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Reply #1
I would like to respond to
article #2 in your last newsletter regarding overs. I don’t know if
the longtime customer you referred to in the article is [us] but I know that
issue has come up repeatedly over the years.
You refer to “trade
practices” as a source for guidance. In my opinion there are very few “trade
practices” followed to any degree in the graphic arts industry these days.
Some of the “trade practices” could be laughed at today if printing company
managers even referred to them; Trade practices for Orders of Acceptance
state that “canceled printing press orders require compensation for
incurred cost and related obligations”. When is the last time you heard
of a printer getting paid by a customer for canceling a job? Trade practices
for Terms/Claims/Liens calls for “50% of the job to be paid upon
placement of the order with the balance due before shipping product”.
One of our larger customers has standing terms of 60 days from receipt of
invoice. Another large customer pays 1/3rd of their invoice in
30/60/90 days. I’m not bringing these issues up to complain but to point out
that “trade practices” evolved during the 1940’s – 1960’s when it was a more
level playing field. In the “good old days” printers told customers when the
job would be completed. Certainly the printed piece and associated finishing
was not considered a commodity as it is in the eyes of many print buyers
today.
The only time we indicate
-0- overs to one of our partners, like Seattle Bindery, is when that is
stipulated to us by our customer. We have explained to customers that
multiple production processes necessitate a certain amount of overs and that
we should be able to deliver and bill for what remains after making the
required count, since we produced and paid for those overs. Basically, we
are told that is our problem. We are in the same position of being
non-competitive if we build in 10% overs on an estimate – we won’t get the
job. We recognize that we have to build some overs in on a job even if we
won’t get paid for it. The trick is finding that balance between building in
sufficient overs and having a competitive price. I agree communication is
critical.
All
of our purchase orders contain the phrase:NO OVERS OR UNDERS
EXCEPT AS NOTED
On jobs where overs are
allowed we state the % of overs allowable on the purchase order. It is our
belief that our partners will read the purchase order prior to starting the
job and if they have issues they will bring them to our attention so we can
discuss. It is in our interest that our partners, like Seattle Bindery, make
money working with [us]. However, our customers are demanding greater
precision and quality in less time than ever before. I believe it improbable
that a printing company, even a large one, will accept all of the risk
associated with the overs issue. Each part of the supply chain will have to
participate.
Reply #2
Anyone who orders a job
with no overs must have perfected the printing process (or feels very lucky
or doesn’t care) and doesn’t cater to the designer market where they require
10-20 samples. For most projects, the small extra cost of having some overs
is insurance in case they are needed and can be used to show off your work
to other clients.
Thank you for making the 5
“samples” you deliver not part of the count so we have copies for our job
ticket, even if the job comes out right at count. And, packaging them
separately is a HUGE help to make sure we actually do put 5 samples in the
job ticket.
Reply #3
Your “customer” is usually
a printer who is manufacturing a job for their customer. The salesman has
talked to their customer who first needs an estimate based on specific
quantities, so that they can approve and budget the cost of the job first.
When the job is awarded to printer, the customer is asked if they will
accept (pay for) overs? Based on the answer, the ticket / PO information
should be entered as QUANTITY (10,000) and % OVERS (1000) that the customer
will pay for. Example on PO: “run 11,000 MAX”. The reason for listing two
separate entries (both qty and maximum run qty) is to indicate to the
bindery that they can charge printer for 11,000 (per PO), but that they can
NOT produce less than 10,000. I agree, communication is the key! Thanks,
Reply #4
About overs. . . of course
communications is the key, find out exactly what the customer really needs.
Speaking as a small shop, our customers usually order only what they need,
245, 730 etc.In the digital world it's easy to print one or a hundred and
one. Our small customers expect to get exactly the number they ordered.
And I think as the digital world expands that is becoming the expectation.
When we quote a customer a price, we never bill an extra 10%. If we job out
a part of it and get billed extra, we eat it. So it kind of irks me to be
charged for overs.There often isn't a 10% net on a job. As a recovering
accountant, you know that. Well, the latest NAQP ratio study shows an
average 14% net. But again, we live in a very small world, so take these
comments with a grain of salt.
Reply #5 (Trade
Shop)
We struggle with the overs
issue almost every day. Some of our customers (bless them) are very clear
on their P.O.'s or work orders about their expectations. They state a
number or percentage of overs they will pay for. We, in turn, have a space
on our job ticket for that information including doing the math for some of
our challenged operators (5% overs = 500). Other customers don't tell us
with each job, so we have to call for that information or, when in doubt,
produce no overs. Producing no overs sometimes robs us and the printer of a
chance at a few more dollars but I also hate to waste our time producing
overs that won't be paid for.
You're right about
including overs in the original estimate. If we did that, I suspect we
might lose some jobs. Besides, it's hard to know when we are bidding a job
if it might be a 5% overs kind of job or a recurring order where all overs
are acceptable.
Our "favorite" occasional
customer regularly requests "unbillable samples" or "unbillable overs".
That is, they require 100 or 250 overs for internal purposes or customer
samples but they won't pay for them. Of course, in this case, we try to
build an additional cost into all of our bids for them, which means that we
don't do very much work for them. Perhaps that is for the best anyway.
You are absolutely right -
communication up front is the best way to avoid problems and "right size"
the order for everyone's satisfaction.
Reply #6 (Trade
shop)
We have a practice of
sending overs with our products and billing for them. I agree with your
thinking as stated. As a manufacturer of custom products, many operations
are required to complete the product. If overs are not planned for it is
highly possible to end up shipping the order short. This can also cause
dismay. The same people complaining about the overs, also complain about
shortages. If all the expenses of overs are entered into the estimated
pricing it can reflect non competitive values.
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