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Six Steps To Make Your In-plant Financially Fit

Is your in-plant valued by your parent organization for its financial contribution and cost-efficient growth? Here are six areas to focus on to ensure your shop gets the respect it deserves.

March 2011 By Jerry Sampson
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IN THE December 2010 issue of In-plant Graphics, I recommended that every in-plant manager conduct a rigorous financial and business analysis, and then size up the results like a savvy investor would. In short, ask yourself if your in-plant is a "Buy" or a "Hold."

You earn a "Buy" rating if your in-plant is making a significant financial contribution to your parent organization, is showing cost-efficient growth and regularly invests in new technology. Your in-plant is a "Hold" if volume is declining or flat, contribution is uncertain and your overseers question the value of new investments.

To earn a "Buy" rating, your in-plant must score well in the following six areas:

1. Strong Financial Contribution

This is the foundation of any in-plant. Since in-plants are typically cost centers, management should view the "financial contribution" as cash savings—15 percent is a minimum, but ideally a 25-30 percent savings is expected. In the past several months I have seen a number of in-plants that are generating contributions of 30 percent and higher. Another important consideration is that continued savings (or growth in financial contribution to management) is in jeopardy if your supervisors don't understand the contribution you deliver, then make strategic decisions that adversely affect the in-plant. To earn a "Buy" recommendation, your contribution must be seen as growing. It most likely is based on your providing higher value-added services and high-quality work below market cost.

2. Market Share

Most in-plant managers don't consider that their total value depends on what share of the parent organization's printing they have captured. It is essential to be the parent organization's top supplier of print and communications fulfillment services, while continuously offering innovative solutions to cut costs and bring new value to the organization.

3. Cost-efficient Growth

Measure work acquired by the in-plant as it relates to total volume and also by category. The in-plant must aggressively capture more work represented by the high-contribution (savings) categories and outsource work that is only provides a marginal contribution. Some industry providers recommend adding alternative services like scanning, signage, social media and digital asset management. Others suggest becoming a marketing services provider. These approaches may not fit into your operations, but you should aggressively investigate the merits and costs of each potential new product or service, and determine whether it has a place in your in-plant's future.

4. Competitive Advantage

The strongest in-plant is the one that maximizes its unique advantages and business niches to give the parent organization value it can't get at a lesser cost from an alternative source. Aligning the mission of your broader organization with your in-plant's own business mission is absolutely essential. Look for as many matches as you can find. For example, consider using company or purchased data to provide cross-channel marketing or your own dedicated Web site. Create efficient production workflows that give your in-plant an advantage. One area where in-plants have long held the advantage is information security. Keeping data within the in-plant, rather than sending it out to external services providers, translates to increased security of business information.

5. Sales & Marketing Excellence

Too often, in-plant managers have not adequately focused on creating a top-tier sales and marketing program targeting their internal customers. Marketing is about enhancing growth opportunities. This marketing must compete with strategies that hardware vendors, facilities management (FM) firms and print-for-pay services use to attract customers. The challenge must not be taken lightly—and it's especially important given the abundance of low-cost alternative media choices. The key is to use print to complement and reinforce electronic media. We know well that print can reinforce electronic media, driving traffic to Web sites and stimulating lead generation, new business and more. And, of course, electronic media can reinforce the advantages of well-done print.

6. Win Management Support

Regular and very clear communication of financial contributions with comparison to the prior month, quarter and year (with explanation for changes) is non-negotiable in any business today. Market your vision for the in-plant, clearly articulate your value propositions and update your one-to-two page business plan to make that happen. Documenting steady business increases, cost containment, the addition of higher-value products/services and customer success stories will provide management with the information that prevents the inevitable question: "What is our in-plant doing and why?" Or worse: "Do we really need our in-plant?"

Making Your In-Plant a "Buy"

After a reviewing the six criteria and making a rigorous assessment of where you stand, accelerating growth is likely at the top of your "to do" list. Cost reduction and efficiency are important goals and can generate hard savings, while spurring growth. Of course, growth is the most effective way to expand management confidence in the in-plant, win new investment opportunities and achieve deserved recognition. You can build growth by being sure your business plan stresses discovery, strategy, marketing and sales.

Follow the six rules outlined above and you will become your in-plant's chief strategy officer, chief marketing officer and chief sales officer. Take on these roles with commitment and enthusiasm. Making your in-plant financially fit and thriving is essential. You and your in-plant will earn the respect and support necessary for long-term success.

If a savvy investor would rate your current in-plant a "Hold," start acting today to transform it into a "Buy." Your future may well depend on it. 


Jerry Sampson is a 16-year veteran of the U.S. in-plant printing industry. Formerly National Business Development manager for the xpedx Business Imaging Group, he is now Solutions Architect at DCT Consulting Group. For more information and to contact Jerry, visit DCT Consulting Group at dctconsult.com

 

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