Leasing: A Strategic Tool
DDI’s Lease Line: Easy to Implement – Cost Effective
Situation: Our client is a leading total service wholesale distributor of food and household products to retailers in New England and the greater NY Metropolitan area. They believe that their customer’s success depends to a great extent on their effectiveness and efficiency as distribution specialists. In their words…“We have invested in leading edge technology in both transportation and warehouse areas. Our objective is simple: to be the number one wholesaler of choice in the markets we serve.”
Their ongoing objective typically requires that they leverage the newest technology as soon as it becomes available – as long as it contributes to streamlining the process and provides a desired return on investment. Leasing technology is an important tool in their strategy – but only if the “buy vs. leasing” alternatives make economic sense and are easy to implement. The client has come to rely on DDI as a partner in both evaluating and executing their strategy.
DDI Solution: DDI has enjoyed a five (5+) year relationship with our client commencing with an initial lease of an AS/400 Development system. The customer valued DDI’s understanding of the IBM AS/400 product line and the various alternatives offered for the structure of a FASB qualifying lease. The lease matched the customer’s financing needs. The solution also included an understanding of how future IBM product enhancements could be incorporated into the lease – during its initial term (and subsequent renewals) in order to allow future growth needs to be met and the total cost of product ownership to be lowered.
Our client then challenged us to assist them with their retail technology program. The program objective was designed to provide their retailers a superior level of retail sales and accounting support. Applications such as space management, pricing support & consultation, category review and new store/grand opening programs required “real-time” data collection and analysis. They developed a hardware/software solution that specialized in front-end POS solutions, scanning, back office information processing and electronic shelf labels. However, the solution required an “easy to implement” and “cost effective” way to manage multiple vendors, a multi-site implementation and a multi-month/year time schedule. The implementation schedule required the utmost in flexibility with changing dates and equipment alternatives. The client had the same need for their internal PC acquisitions. DDI responded with our Lease Line offering.
DDI’s Lease Line provides a structured approach to financing multi-vendor equipment allowing the bundling of hardware, software, shipping and support services into one lease – over multiple time periods. The “pre-approved” line of financing is also simple and cost effective. Our client enjoyed significant cost savings by eliminating many back office administrative processes since vendor payment, asset management, and lease management functions are handled by DDI. Paperwork is significantly reduced by eliminating the need for multiple lease requests.
Value Delivered: Our partnership is based on a shared vision. DDI understands the customer’s buy vs. lease criteria and how it affects their Balance Sheet. We collaborate on plans focusing on leasing as a tool to acquire technology – where appropriate. DDI has recommended certain equipment be purchased rather than leased and will continue to do so when it is the right solution for the customer.
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