Outsourcing – What’s in it for you

PPI Nuts N Bolts

July 18, 2001

 

 

Skip Corbitt, Ikon Office Solutions, 206-901-2500   wcorbitt@ikon.com

Milt Vine, Seattle Bindery, 425-656-8210   miltvine@seattlebindery.com

 

 

Opening thoughts:

·        Internet search turns up 623,930 hits on “outsourcing” – a hot topic

·        Outline will be on PPI and Seattle Bindery web sites

·        Watch out for reviews that focus on features

·        Watch out for “siren song” of “look what this equipment will do”

·        Vendors can be very helpful, but make your own evaluation

 

Advantages of outsourcing for printers – long-term / strategic:

·        Reduces printers financial breakeven point

·        Frees capital to allow for printing abilities to improve

·        Trade shops have the experience (if you choose the right one for the job)

·        And the expertise

·        Operators get to specialize in what they are good at and like

·        Gives ability to use highest and best use of capital (opportunity cost)

·        Can “fund” growth with payable to trade shop, get $ before payable due

·        Trade shops have much more diverse equipment

·        Job specific knowledge (did that job for two other printers in the past)

·        Controls square footage requirement

·        Prevent need to expand plant size

·        Many other industries are moving this direction

·        Employee retention – if I have to run that folder one more time, I quit

·        “Expert” consulting advice to visit with printers customer

·        Use “value added” accounting and avoid miscommunicating results

·        “Insurance” – if they mess it up, they pay for it

·        Let’s the printer keep her “eye on the ball” or the core business

·        Allows staffing for less than 100% of capacity

·        Allows printer to add services that customer may need, more attractive as vendor

 

Advantages of outsourcing for printers – short-term / crisis management:

·        Fill in for temporary labor shortage (vacation, illness, training new person)

·        In-house equipment is down or double scheduled or running slow

·        Customer has crisis with second vendor

 

Editorial interlude:

·        Thoughts on how to price outside buys

·        Monthly result comparison with and without outside buys

·        Reasons print buyers have to use printers with the wrong equipment

 

Advantages of in-plant production for printers:

·        Control of job process

·        Increases value added

·        Reduce turn time for job (usually)

·        Market perception of “full service”

·        Equipment sales person will like me

·        Ego

 

Observations:

·        How many new in-plants can you name?

·        Dick Goerlich said in May “value added is overblown”

·        Choose the right trade shop, they aren’t all the same

 

Non-factors:

·        Will I be less important to the trade shop after I bring _____ in-house.

·        New machines are more efficient (from “article” in Graphic Arts Monthly)

·        They have my dies (whose dies are they?)

 

Tips:

·        Know the true cost of new equipment: (training, waste/rework, learning curve, “tricks” to learn, space, power, site prep, ventilation, compressed air volume, noise control, supplies inventory, spare parts, parts availability, blade sharpening, repairs), “life cycle cost”

·        Technical compatibility (29” press and 20” folder)

·        Don’t buy for one job

·        Choose a vendor carefully (tour, equipment evaluation, financial viability, scope of services, ask around)

·         Don’t forget Trade Printers too

 

 

 

Questions, comments and war stories from the floor