Six Steps To Make Your In-plant Financially Fit
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.