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