India: Company takes HP To Court Over New Expired Cartridges

[Anonymous]

India: Company takes HP To Court Over New Expired Cartridges
 Dhaval Valia,February 2012, Raipur-based sub-distributor, Priyanka Computer Services is planning to take legal recourse against HP’s Imaging and Printing Group (IPG) over an issue pertaining to expired inkjet cartridges worth Rs 8 lakh as per the Bill of Material (BoM).

“We have tried our best to redress the matter with HP. However, despite several interactions with them in-person and over email, they have failed to provide a solution. I have been stuck with a stock worth Rs eight lakh for the past couple of years. I am planning to now file a complaint for unethical business practices against HP under the MRTP Act, and also sue them for unfair business dealings,” said Kishore Makhija, CEO, Priyanka.

CRN has emails that Priyanka exchanged with HP. These emails list the details of the cartridges with their expiry dates, and names of distributors they were sourced from.

Asked why the company purchased so much stock at one go, Makhija said, “Being the biggest RSR for HP in the region, and also an authorized volume partner, we had to stock large quantity. We had rate-contract with large customers like Jindal Steel, NTPC, Apollo Hospital and Bhillai Steel Plant. However, the regional team (of HP) without forewarning us, transferred two big rate-contacts to another RSR saying that the customers were unhappy with our service. As a result we were stuck with the large stock.”

Makhija also accused the local Area Sales Manager (ASM) of HP for wrongfully transferring these rate-contracts. “In fact, Bhillai Steel Plant had categorically told HP that they wanted Priyanka to be the supplier. HP ignored this and introduced a new RSR for this account at the behest of the ASM,”  he alleged.

Priyanka sought HP’s help in selling the stock before expiry in the open market, but did not receive any support from the local team. “We had hoped to sell it in the market, but HP’s strategy of introducing newer models every year with new cartridge technology did not help our cause. Also the local ASM did not help in liquidating the stock, despite repeated requests,” alleged Makhija.

According to Priyanka, the HP ink cartridges come with an expiry period of two years from the date of manufacturing. “None of the distributors mention the expiry date in the invoice, and hence you have to look at each pack, which is not possible when you are ordering in hundreds,” he opined.

Priyanka had requested HP to take the cartridges back and return the money or replace the expired cartridge with new ones, but HP refused to do so citing policy reasons.

“Over the past couple of years, I have spoken to every level of IPG management on several occasions, and despite assurances to resolve the matter, nothing has happened so far,” lamented Makhija. 

Priyanka claims to be one of the oldest HP IPG partner, although it terminated its partnership since 2010. “We worked with HP for more than 15 years as ASP, ARC, sub-distributor, and server partner. However, due to wrong selection of the regional ASM, HP has lost many good partners and customers in our region over the past few years. A classic example is Bhillai Steel which was a staunch HP customer till four years back, but has moved 100 percent to Samsung printers,” claimed Makhija.

HP on its part, without going into specific allegations leveled by Priyanka, sent the following note to CRN to clarify on the matter:

HP as an organization is always willing to help our trade partners avoid such situations and further help resolve them once they arise; to the extent the reasons behind such a situation arising are justified.

All cartridges have an expiry date and in general, our partners have a window of 1 to 1.5 years to sell these cartridges before the date of expiry, from the date the partners receive the cartridges.  It is expected that all players in the value chain including the partners will follow the FIFO way of managing logistics. Typically, the cartridges move across the value chain to the end customer within three months. However, it is a standard practice that cartridges are not covered against expiry, as an industry policy.

In rare cases, when the cartridges are closer to expiry date, the tier-1 distributor generally extends special discounts to tier-2 partners and the same is further extended from tier-2 to tier-3 partners to help liquidate the stock.  All such transactions are duly documented between the selling partner and buying partner.
However, in the event of any tier-2 or tier-3 partner receiving cartridges that are close to the expiry date or are already expired, without prior information backed by special discounts, they have an option to deny accepting the delivery.

Proper order planning and a diligent following of the established stock-keeping norms like FIFO are two possible ways to prevent stock ageing. Even if a partner has extra stocks because of wrong planning, the adequate shelf life of at least 12 months serves as an adequate buffer.

HP also has a very robust and structured corporate engagement program, Most Valued Customer (MVC) program,  for supply of HP original ink and toner cartridges. The MVC program over the last 10 years has seen participation of over 1,000 customers across India. All customers under this program select their preferred local HP authorized service provider for timely supplies of HP original ink and toner cartridges.

HP plays a role in ensuring that these service providers are authorized by HP and can adhere to the service-levels agreed with the customer. It is entirely a customer’s choice to engage with one service provider, or split his business over two or more service providers, or even switch his service provider if the service levels are not satisfactory. HP plays no role in influencing this decision taken by any of our customers.

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February 13, 2012 at 8:35 AM