A New In-plant Challenge Emerges

Scrutiny of in-plants is on the rise. Smart managers are preparing before they are challenged. Here's how to collect the data you'll need to win this battle.

HowieFentonLast year after Graph Expo I wrote an article for this magazine in which I noted that “the state of the in-plant printing market is healthier than it has been in the last few years—not because of any projected growth in in-plants, but because in-plant managers are reporting that they are under slightly less scrutiny.”

In the last year, however, I’ve seen a disturbing trend in which in-plants that were performing well and did not appear to be under scrutiny were suddenly surprised to hear that they were closing. They were achieving their goals; some reported huge savings, and others talked about how happy their customers were.

There was a university in-plant in the Northeast that was saving its organization over $200,000 a year, a transactional printer in the Midwest that had recently consolidated printing facilities, saving the parent organization several million dollars a year, and a school district printing office in the South that had flourished by excelling at insourcing. All were now being significantly downsized.

But perhaps the worst part of this story is that many of these in-plants never saw it coming. They were shocked and surprised when they were called into their bosses’ offices and told to prepare RFPs for outsourcing. In other words, they were blindsided.

Sinister Misdirection

I don’t know about you, but in my opinion that is sinister. Their bosses never told them they were dissatisfied and were considering closing the in-plants. In some cases, they were even praised for their accomplishments. It’s almost like the misdirection part of a magic trick when you look the wrong way only to be surprised at the end. In this case, the managers were lured into a false sense of security and distracted from preparing a case proving their value. They looked the wrong way until the day when they were told to prepare for outsourcing.

The irony is that no one thinks this can happen to them. They assume that these other in-plants were clearly doing something wrong and if they had any problems they would have heard about them. It’s surprising to find that talking about these case histories in presentations is not motivating because most of the in-plant managers don’t believe it is a problem that will affect them. Several times this year, managers have walked up to me and said, “That was interesting, but I don’t think that’s going to happen in our organization. We’ve been around for long time and have a really good reputation.” I’ve tried to explain that this is exactly the same situation that occurred with these other in-plants, which resulted in them being blindsided.

Subtle Hints

Sometimes when talking to these administrators, there are hints of what they are thinking about. One question I find effective and revealing of someone’s true feelings and possible predisposition is to ask, “What do you think are the strengths and weaknesses of offering in-plant services?”

Of course, it’s not foolproof but I find that when the first responses focus on happy loyal customers, ability to break even or make some money, conversations about being strategically aligned, or discussions of speed and convenience, I walk away thinking that the in-plant is not under scrutiny.

However, when the first thing out of someone’s mouth are comments about declining volumes of work and complaints about pricing, on-time delivery and losing money, my suspicions are triggered.

What can be even more surprising to in-plant managers who thought they were doing well, is when they ask their bosses what is their motivation to close, how quickly the management will rattle off reasons, supporting their arguments with evidence, typically focusing on financial performance, customer satisfaction or pricing.

But perhaps the most common argument, and the most difficult to address, is the question about core competencies. In other words, the inevitable question: “Is printing or mailing our core competency?” The obvious issue for the in-plant community is how you can battle this complaint.

In my opinion, those who are most likely to win are those who are prepared for battle. In The Art of War, written in China 2,500 years ago, Sun Tzu says, “The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand.” So let’s go back into our temple and prepare for this battle with logical arguments and substantial data.

Preparing For Battle

To prepare for this battle, you have to understand the attack strategy. A good example comes from one of the top consulting companies outside our industry, Accenture. In its white paper, “Core Competency 2.0: The Case for Outsourcing Supply Chain Management,” Accenture offered the following questions as a guide to deciding whether to outsource:

• Is this your core competency?

• Is this strategically aligned with your mission?

• Who will improve the functionality the most in the future?

• What is the risk?

In my experience, the first two points are most often discussed, and the argument that is most difficult to address focuses on the question, “Are printing and mailing services part of our core competency?”

At the IPMA conference this year, I made a presentation about benchmarking operational and financial performance. The underlying theme was to use measurements and benchmarks to prove that printing and mail services were your core competencies. In other words,

Howie Fenton is the Vice President of Consulting Services for IMG. For 25 years, he has focused on benchmarking operational and financial performance for enterprise and commercial printers. For more information, email hfenton@imgresults.com

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