o:p></span></p><p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px 1em 1in; text-indent: -0.25in; mso-list: l0 level2 lfo1;"><!--[if !supportLists]--><span style="color: rgb(31, 73, 125); font-family: &quot;Courier New&quot;; font-size: 11pt;">o<span style="font: 7pt/normal &quot;Times New Roman&quot;; font-size-adjust: none; font-stretch: normal;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></span><!--[endif]--><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;">That said, the wholesalers are not involved in manufacturing.<span style="mso-spacerun: yes;">&nbsp; </span>They rely on their manufacturer representatives to provide such information such as Country of Origin, Post Consumer Waste (for CPG and RCRA Reporting purposes), and Performance Testing for Office Furniture.<span style="mso-spacerun: yes;">&nbsp; </span>With the possible exception of Global Sourcing Initiatives, the wholesalers do not have direct access in reporting this information.<span style="mso-spacerun: yes;">&nbsp; </span>They are simply the messenger and delivering the information.<span style="mso-spacerun: yes;">&nbsp; </span>This sometimes leads to miss-information to their dealers.<span style="mso-spacerun: yes;">&nbsp; </span>Ultimately, this creates ongoing issues with GSA and the ability to manage this process<o:p></o:p></span></p><p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px; text-indent: -0.25in; mso-list: l0 level1 lfo1;"><!--[if !supportLists]--><span style="color: rgb(31, 73, 125); font-family: Symbol; font-size: 11pt;">&middot;<span style="font: 7pt/normal &quot;Times New Roman&quot;; font-size-adjust: none; font-stretch: normal;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></span><!--[endif]--><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;">The main reason for moving manufacturing off- shore was significantly lower costs due to low labor costs.&nbsp; As the Chinese economy has revved up, the Chinese are now experiencing more demands from their workforce (higher pay, more time off), which has the effect of increasing manufacturing costs.&nbsp; Up until recently, even with the cost of shipping from the other side of the world, there was still a significant big price differential between off shore suppliers vs. domestic suppliers.&nbsp; Global Sourcing was the new buzz word for lower cost alternative to National name brands - led by Staples Brand, Office Depot Brand, Office Max Brand, etc.&nbsp; Wholesalers got into the game with their own Global Sourcing initiative (to keep the independent dealer community competitive), but also looked to domestic suppliers that could offer a good price, better logistics, and more favorable delivery during times of increased demand.&nbsp; From this new way of thinking was the birth of Wholesalers Business Source or Universal product lines.&nbsp; The &quot;house brand - or private label brand for the Independent Dealer Channel&quot;.&nbsp; The big difference is that the products (for Business Source nearly 80%) are domestically sourced from name brand suppliers<o:p></o:p></span></p><p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px; text-indent: -0.25in; mso-list: l0 level1 lfo1;"><!--[if !supportLists]--><span style="color: rgb(31, 73, 125); font-family: Symbol; font-size: 11pt;">&middot;<span style="font: 7pt/normal &quot;Times New Roman&quot;; font-size-adjust: none; font-stretch: normal;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></span><!--[endif]--><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;">The United States Federal government is the largest consumer of these types of&nbsp;products, but almost universally, they are paying higher prices for non-TAA compliant products.&nbsp; Why?? - because they are being purchased on the Open Market<o:p></o:p></span></p><p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px; text-indent: -0.25in; mso-list: l0 level1 lfo1;"><!--[if !supportLists]--><span style="color: rgb(31, 73, 125); font-family: Symbol; font-size: 11pt;">&middot;<span style="font: 7pt/normal &quot;Times New Roman&quot;; font-size-adjust: none; font-stretch: normal;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></span><!--[endif]--><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;">It is very challenging for a wholesaler to manage TAA Compliance.&nbsp; They rely on manufacturers to keep up to date with Country of Origin information.&nbsp; In many instances, the manufacturers do not understand TAA Compliance.&nbsp; A quick example is the Brother tape that is widely used by the Federal Government in labels (P-touch).&nbsp; The manufacturer believes that since the tape is made in Japan, that their product is TAA Compliant.&nbsp; Based on Homeland Security guidelines, the country of origin is determined when a product is &quot;substantially transformed&quot; into the final usable product.&nbsp; A great example is the P-touch labels from Brother.<span style="mso-spacerun: yes;">&nbsp;&nbsp; </span>A housing (cartridge) is required for the tape to be used in the labeling devices.&nbsp; The tape itself is useless without the cartridge, and the assembly of the tape to the cartridge is completed in Malaysia (a non-TAA compliant country)&nbsp;Therefore, substantial transformation occurred in Malaysia, so the country of origin is Malaysia, not Japan.&nbsp; It took six weeks to convince the manufacturer (even though the boxes were correctly labeled as Made in Malaysia) that their product was not TAA Compliant.&nbsp; This is very complex to manage when the manufacturers do not understand the rules<o:p></o:p></span></p><p>&nbsp;</p><p class="msolistparagraph" style="margin: 1em 0px 1em 0.25in;"><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt;"><!--[if !supportEmptyParas]-->&nbsp;<!--[endif]--><o:p></o:p></span></p><p><span style="color: rgb(31, 73, 125); font-family: Calibri; font-size: 11pt; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;">The next big trouble area will be remanufactured toner cartridges.&nbsp; All remanufactured toner cartridges should have a verifiable source (chain of custody) of empties.&nbsp; There has been dumping of unused toner cartridges that are being used by some re-manufacturers because they are much less costly to re-manufacture.&nbsp; You will be hearing a lot in the coming weeks as Lexmark goes after some of the reman guys that have been gaming the system</span></p><div id="cke_pastebin">&nbsp;</div>
Welcome to the Federal Strategic Sourcing Initiative – Office Supplies Third Generation (FSSI OS3) community.  The intent of this collaborative forum... More
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