Ricoh’s Transformation Plans

For some time now, Ricoh’s printer business has been under performing the printer market as the latest published quarterly numbers show.

Note the following from the above chart comparing Ricoh’s printer business performance vs. major competitors:

  • Largest quarterly revenue decline when comparing Q316 to Q315
  • Operating profit % of revenue of 5.5% is the lowest
  • Highest decline of quarterly operating profit from Q316 vs. Q315 of -40.9%

If no actions were taken, declining margins and continued underperforming businesses were projected to put the business into loss by 2019 according to Ricoh.  Photizo was pleased to hear that Ricoh’s new appointed CEO, Yoshinori Yamashita, appears to be taking the following actions that hopefully will improve Ricoh’s printing business:

  • Savings of ¥100 billion by 2019
  • Elimination of 1600 jobs in the US as Ricoh focuses more on the dealer channel rather than on direct sales
  • Reduction of 100 temporary workers as they discontinue the operations that they were involved in. The Customer Experience Centre, inkjet development and 3D printing facility are not impacted at this time
  • Production printing will not be impacted since it is considered to be a growth area and focus will be on hardware, software, and solutions so not much impact on Ricoh’s Boulder, Colorado operation
  • Costs will be taken out of office printing operations
    • Ignore unprofitable opportunities
    • Stress profits over sales
  • Cut development costs and fixation on making its own machines and move from focus on fixed costs to focus on variable costs
  • Resources from Pentax compact cameras will be diverted to making imaging equipment
  • Continued focus on 3D and printing on to durable goods as part of the manufacturing process
  • White Board and projection systems are considered growth areas although Ricoh plans to halve the number of engineers by 2020.

According to Ricoh, the past lackluster performance was due to the following:

  • Ricoh failed to respond to market changes
  • Ricoh did not restructure the business as was necessary at the time
  • Ricoh did not take action and withdraw from any businesses despite their continued weakening performance
  • In growth areas, there was not enough focus on understanding customer needs
  • Not enough focus on strategic areas
  • Ambiguity with regard to management roles and responsibilities

Photizo feels that Ricoh appears to be taking the right steps but time will tell whether Ricoh can successfully execute the outlined plans.  Photizo acknowledges that some of the content of this News Byte was base on an article published by Print Business, UK on April 4, 2017.

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