Xerox to build its own supply chain

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Xerox CEO John Visentin has indicated that the Technology Agreement between Xerox and Fuji-Xerox will be phased out. Xerox will in future source replacements for the Versant models, office printers and MFPs and the new Iridesse, from other suppliers. Xerox makes the Nuvera and iGen product ranges in the US as well as its growing inkjet portfolio that it acquired with Impika, in France.

The company does not plan to renew the Technology Agreement when it expires in 2021. In his letter to Shigetaka Komori, chairman of Fujifilm, on 25 June 2018, in response to the lawsuit filed by Fujifilm in the previous week, Visentin claimed that the lawsuit ‘is nothing more than a desperate, misguided negotiating ploy to save a takeover,’ and ‘the New York State Supreme Court has already enjoined Fujifilm from taking any action toward consummating the ill-advised takeover.’

Visentin’s letter added, ‘Fujifilm’s actions have forced us to move forward on several fronts to protect our supply chain. First, we will start, in a material way, to source products from new vendors. Second, we will build partnerships with companies that are aligned with the Xerox mission to provide world-class technology and solutions. Third, we currently believe Xerox will be much better served by not renewing our Technology Agreement with Fuji-Xerox when it expires. We will detail for our shareholders the enormous opportunity for Xerox to sell products directly into the growing Asia-Pacific market with sole and exclusive use of the valuable Xerox name, and a more efficient, better managed supply chain than exists with Fuji Xerox today.’

Fujifilm has argued that Xerox will find it difficult to thrive alone because of the reliance on its technology. However, Visentin says, “Nothing could be further from the truth . . . In fact it is actually Fuji-Xerox that could potentially suffer ruinous consequences from the loss of over US$ 1 billion of revenue from Xerox, its largest customer. And legally there is nothing Fujifilm can do to stop that happening.”

In response to Xerox’s apprehensions of malfeasance on various accounting issues, Fujifilm said Xerox’s argument on Fuji-Xerox’s accounting issue is wrong. “The accounting issue at Fuji-Xerox is properly resolved and no longer exists.”

Fujifilm said it would be difficult for Xerox to build its sales channels in Asia from scratch as it does not currently have any marketing channel in the region. “We do think that Xerox has the ability to build its supply chains and source products from scratch in Asia, although the merger with Fuji would have been the ideal situation,” an institutional investor, who holds 5 million shares in Xerox, told Reuters.

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