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Preparing for 2013

Though the economy is slowly recovering, parent organizations continue to focus on reducing overhead. In-plants must remain vigilant for ways to decrease the cost of manufacturing, measure improvements and respond to customers' changing needs.

December 2012 By Howie Fenton
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In-plant managers were much more visible at these presentations, and equipment manufacturers seemed to be focusing more attention on the in-plant market. Talking to these in-plant managers yielded more of an optimistic feeling, as well. The last three years seemed to be tougher as more in-plants have been closed, outsourced or evaluated, but in conversations at the show it seems as though things are getting better.

Many said that business for their parent organizations had been improving, resulting in more printing for them and making it easier to achieve their financial goals. Believe it or not, people were starting to talk about reinvesting in their business and hiring again. Many said they were visiting the show looking for ways to build their business, instead of just working in the business.

Operational Excellence

Does that mean you can sit back and relax while you wait for things to improve? No, we are still struggling through cyclical and structural changes that are reducing the demand for printed products. The cyclical changes are tied to the slowly healing economy, while structural changes come from technologies that are disruptive to the printing industry, such as the Internet/e-mail, smart phones and e-books, all growing in popularity and reach.

While a portion of the demand for print will return as the economy revives (the result of the next wave of cyclical change), structural changes will have more profound and long-lasting results, and the declines resulting from these changes may never rebound.

Reduce the Cost of Manufacturing

Most in-plants still have to compete against their commercial counterparts. That means that everyone has to remain vigilant for ways to reduce the cost of manufacturing by using software automation, overcoming bottlenecks and reducing FTEs (full-time equivalents) with on-call staff. This is all part of operational excellence. In addition, today's operational focus also includes measuring and increasing productivity and customer convenience, and maintaining competitive costs and turnaround times.

Measuring and showing improvements are keys to proving an in-plant is competitive with outside providers. Some of the more common metrics to measure—or benchmark—include budgeted hourly rates, competitive pricing and on-time delivery. All in-plants should be measuring and tracking their financial and operational metrics and working on improving them—before they need to.

Increasing productivity and reducing manufacturing costs run hand-in-hand. Driving down the cost of manufacturing also results in shorter turnaround times and more competitive prices. These can be gained through process improvements or new technologies (or both). One way to increase productivity is continuous process improvement, or critically evaluating how you do things and always looking for better ways to do them.

In the technology area, there are three categories of software automation: Web-to-print solutions, Print MIS systems and prepress PDF workflow software—and their functionalities are beginning to merge. For example, estimates and job ordering may start with a Web-to-print solution. The files may then be transferred to a prepress PDF workflow where a job is preflighted, corrected and imposed, while the print MIS creates the job ticket, monitors production and scheduling and produces an invoice.

Marketing, Sales and Planning

As much as we like to focus on operational excellence, it's important to recognize that streamlining and automating production will get you just so far. Once you have reduced your manufacturing costs, the next step is to respond to customers' changing needs and build new products and services that have greater value. That means marketing, sales and strategic planning.

As mentioned earlier, simply using market research that shows growth for a specific product (i.e. large-format) is not enough. Projections of market growth do not guarantee success. There are other factors to consider, such as understanding your customers' changing needs, recognizing all the sources of competition, and making sure you have the infrastructure (including manpower, equipment and expertise) required.

Do you have the right people doing the right tasks? Do you have the right equipment? How well will your staff's skill level transfer (from printing pages to printing posters)? Most companies have a pretty good idea of their equipment capabilities, but don't know if they have the right staff, the right skills, or if their employees have the ability to update their skills.

Unfortunately, there are no universal answers about staffing and skill levels. Sometimes, if you have a group of people all doing the same thing and one person performs well, you could consider that an internal benchmark. If you're lucky enough to have someone that you can consider your internal benchmark you could use that person for training and as a basis for measuring performance. But, more often than not, you may need to hire someone to come in to benchmark the performance of your staff.

One new expression that is gaining popularity is listening to the "voice of your customer." This is becoming an important part of the strategic planning process because it provides feedback about your customers' changing needs. This can be done with surveys, focus groups or simply by meeting with customers on a scheduled basis.

Also important in this process is understanding the competitive environment. That means monitoring the products and services offered by others, understanding how they position their value proposition, and knowing how much they charge. For many in-plants, the competition is no longer limited simply to the commercial printers in their area. It can also be the MFPs (multi-function printers) in their offices or other groups within the organization, such as the college or university bookstore.

Summary

As the economy improves, business for in-plants' parent organizations is improving, and we are starting to see print volumes increase. But NAPL research says that the growth will continue at a painstakingly slow pace, which means that some parent companies will continue looking for ways to reduce overhead or head counts or to outsource services in an attempt to improve their financial performance.

But the general consensus at Graph Expo is that sharp scrutiny of in-plants is declining as business gets better. We learned that there was more optimism about the future, and, for the first time in years, in-plant managers were talking about reinvesting in their businesses. Some people were talking about new equipment, such as large-format devices or new mailing machines, while others were focusing more on a strategic approach, such as creating a business plan or a marketing plan.

In fact, strategic planning is beginning to emerge as a trend among industry leaders. In the 2012 NAPL State of the Industry Report, 10th Edition, we asked survey participants what they learned going through this recession. Their answers:

  • Be prepared for change and adjust quickly: 69%
  • Understand your customers' problems and solve them: 65%
  • We can't stand still, satisfied with past accomplishments: 54%
  • Always be looking for fresh ideas and new talent: 50%
  • Strategic planning is a must: 49%

To learn more about how to measure and increase in-plant productivity and value, download the free NAPL white paper, "How to Improve In-Plant Performance," at www.napl.org/Publications/White-Papers.
 


 
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