Self-evaluation: Don't Hide From It
For years we have heard that in-plants are being asked to make do with less. On the heels of this push for efficiency, some in-plants are now receiving an even more challenging request: they are being asked to perform an internal review or to secure an outside evaluation of their operation.
Self-evaluations have always been tricky, even dating back to the ancient Greeks, when Socrates stated in his Apology that he was truly wise in that he did not think he knew what he did not know. Socratic wisdom aside, many times what we do not know is our undoing.
No matter what situation you find yourself in—from growing volume to reduction of output—a regular self-evaluation is a project every organization should have on its agenda. The opportunity to adjust to the future goals of the parent organization is much more achievable when the operation is doing well in the eyes of its client than when it becomes a question of what value the print service provides.
Unfortunately, an organization that is humming along and feels no need to do a review of what it is accomplishing is just as vulnerable to a management reassessment of its value as one maintaining its status quo. We have seen situations where the in-plant is surprised by management’s decision to change course in its objectives, which ultimately affects printing and distribution needs.
Of course, the more critical concern is when the printing organization finds there is simply less to do as a result of lower volumes, or it is spending too much time in unproductive aspects of an evolving business and economy. It is in this climate that an in-plant will be challenged to determine if its vision and value are still valid.
Unlike an independent corporation, which will look at its standing in the marketplace, in-plants generally focus on two elements:
Each element lends a specific aspect to the in-plant’s ability to deliver the price, quality, timeliness and other unique capabilities that provide value to the organization. So what would one expect to see in an evaluation of an organization, and what does one do in performing a credible self evaluation?
In our September IPG article, we spoke of the in-plant maintaining relevance. We call this “congruence,” derived from the Latin congru, meaning “I meet together; I agree.” This includes providing unique capabilities in support of the parent organization, which could be tangible or intangible benefits, or both.
This aspect of the in-plant is critical as there is no greater influence to success than the in-plant customer. Without the buy-in and alignment within the organization, success for any internal entity is difficult at best.
Since the customer is paramount in the evaluation it is critical that this aspect of the evaluation be done correctly. Customer interviews should always cover:
- Needs (those met and those not being met)
- Percentage of business captured vs. outsourced
- The print shop’s general reputation
Also known as financial contribution, savings is usually presented as a percentage, and can be arrived at in two ways: competitive bidding and benchmarking. It is important to know there are limitations associated with each. Which one you choose is dependent on how well the limitations can be managed.
Competitive bidding starts with you determining your true costs and verifying that your jobs are priced accurately, after which comparisons are made against the outside marketplace via quote requests. While this may seem to be the most accurate measure of how you compare to the outside marketplace, doing a thorough job is time consuming, and the task of choosing the appropriate printer for the each job quoted is critical.
There are other difficulties with this approach, such as outside printers tiring of providing you with price checks after quoting multiple jobs and getting little business in return. Another difficulty is choosing the correct price if more than one vendor is involved. What appears to be a low-ball quote may be thrown out in favor of a higher price in spite of the lower quotes’ validity.
Benefits of Benchmarking
Benchmarking allows you to price components of your estimates in terms of cost-per-click or hourly rates. These can be compared to the production standards and typical costs of the print-for-profit. Benchmarking can be as effective as detailed competitive bidding without the investment in time and difficulty in finding printers willing to participate.
Benchmarking is an art and a science. It requires multiple sources of printing industry data and the diligence to maintain the data. A major feature is the use of numerous avenues of data that may not be formatted in the same manner. You must then translate this data into useful, unbiased information.
Therefore when benchmarking is used as part of the analysis, the source or sources need to be carefully reviewed. Obviously, sources with a flaw or bias can detract from the credibility of the entire evaluation. Utilizing both congruence and savings one can determine the price-value relationship for optimizing the type of work provided. (See example below.)
While savings in any one element may be seemingly large, the perceived value by management may diminish its impact. As an example, the above chart shows that, while savings enjoyed by providing distribution services may be high, management does not perceive it to be important. The parent organization’s recommendation, therefore, may be to eliminate the function entirely via digital delivery.
A typical methodology for a print shop evaluation utilizes a four-step approach to meet the goals (scope) of an review. Here is a suggested format:
Assessment: This step is the period in which one conducts the due diligence necessary for a thorough understanding of all the dynamics affecting the project. The project will require assessment and findings with regard to equipment prepress, digital imaging, variable print, workflow and customer needs. This assessment should center on the following areas:
- Evaluation of current personnel levels
- Equipment and operations, including workflow
- Cost of printing services compared to private sector costs
- Customer satisfaction
Collaborate: After the assessment phase, findings are shared with stakeholders and sponsors alike to arrive at possible solution scenarios. This step is an event that allows for validation of the findings as well as a more focused evaluation.
Evaluate: After validating the findings and determining possible improvement scenarios, comparisons should be made from a customer service and financial perspective to determine the most viable options. This process must be applied to the entire evaluation.
Recommend: Recommendations are then developed and included in a final presentation and report. A presentation should be planned to discuss the findings and recommendations with management and staff.
One can see that an evaluation, whether provided internally or externally, can drive change and manifest opportunities. It all comes down to the legitimacy of the evaluation. When deciding whether to pursue an evaluation internally or externally one should consider the reputation, experience, capabilities and resources of the provider of the evaluation.
Whether the evaluation is performed internally or externally, in the end, knowing what you did not know will position your in-plant to be more successful.