Printing Industry Ideas and Insights Blog

2012-01-16T16:45:00.002-05:00

Proven Pricing Strategies
Used By Printing Industry Leaders

By Craig L. Press

President, Profectus Inc

Printing Industry Business Consultants

Devising an effective pricing strategy is one of the most critical elements for sustaining a successful printing business. After all, you cannot make a sale without first setting a price.

Nevertheless, most companies give little thought to formulating an appropriate pricing strategy. Many companies utilize simple pricing approaches predominantly to beat the competition, cover costs, and sustain the business.

The industry market leaders tend to implement more innovative pricing strategies that are designed to maximize revenue, cultivate growth, earn higher profits, and generate the highest shareholder value. These price-savvy companies typically apply numerous pricing tactics intended to address distinct short-term and long-term objectives.

The process of setting an adequate price is not an exact science. Here are a few of the many pricing strategies used in the printing industry.

Cost plus Markup Pricing Strategy This is the most common pricing strategy used by our industry. A sell price is determined by forecasting the cost to produce the order using estimating software, spreadsheets, or worksheets, and then a desired or tolerable profit markup is added to the estimated cost. It is often left up to the estimating department to set the price based on the estimated costs.

While cost is an important factor for determining price, this strategy has some serious flaws. Estimators are generally unfamiliar with the marketplace, product demand, perceived value, and the long-term value of winning the customer's business. It often restricts sales, leaves money on the table, and decreases a company's ability to compete and grow. In general, companies depending on a cost plus markup pricing strategy don't become market leaders; they are perpetually the underdogs.

Skimming Pricing A skimming pricing strategy is when a company charges the highest initial price that customers will pay for a new or innovative product that may not be easily assessable from the competition. As the demand of the first customers is satisfied, the company lowers the price to attract another, more price-sensitive segment. Eventually, the price drops as the product matures and competitors offer a similar product or service at lower prices. A good example of Skimming Pricing is when the early adopters of large format printing were able to charge higher prices before large format printing became more available and price competitive.

Gain Market Share Pricing With the gain market share strategy, prices are set low to gain market share against competitors. Lower prices will eat into your profits, but there are good reasons for this approach. A company may lower prices on digital printing orders to get new customers, knowing that later they'll be able to sell these customers other, more profitable services such as long-run offset printing or mailing services, once they get comfortable with your company. You don't make as much early, but you plan to make money later with "back end" sales.

Versioning Pricing
The versioning strategy is a very effective tactic that can be easily implemented. The idea is to quote the customer slightly different versions or alternatives of the product, for less money. For example, you can quote alternative prices for a more economical size, paper, binding, packing, etc. This strategy can also be used for up selling; i.e. only $79 for an additional 2,000 copies.

Versioning is often frowned upon by the estimating department because it creates more for work for them, but it's proven to win more quotes and customers. Taking the additional effort to present the customer with cost-savings alternatives demonstrates your will for their business and improves their trust in future pricing.

Customer Demand Pricing A customer demand pricing strategy is typically driven by an event, a new trend, niche, or the availability of similar products. For example, a company that specializes in political signage can increase prices during the Senate and Presidential elections, when demand is up. After the elections, demand for political signage will decrease and so will prices.

Perceived Value Pricing
Perceived value pricing is the valuation of a company's products or services according to how much the buyer is willing to pay for it. To price based on perceived value, the customer needs to be convinced of the tangible and intangible values they will receive by choosing your company (i.e. capabilities, on-time service, friendly staff, trust, quality, stress-free, ease of doing business, etc.) Some buyers will not take a company seriously if the prices are too low because they often associate low price with low quality or poor service. To price base on perceived value, consider the following questions:

Conclusion These pricing strategies are just a few of the many schemes used by companies. Other strategies include; value added pricing, product line pricing, promotional pricing, psychological pricing, differential pricing, bundle pricing, and volume pricing. To become a market leader, you need to have a good understanding of a number of different strategies and adopt the strategies that best fit your company's short-term and long-term objectives.

To learn more about developing and implementing an effective pricing strategy for your business, attend Craig Press' "Pricing Strategies for the New Economy" seminar:
- March 2, 2012, Graphics of the Americas Expo and Conference, Miami Beach Convention Center Graphics of the Americas Seminars Page

- April 17, 2012, Printing Industry Midwest, Ricoh Print Learning Center, Roseville, MN PIMPricing Strategies for the New Economy Workshop Registration Page

Printing Industry Performance Metrics

2011-12-05T09:00:00.009-05:00

A major contributor for improving a printing business is performance metrics. There are various methodologies and tools for measuring performance including Performance Benchmarks, Key Performance Indicators (KPI's), and Balance Score Cards (BSC).

This is not a new concept. Just do a Google search on the following quotes:

"What gets measured, gets managed" ... 2,780,000 Google results
"You can't manage what you don't measure" ... 170,000,000 Google results
"If you don't measure it, you can't improve it" ... 180,000,000 Google results

The performance of production can be measured by tracking spoilage, efficiency, productivity, and other measurements. Performance metrics are not limited to production. They can also be established for other areas such as order entry, invoicing, and inventory. Baselines and improvement goals should be established for each metric. Metrics can be at the company, department, cost center, or employee level.

The best implementation of performance metrics is one that is tied to incentive programs. Each employee and department should have incentive performance goals relevant to their area. The production incentive program could include efficiency, productivity, spoilage, quality, and profitability. The administrative areas could include average time to get orders into production, cost to process orders, quotes per estimator, and average time or days to invoice customers.

How you measure, collect, and present the information should be easy for employees to grasp. It's best to establish realistic short term goals as well as long term goals. The short terms goals make the long term goals seem more achievable and makes employees more optimistic. The following example Order to Production Throughput Metric is an excellent example of how to implement and present the information.

Example Order to Production Throughput Metric

Here are some performance metrics you may want to consider implementing in your business.

- Estimate/quote process time
- Number of customer complaints
- Orders per pre-production employee
- Sales per employee
- Sales, costs, and profits by product category
- Administrative cost per order
- Invoicing process time
- Administrative cost per invoice
- Spoilage hours and costs by reason
- Spoilage as a percentage of sales
- Direct and indirect expenses per employee
- Total and average value of invoices
- Receivables Days Outstanding

If you're interested in learning how Profectus' Printing Industry Business Consultants can improve your organization, contact Profectus for a FREE phone consultation at 1-888-868-8662. http://www.profectus.com/services/bp.htm

About Profectus
Profectus printing industry business consultants are committed to helping printing and packaging organizations implement best business practices and maximize the value of their information technology investments. Profectus has been contributing to the success of small and large printing and packaging organizations throughout the United States and Canada since 1993. Our consultants provide expertise in management information systems, estimating, customer service, order entry, job planning, purchasing, inventory, production management, scheduling, cost accounting, invoicing, and other administrative practices.

Printing Industry Best Practices Tracking & Reducing Spoilage Costs

2011-11-15T12:45:00.001-05:00

One of the easiest ways a company can improve their businesses is by reducing spoilage. Spoilage is defined as wasted materials and labor consumed as a result of avoidable errors. Rework is another form of spoilage. Rework is the costs associated with reproducing a job rejected by the customer or because it did not meet your own expectations.

The most common method of measuring spoilage is to calculate spoilage costs as a percentage of revenue. Using this method, a company with annual spoilage costs of $30,000 and sales of $10,000,000 would have a 3% spoilage rate. The industry leaders aim for a spoilage rate between 1/2 percent and 2 percent of revenue.

There’s another gauge of spoilage that many companies fail to recognize. If a company's profit margin is at 10%, then the profit on a $10,000 job is $1,000. If the company spoils $1,000, then that company losses $10,000 in sales. The lower a company’s profit margin, the greater spoilage impacts the bottom-line. The following chart can help employees realize how much that $100 mistake really cost the company.

% Profit	Spoilage Costs
% Profit	$10	$100	$1,000
3%	$330	$3,333	$33,333
5%	$200	$2,000	$20,000
10%	$100	$1,000	$10,000
	Sales required to recover spoilage costs

So who pays for spoilage? Since all printing organizations are in the business to make a profit or at least breakeven, the customers ultimately pay for spoilage. The higher an organization's spoilage, the higher the product sell price must be to recover spoilage costs. Obviously higher prices will make an organization less competitive and more likely to loose business.

To reduce spoilage a company must first identify what’s causing the errors. Errors can be tracked by recording the error cause, the solution, and the recovery costs. (download an example spoilage tracking form). Most business management systems also have the capability to track and report errors. Spoilage should be reported and monitored by reason on a weekly, monthly, quarterly, and yearly basis.

Reducing spoilage will also eliminate the non-value added activities needed to recover from errors. Non-value-added activities are those activities that aren’t required but still occur. Anything that adds unnecessary time, effort, or cost is considered non value-added. To put it another way, non-value-added activities are any activity for which the customer is not willing to pay.

Most errors can be avoided by implementing better processes and through training. Organizations that implement a spoilage reduction initiative will reduce production costs, add more capacity to perform value-added activities, improve product quality, improve competitiveness, and increase profits.

Click here to learn more about reducing spoilage and improving your business processes.

Profectus, Inc, is a national consultancy that helps printing organizations implement best business practices and maximize the value of their information technology investments.

Profectus, Inc.
Printing Industry Business Consultants
advisors@profectus.com
http://www.profectus.com/
Phone: 888-868-8662
Phone: 941-379-8700

Advanced Printing Estimating & Planning Workshop

2011-04-06T23:41:00.000-04:00

Are you looking for ways to prepare more competitive estimates and price quotes?

Do you want to sharpen your estimating and job planning skills?

Want to learn best practices for estimating and selling digit printing, large-format printing, mailing services, or fulfillment services?

This course is designed for experienced estimators who want to improve their estimating and planning skills.

What You Will Learn?
- Best Practices for estimating and planning
- Request for Estimates
- Qualifications and responsibilities of the estimator
- Planning jobs for production
- Layouts and impositions
- Improving the information from customers and sales
- Using budgeted hourly rates & production standards
- Calculations & formulas for estimating
- Prepress, offset, digital, wide format, bindery, mailing
- Paper, ink, materials, services, and buyouts
- Fulfillment charges, storage, pick and pack, kitting
- Markup and pricing strategies
- Computerized estimating software and e-commerce

Who Should Attend:
Experienced estimators, production planners, managers, print buyers, or anyone responsible for the estimating, pricing, or planning of print projects

When: Wednesday, May 4, 2011
Location: Printing Industry of Minnesota IKON Learning Center, Roseville, MN

For more information or to register online click here:
http://www.pimn.org/classes/pim_classes_detail.aspx?id=276

5 Tips for Preparing a Printing Business and Production Management System RFP

2010-10-15T22:26:00.000-04:00

You can get product proposals either by informally asking vendors to submit proposals or by preparing a "Request For Proposal" (RFP) for the vendors to respond. An RFP has many purposes and provides benefits for both you and the software vendors. It does a lot more than request product pricing. It provides software vendors with information about your company and needs, and provides you with information about the vendors and their products. An RFP can quickly determine if there is a fit between your company and the vendor's product, without further wasting everyone's time. Here are 5 tips for preparing an RFP for a business and production management system.

1. Information You Provide the Vendor - Your Request For Proposal (RFP) should provide the vendors with ample information about your organization including your company's background, your selection timeline, the number of required software users, and the requirements the vendors must meet in order to win your business

2. Information You Request From Vendors - Your RFP should also solicit the software providers for information about their company and products including vendor company background, product information, pricing, and references.

3. Product Functionality - By incorporating your requirements into the RFP, you illustrate to the software vendors what your organization needs the software to do. You can also have the vendors identify their ability to meet each of your requirements using a ranking system similar to the system you used to prioritize your requirements.

4. Product Comparisons - The vendors' responses to your RFP will provide a generous amount of information about each product on your short list. An effective method for analyzing all this information is to create a side-by-side comparison of the capabilities of each product in a spreadsheet that weighs each product's potential against your requirements using your ranking system.

5. Purchase Contract - Incorporating the vendor's RFP responses into the vendor's final software purchase contract will help to ensure that the product is delivered as promised and protect your organization from possible litigation proceedings such as product misrepresentation or performance issues.

Improving Employee Performance In Your Printing Organization

2010-06-03T23:15:00.000-04:00

It's a fact that the labor pool for skilled employees in the printing industry is shrinking. Motivating and retaining productive employees in today's economy is one of the most significant challenges for printing company managers.

Consistent praise, recognition, and incentives are proven to be the best way to improve employee performance, as well as satisfaction. Incentives, Motivation and Workplace Performance, a study conducted by researchers for the International Society of Performance Improvement, found that properly designed and implemented incentive programs will increase performance from 25 to 44 percent.

Creating an incentive plan involves defining the goals, defining the objectives, defining the measurements or calculations, and defining the incentive rewards.

Incentive measurements or calculations can be based on numerous criteria such as employee efficiency (actual vs. standard), spoilage costs, down time hours, net good impressions, orders processed, number of customer complaints, employee absenteeism and tardiness, or number of incorrect job tickets.

Incentive benefits can be financial rewards based on a fixed dollar amount or based on a percentage of an employee's wages earned during the incentive period. Financial rewards can be subsidized using corporate credit card rebates, vendor rebates, local business sponsorships, or income from recycled materials.

Incentives do not have to be in the form of cash. You can also reward employees for their performance with tangible items such as lunch on the company, gift certificates, grocery store gift certificates, movie passes, merchandise, dinner for two, or weekend getaways.

Printing companies that provide exceptional incentive programs that motivate employees and appropriately reward them for their performance will realize the greatest financial gains.

Deadline Extended for Print Management System Survey and Sweepstakes

2010-01-08T09:41:00.000-05:00

Because of the excellent feedback we have already received, we have extended the survey deadline until January 31.

Profectus, Inc. is looking for printing industry professionals to participate in a survey on how satisfied printing organizations are with their management information system and vendor.

Your insights can provide invaluable feedback to help printing organizations make wise software purchase decisions and encourage software companies to improve their products and services. Your information will be kept confidential and anonymously compiled with other participant's responses and published in a report.

American Express $25 Gift CardFor taking the time to complete this survey, you'll receive a free copy of the report, plus a chance to win a Logitech Webcam, Bose Headphones, American Express $25 Gift Card, or other prizes.

This survey only takes about 1 minute to complete.
http://www.profectus.com/surveys/mis.asp

Customer Satisfaction Survey of Management Information Systems

2009-12-16T23:12:00.001-05:00

Profectus Printing Industry Business Consultants is conducting a survey to objectively collect data on how satisfied printing organizations are with their management information systems. The results will be published in a report to help printing organizations make more informed decisions about their software investments and to help software vendors improve their products and services.

For completing the survey, you will receive a free copy of the results report, plus a chance to win a Logitech webcam, Bose Headphones, American Express Gift Cards, or other prizes.

Here's the link to the survey
http://www.profectus.com/surveys/mis.asp

PIA Converge Conference

2009-10-09T15:54:00.001-04:00

Are you planning on going to the PIA Converge Conference in November?

The Converge Conference - The Next Generation of Print and Communication Services - is designed for the new breed of company that is integrating the components of conventional and digital print, web technology, automated workflow, personalized and cross-media campaigns, mailing services, and more.

While many challenges exist to undermine profitability, so do numerous profitable opportunities. Progressive printing companies are adding new services, changing their names and rebranding. The result is a new breed of company integrating the components of conventional print, digital reproduction, web technology, mailing services, personalized cross media campaigns and much more.

The Converge Conference will present the strategy, tactics, and tools necessary for creating a dynamic new profit oriented business paradigm. Key industry leaders have acknowledged that there is no other conference attempting to serve the industry in the same way as Converge. The conference is broken into three tracks - Sales and Positioning, Production and Workflow Issues, and Value Added Services - the program is designed to appeal to a wide cross section of companies and individuals. I will be giving a session on how to integrate these new services into your management information system.

The Converge Conference takes place November 7-10, 2009, at the Hilton Bonnet Creek in Orlando, Florida. It is presented in partnership with the Printing Industries of America, the IPA, the Association of Graphic Solutions Providers, Digital Printing Council, Direct Marketing Association (DMA), and Printing Impressions magazine. Visit the Converge Conference website at http://converge.printing.org/

If want to learn how your organization can grow and prosper by taking advantage of new value-added business opportunities, join us in Orlando at The Converge Conference.

Printing Business Seminar: Calculating Budgeted Hourly Cost Rates

2009-10-05T11:00:00.006-04:00

By: Craig L Press,
The Printing Industries of Wisconsin (PIW), &
The Institute for Graphics and Imaging (IGI)

November 11, 2009
9:00 am - 3:00 pm

In today's economy it is essential to know your true costs so you are more competitive on the desirable work and avoid the less lucrative work. This workshop will teach you how to develop and calculate hourly cost rates of your production equipment and employees. You will learn how to distribute 100 percent of your expenses among your cost centers so that your costs are fully absorbed in your estimates, actual costs, and pricing. All participants will receive forms and a spreadsheet that can be used to develop your own hourly cost rates.

What Attendees Will Learn?
- What budgeted hourly rates (BHR's)
- How to develop BHR's for your equipment
- The components of budgeted hourly rates
- Where to get the information and numbers
- How to recover your overhead costs
- What to do when equipment is fully depreciated or paid for
- How to compensate for under-utilized equipment
- Calculating direct manufacturing and all-inclusive costs
- Example prepress, press, and finishing BHR's
- Software and publications available to help develop BHR's
- How to use BHRs for pricing and job costing
- What to do when your cost is more than your customers will pay

Who Should Attend?
Principles, managers, financial officers, estimators, cost accountants, billing personnel, department managers, or anyone wanting to improve estimating, pricing, and costing skills.

Click here to download the seminar brochure and registration information.
http://www.igi.org/events/IGI_CPress_CalcRates_F.pdf

Printing Business Seminar: Maximizing the Performance of Employees

2009-10-05T10:30:00.002-04:00

By: Craig L Press,

The Printing Industries of Wisconsin (PIW), &

The Institute for Graphics and Imaging (IGI)

November 11, 2009

9:00 am - 3:00 pm

Performance is essential for maximizing efficiency, productivity, cost effectiveness, and the utilization of resources. This session will teach you how to improve the overall performance of your organization by motivating your administration and production employees, selling change, overcoming resistance, setting performance goals, creating performance benchmarks and scorecards, pinpointing areas of improvement, measuring results, and creating incentive programs.

What Attendees Will Learn?

- Maximize the performance of your most valuable assets, your people

- Developing a performance oriented culture

- Integrating lean practices and principle

- Why "Change Is Good"

- 10 Ways to sell change

- Proven techniques to motivate employees

- Retaining your best employees

- Improving employee morale and engagement

- Evaluating employee performance

- Setting realistic goals for your employees

- Creating employee key performance metrics and scorecards

- Effectively collecting and presenting data

- Designing employee incentive programs

- Using technology to improve performance

Who Should Attend?

Principles, managers, financial officers, human resource managers, or anyone wanting to improve company performance by engaging, motivating, retaining, and maximizing the capabilities of employees.

Click here for additional information or to register:

http://www.igi.org/events/IGI_CPress_BuildingPerf_F.pdf

Best Practices for Printing Estimating & Planning Seminar

2009-09-22T11:35:00.012-04:00

By: Craig L Press and
The Printing Industry of Minnesota

October 20, 2009

9:00 am - 3:00 pm

Get Your Game On...

Sound estimating and pricing practices are essential to the success of all printing organizations. An estimate that accurately reflects actual costs plays a key role in making intelligent pricing decisions and determining your bottom line. The speed in which you can provide your customers with a price quote reflects your organization's ability to provide prompt service. An estimate is also critical for forecasting materials requirements, labor and equipment resources, production schedules, and costs. All successful print projects start with an accurate time, material, and cost estimate. This course is designed to improve your estimating planning, and pricing process by implementing industry best practices.

What you will learn:

- Best practices for Printing & Estimating & quoting prices

- Request for Estimates

- Feedback reports that can sharpen estimates

- Qualifications and responsibilities of the ultimate estimator

- Planning jobs for production

- Pricing Strategies, value added pricelists

- Improving the quality of information from customers to sales force

- Quotations and price proposals formats that benefit you and your customers

- Estimates as a sales tool verses a production tool

- Using budgeted hourly cost rates and production standards

- Over 100 calculations and formulas for estimating time, materials and costs

- Computerized estimating software and e-commerce

- Estimating prepress, press, digital printing, bindery, paper, ink and other materials

Who Should Attend:

Estimators, sales and customer service representatives, production planners, managers, print buyers, or anyone responsible for estimating, pricing, or planning print projects

Location:

Printing Industry of Minnesota, Inc.
Rosedale Tower

1700 Hwy 36 W Suite 510

Roseville, MN 55113
Phone: 651.789.5500

FAX 651.789.5520

Click here for additional information or to register:
http://www.pimn.org/classes/pim_classes_detail.aspx?id=217

How E-Commerce Is Changing The Role of The Customer Service Representative

2009-08-10T21:09:00.006-04:00

As more E-Commerce innovations become available to the printing industry, customers will become more empowered to place, track, and manage orders on their own. Many of the Customer Service Representative's daily responsibilities will become the customer's responsibilities. Rather then passing information from the customer to the CSR and back to the customer, the customer will be able to resolve questions at the click of a button at Internet speed.

So, what will your CSRs be doing in 3-5 years? The Internet, email, preflight software, and smarter file creation software have already begun to change the role of the CSR. Today, CSRs are spending more of their day at the computer, communicating information to customers, suppliers, and intra-company staff via email and web forms.

The future CSR will be more of a sales consultant position. Responsibilities will include preserving personalized relationships with customers, creating new business opportunities, and troubleshooting jobs.

Customer phone calls to the CSR will change to technical questions about file preparation, production requirements, and billing questions. The customer will also be contacting the CSR when there is a problem with the order status, finished goods inventory counts, and other information viewable on the Web.

The same E-Commerce features available to the customer will help the CSR service customers. This also presents the opportunity for the CSRs to work from remote sales offices, telecommute from their home, or use wireless Internet devices while in the customer's office.

Perhaps E-Commerce may even combine the roles of the salesperson and the customer service representative into one position in the future.

Profectus, Inc, is a national consultancy that helps printing organizations implement best business practices and maximize the value of their information technology investments.

Powerful Ways to Manage People in Your Printing Organization

2009-06-24T20:17:00.006-04:00

You're only as successful as the people who helped get you there. Managing takes a lot of patience. The more successful your relationship with employees, the further your career will go in business. Some managers take a stringent, stern approach, but this type of managerial style is slowly becoming archaic and ineffective. Powerful approaches to being a manager are less about giving orders than it is about reciprocal respect.

Acknowledgment and Humiliation
Old style management techniques fostered respect out of fear and bossy personalities. The new manager gains respect from employees by acknowledging ideas and developing relationships with the staff. When an employee's idea is implemented, overseeing its progress while acknowledging the employee's contributions to the company will further the success of the business and give credit where it's due.

If the idea is not feasible, continue to foster positive feedback, giving the employee motive for creativity. If the idea or process fails, positive reinforcement is a better way to correct mistakes. Humiliation cultivates anger and alienation of employees towards managers.

Friendliness while Managing
Although employees recognize the organizational ladder, friendliness eliminates lines of nervousness and hidden anxiety. Remember details and ask staff how their day is going. Some managers hide behind closed doors in small offices and never interact with their staff. The failed relationships with employees only hurt and reflect poorly on the manager. As employees feel more comfortable with a manager, ideas and cooperation are more prevalent than emotional obstacles. Ideas are created from group lunches and a friendly atmosphere discussing business development.

Open-Door Policy and Approachability

If you want to keep contact with employees and their performance, being approachable eliminates communication barriers. Managers with open-door policies make it easier for employees to notify you of obstacles, goals, and ideas to bring to the company. It opens the lines of communication between the manager and his staff, which is more beneficial for the company. Startup companies especially benefit from open communication since it helps identify growth issues and creative ideas.

Humility and Respect
Part of being a good manager is admitting faults and acknowledging wrongdoing. When employees see their boss is humble, it creates a higher amount of respect. Some managers see the acknowledgment of inaccuracies and mistakes as a sign of weakness. However, people have more respect for a manager who admits when he's made a mistake rather than hiding it.

Make Requests Clear and Concise
Finally, when asking for projects or performance from an employee, managers should make requests clear without ambiguities. Employees with unclear direction lead to mistakes and misunderstandings. Let your employees know exactly what you expect from their work ethic and performance. This eliminates confusion and frustrations in business organizations.

Although being a manager puts you in a position of power, treating employees with respect increases performance and business growth. Increased performance in a business organization makes the manager successful. Employees can make a manager successful, or they can make a job unbearable. Follow these few rules for a more enjoyable job and continued success.

By Lysis

Profectus, Inc, is a national consultancy that helps printing organizations implement best business practices and maximize the value of their information technology investments.

Maximizing Your Print Management Software ROI With Post Implementation Assessments

2009-06-06T03:04:00.004-04:00

When you purchased your current management system, you probably received all the training you needed to get the system fully operational. Right?

Wrong. Never assume the status quo is acceptable with your MIS system.

Studies from Profectus and other research organizations consistently show that businesses never use 40% or more of all application functionality. Often companies are unfamiliar with all the capabilities of their MIS due to ineffective training, "crash courses" to quickly get a system operational, and cutting training investments.

Once the system has been installed and is fully operational, it still has to be managed. You want to ensure that the system continues to operate at peak efficiency.

Business processes may change and need to be integrated into the system. New production equipment or product lines may have to be defined in your cost centers, production standards, and job tickets. Personnel might change positions and require training on other software components. As new employees are hired, they also will need training. The software itself will change over time as new functionality is incorporated into software product releases, requiring additional training to take advantage of these features.

As time passes, all systems tend to retreat from their initial levels of efficiency. Sometimes this is not noticeable until the system's efficiency has been significantly impacted. This deterioration can be avoided by conducting regular checkups of your implementation.

An annual budget for training will ensure that everyone is consistently taking full advantage of the system's capabilities. Take the time and invest the funds necessary to determine exactly what training and education is required by each person, and then provide it for them.

The better your people are trained on the capabilities of the software and the information it provides, the more likely your organization will maximize the system's potential.

A formal analysis of the entire system should be conducted at least annually. Revisit your initial implementation goals, objectives, and expected benefits to see if they are still being met. Talk to the users to determine their level of satisfaction and the need for additional training, modifications in business processes, changes in the system setup and reports. Then make adjustments as warranted.

5 Ways to Improve Cash Flow In Your Printing Business

2009-04-22T02:28:00.003-04:00

Given the current state of the printing industry and the economy, a healthy stream of cash is essential for a printing business is to succeed. Cash is the lifeblood of any printing business. In general, the key is to accelerate the flow of money coming in and delay the money that goes out. Here are 5 tips a printing business can use to improve cash flow.

1) Establish sound credit practices
Before dealing with a new customer, always get at least three trade references and a bank reference. Credit reports report on a company’s general financial health as well as how quickly (or slowly) it pays its bills. Never give credit until you are comfortable with a customer’s ability to pay.

Since many printers now provide email price quotes to their customers, a best practice is to incorporate your “Terms and Conditions of Sale” into your credit application.

2) Speed up throughput and delivery
Fill orders accurately and effectively, and then use the quickest means available to produce and deliver products to customers. Unnecessary delays can add days or weeks to customer payments. You must pay out considerable costs in paper, wages, and other expenses to produce orders, so you want to get reimbursed as soon as possible. Lean Office and Lean Manufacturing principles can help speedup your throughput.

3) Bill promptly and accurately
The faster you mail an invoice, the faster you can be paid. Where possible, send an invoice within 1 to 2 days after the order has shipped. A best practice is to establish the invoice amount at time of order or as the customer request changes. The only exception is billable overs and shipping charges. Many companies expediting the invoicing process by sending electronic invoices to customers using email, Electronic Data Interchange (EDI) or other means.

Check invoices for accuracy before mailing. All invoices should include a payment due date. An invoice without a payment due date may fall to the bottom of the customer’s pile of bills.

4) Offer discounts for prompt payment
Given an incentive, some customers will pay sooner rather than later. Trade discounts typically give 1% to 5% off the total amount due if customers pay in 10 to 15 days.

5) Aggressively follow up on past-due accounts
As soon as a bill becomes overdue, call the customer and ask when you can expect payment. Keep a record of the conversation and the customer’s response. Set a follow-up date in the event the promised payment is not received. Ask delinquent customers with legitimate financial problems to try and pay at least a small amount every week. Some accounting software packages functionality that automatically generates past due notices the day the invoice becomes past due.

When necessary, don’t hesitate to seek professional help from an attorney, debt collection agency, or the Printing Industry Financial Executive (PIFE) Credit & Collections Service.

Implementing 6S Lean Principles To Reduce Administrative Costs in Your Printing Company

2008-08-07T11:39:00.007-04:00

Ever take a good look around your office, especially after some hectic period of work? If it gets like most printing offices, it can look like a cyclone hit it. Copies of job tickets stacked on your desk. Proofs and samples on the floor around your desk. Interoffice memos and email printouts that you put off reading because you didn't have time to read them when they came in.

The focus for most of us is to get the work in-hand done. And that often means we neglect good organization. Unfortunately, this habit can become a significant hindrance to working efficiently and sometimes safely. Studies have shown that people can spend half their time at work looking for things!

One Lean approach to business improvements and an improved workplace is 6S. Most people may think of 6S as relating to manufacturing workplaces, but it is just as applicable to office settings. As with all Lean tools, 6S is about eliminating waste and maximizing value-added work.

6S is a process to create and maintain an organized, clean, safe, and efficient setting that enables the highest level of value-added performance. This means eliminating search, travel, transporting materials, inventory, and hazards. It achieves this by introducing organization and orderliness, eliminating unneeded materials, and establishing self-discipline.

6Ss and Their Meaning

1. Safety
- Always put Safety first
- Safety and quality go hand-in-hand.
- Safety improves as the other S’s are established

2. Sort
- What is needed right now and what is not
- Sort through and sort out
- Remove items from office areas that are not used
- When in doubt, move it out!

3. Set-In-Order
- A place for everything and everything in its place
- Designate a specific location for everything and label
- Use of signs and labels to identify "what is to be stored where“

4. Shine
- Physically and visually
- Getting the workplace clean and maintaining its appearance
- Keyboards, monitors, desktops, cabinets, floors

5. Standardize
- Standard how everyone does things
- Put systems in place to ensure that everyone does things the same way
- Visual techniques, color-coding, checklists, labeling

6. Sustain
- Continually reinforcing 6S
- Keeping everyone involved
- Ongoing audits of 6S activities

6S in the office can include organizing job files, folders, file cabinets, proofs, die lines, samples, an individual’s desk, sales brochures, and packing materials for proofs. 6S is not limited to physical items. The same principles can be applied to electronic items in your desktop computer or company file servers. Electronic files and folders can be organized and labeled for your emails, customer supplied job files, purchase orders, PDF proofs, folding carton designs or prototypes, or CAD die line files.

By implementing 6S in the office, printing organizations can eliminate wasted time and costs by making it easier to find things, improving workflow, and reducing employee frustration and stress. Not only will 6S help your organization internally, but it will also impress your customers.

The Changing Landscape of Print Management Systems – Are You At Risk?

2008-08-06T23:06:00.008-04:00

Eectronics for Imaging, Inc (EFI) made several announcements last week regarding their Print Management Systems that has prompted new concerns among the printing industry. EFI announced that it has acquired Pace Systems Group and their ePace MIS product. EFI also announced that their popular PSI and Logic print management systems would eventually be discontinued and replaced with ePace. EFI will continue to support PSI and Logic for an undetermined amount of time.

EFI’s announcements have provoked several of the 2,000 printing companies using PSI, Logic, and ePace to reevaluate their current and future MIS strategies. A lot of these companies had evaluated ePace and purchased PSI or Logic because it was a better fit for their organization. Evaluating, purchasing, implementing, and changing a print management system is a daunting effort that most printing companies want to avoid.

Mergers and Acquisitions - Good or Bad?
If your software vendor has been acquired or merged with another software company, this may be good or bad for your company. There have been at least 20 mergers and acquisitions of management systems in the printing and packaging industry in the last 10 years including the following:

Logic Associates acquired Covalent Systems in 1997 and then Constellation Software acquired Logic Associates in 1999.
The Prism Group acquired QTMS in 1998 and acquired MicroInk in 2001. In 2004 MicroInk separated from The Prism Group and created Enterprise Print Management Solutions.
VantagePoint Systems acquired Avalon Printing Software in 2002 and Harry Rohde Management Systems in 2005. And in 2007 Solarsoft acquired VantagePoint Systems.
Creo and Prograph create printCafe in 2000 and then printCafe acquired Programmed Solutions (PSI), Hagen Systems, Logic Associates, AHP Systems, and M Data (Printsmith). In 2004 EFI acquired printCafe and then acquired Pace Systems Group in 2008.
Printable Technologies acquired Collabria in 2001.
Tectura acquired Concord Business Systems in 2004.
Pace Systems Group acquired Profit Control Systems in 2005.
Avanti Computer Systems acquired Parsec Corporation in 2006.

Acquisitions are also a means of bringing to a company innovation that may have happened elsewhere. Instead of the company making the investment to develop or enhance its own product, if can acquire a company that has already made the development investment. According to EFI, ePace’s Java-based browser application and flexibility above PSI or Logic are some of the key reasons it was acquired.

An acquisition with a technological advanced or financially sound company is a good way for a software company to obtain needed capital to improve their business, marketing capabilities, and support. Additional capital for software development can breathe new life into a stagnant software product.

Merging two software companies is tricky. It's extremely difficult to blend technologies, and as a result, a merged company often ends up maintaining the sales, support, and development staff of both companies. That makes it difficult to fulfill the cost-savings envisioned when the merger plans were formulated. Merging products was one of the challenges for EFI, considering some of the MIS products overlapped in market segments and capabilities. Since 2003 printCafe had considered combining some of their products to create a Best-of-Breed solution.

Product Life Cycles

Some software companies sell out because they have not appropriately invested in keeping their product current with the latest technologies, and their product may have reached the end of its life cycle. Programming languages, operating systems, databases, development tools, and the way users interact with computers are quickly changing. Any software that does not maintain these technology advancements can quickly become obsolete or undesirable. Print management systems that have retired or will be retiring soon include Covalent, PressTrak, Collabria, InfoNet, Parsec, Profit Control Systems, PSI, and Logic.

In With The New

While many products have reached their end-of-life cycle, fortunately there have been many new products that have emerged. Some older products have been completely re-written to create new products such as Hagen PMS to HagenOA, Globe-Tek to Globe-Tek Enterprise, and Pace to ePace. There are also many new products on the market including KODAK EMS Business Software, Press-sense, Printstar, HighJump, Print-Quotes Software, FORIX PrintBridge, and Virtual Systems. An increase in globalization and the internet has introduced many new products from other parts of the world to the North American market including Intraprint, Radius Solutions, HIFLEX, PrintVis, Shuttleworth Business Systems, Sistrade, and RedTie.

What can you do to limit your risk?

If the intent of your vendor is to eventually replace your product with the acquired product, then you might as well start evaluating alternative solutions now. The acquired product may end up being the best solution for your organization, but before you make that conclusion, benchmark your company’s requirements against other the 100+ print management systems www.print-estimating-software.com.

Make sure you partner with a software vendor that is committed to enhancing their product and embracing the latest technological advances such as programming languages, operating systems, databases, JDF, ecommerce, and printing technologies. You should be receiving at least 2 product update releases annually. These product releases should not just be bug fixes, they should include enhancements.

It’s also important that your software vendor has a management team that is active with its customers and the industry. A software company that listens to their users and is informed on the latest industry trends and technologies is more likely to improve their product. In most cases, these software companies and products will continue to succeed.

For the complete list of over 150 software products available to the printing and packaging industry, visit our online directory at www.print-estimating-software.com. You can also visit our website to learn about Profectus software selection, implementation, and risk assessment services www.profectus.com/services/it.htm.

Software products mentioned in this Article

Avanti www.avantisystems.com
EFI Pace www.pace2020.com
EFI PSI www.efi.com/products/print-mis/efi-psi
EFI Logic www.efi.com/products/print-mis/efi-logic
EFI HagenOA www.efi.com/products/print-mis/efi-hagen
Enterprise Print Management Solutions www.entpms.com
FORIX PrintBridge www.forixprintbridge.com
Globe-Tek Enterprise www.globe-tekcorp.com
HIFLEX www.hiflex.com
HighJump www.highjump.com
Intraprint www.intraprint.com
KODAK EMS Business Software http://graphics1.kodak.com/us/product/workflow_data_storage/business_solutions
Press-sense www.press-sense.com
Printstar www.printstar.biz
Print-Quotes Software www.print-quotes-software.com
PrintVis www.novavision.dk/Default.aspx?tabid=86
Prism www.prism-world.com
Radius Solutions www.radiussolutions.com
RedTie www.red-tie.com
Solarsoft www.solarsoft.com
Shuttleworth Business Systems www.shuttleworth-uk.co.uk
Sistrade www.bdoisb.com
Virtual Systems www.virtualsystems.com
Directory of All 100+ Products www.print-estimating-software.com

5 Ways to Reduce Administrative Costs in Your Printing Company With Lean Principles

2008-07-23T11:00:00.003-04:00

Lean is a business operating philosophy designed to eliminate administrative wastes, increase efficiencies, reduce overhead costs, improve workflow, and enhance the ability to meet customer demands. Its objective is to reduce administrative costs which account for 32% of a printing company’s value added. Administrative costs include sales, estimating, customer services, order entry, purchasing, invoicing, accounting, and other activities that support production. Printing organizations have experienced up to a 30% reduction in administrative costs by implementing Lean Office principles.

1) Eliminate Unnecessary Documents
Stop producing copies of job tickets and reports that may not be needed or even read. Time and costs are wasted printing, photocopying, distributing, and storing these reports. This Lean office waste is known as “Overproduction”. Most MIS systems enable users to access these reports and information on their screen as needed. Take a hard look at your reports, meet with your employees to determine what’s really required, and educate employees on how to query the information on screen when they need it.

2) Improve Administrative Processes
Put a team together to define the steps required to get jobs through your administrative processes and document them using Post-It Notes or flowchart software such as Microsoft Visio. Then count the number of steps involved; identify the non-value-added activities, wastes, and redundant steps; and design a more efficient “Lean” workflow. This Lean principle is known as “Process Mapping” or “Value Stream Mapping”.

3) Design a Lean Office Layout
A poorly designed office layout will create wasted time and costs as salespeople, estimators, customer service reps, and other office employees move estimates requests, quotes, and orders between departments and desks. This often creates interruptions to others. This Lean office waste is known as “Motion” or “Transport”. Redesign your office layout to follow your workflow so there is less movement and shorter distances between handoffs in your administrative processes.

4) Implement 6S
Straighten and organize your office by implementing 6S.

1. Safety - Always put safety first

2. Sort - What is needed right now and what is not

3. Set-In-Order - Remove items from office areas that are not used

4. Shine - Designate a location for everything and label

5. Standardize – Standard how everyone does things

6. Sustain – Continually reinforce 6S

6S in the office can include organizing job files, folders, file cabinets, proofs, die lines, samples, an individual’s desk, and sales brochures. Implementing 6S will eliminate wasted time and costs by making it easier to find things, improving workflow, and impressing your customers.

5) Utilize Your Employees
Take a close look at the skill set and workloads of your administrative staff. Make sure employees are in the position that is best leveraging their capabilities. Are you over staffed in some areas? Is there a poor distribution of work? You may have some people that are overloaded with work while others do not have enough to keep them busy. This Lean office waste is known as “Underutilized People”. Also, it’s important to involve all employees in your lean initiative and value their input. Those who do the work best know where improvements can be made.

Top 7 Reasons Printing Organizations Prosper From Ecommerce

2008-06-20T11:20:00.002-04:00

Top 7 Reasons Printing Organizations Prosper From Ecommerce

Implementing ecommerce in your printing organization can be very challenging, but when done right your organization will receive significant paybacks. Here are the top 7 reasons printing organizations prosper with ecommerce.

1. Time and cost reduction – Ecommerce eliminates time and costs associated with entry and verification of documents and the expense of preprinted forms, paper, toner, postage, phone calls, faxes, and manual filing systems. This significantly reduces your labor costs and cost per business transaction.

2. Cash flow - Ecommerce eliminates days of mailing and paper shuffling by electronically exchanging invoices and payments with your customers. The same is true with suppliers, which allows implementation of just-in-time manufacturing practices that minimize your inventory investment.

3. Reduced stocking costs - Ecommerce speeds the ordering cycle, providing better information and minimizing inventories, floor space, storage, warehousing, and insurance costs.

4. Improved service - Ecommerce will enhance relationships among your customers and suppliers by providing continuous accessibility to order, billing, and other information, simplifying everyone's efforts.

5. Differentiation - Successfully implementing ecommerce with your customers and suppliers will project your company's image as a technological leader, especially when you exploit these new business opportunities before the competition.

6. Multi-company consolidations - Consolidators inherit an assortment of systems and data structures with each new acquisition. Ecommerce standardizes the information among the parent company, acquired companies, and divisions.

7. Business survival - As more of your customers adopt ecommerce technologies, they will demand their business partners also implement ecommerce.

Implementing an e-Business Strategy

2008-05-22T14:20:00.002-04:00

It takes several years to actually implement the strategies needed to truly become an e-business. In fact, a recent study suggests that we will be implementing e-business strategies for the next 5 to 7 years. By then, e-business will just become "business."

In order for a company to actually become an e-business, its business practices and Internet technologies need to become fully integrated. Companies need to reinvent order processes and workflows, and people need to learn to adapt to these new ways of conducting business.

Some of the business practices and processes you may want to consider realigning include:

Pre-production, production, and post-production workflows

Forms, paperwork, reports, job tickets, etc.

Personnel roles, job functions, job descriptions

Departmental structure

Inter-company, customer, and supplier communications methods

Implementation of an e-Business Strategy may require cultural changes in your company. Company owners and management must be willing to change the very way they do business if they expect to maximize their investment in e-Business technology. They must take an active role, even if only to monitor the implementation progress. This will demonstrate to employees that the new technology and related changes in the company are supported by the management and owners.

The most difficult part of becoming an e-business is "people". Companies will achieve greater success by educating their staff. You can accomplish this by hiring industry consultants, attending seminars, and subscribing to e-business publications.