Answering the Outsourcing Question
A lot of the people I work with are confused about how to respond to “let’s close the print shop and save a bundle.”
There are a lot of excuses put forward to justify closing an in-plant. One frequently used excuse is the cost of new equipment and the organization’s inability or unwillingness to modernize. Investing in printing equipment drains resources that would otherwise be invested in “core business processes,” or so the argument goes.
The vendors, and the print media to some extent, have been telling us that we must have the newest, latest, most technologically advanced equipment to be competitive. Shortsighted upper-level managers take that to mean the in-plant can’t be the low-cost supplier unless the organization makes a huge investment in equipment—and that’s not likely to happen, especially in today’s economy.
So they shut down the in-plant and expect to see large reductions in print spending. Too bad it’s not that easy.
The problem is, it’s not all about the equipment. Up-to-date equipment is important, but it’s not the only thing. Successful printing companies are not the ones that have been able to invest in four- to eight-color presses to “stay ahead of the competition.” Judging from the number of e-mails I get offering to sell “like-new” five- and six-color presses for bargain rates, a lot of commercial shops with big iron have closed.
Successful printing companies are those that get a handle on their costs, keep quality and productivity high, and provide knock-your-socks-off customer service. Remember that a lot of high quality four-color work is still being produced on old two-color presses. The two-color may take twice as long to run a job, but it’s paid for, and the hourly rate is probably more than 50 percent lower than the rate of a $1.5 million four-color press. If these guys plan their work, they can be the low-cost producer in a lot of situations. The advantage that the big presses do offer is the ability to do work faster. But sometimes taking a little longer to do a job is OK if it's reflected in lower cost.
If the shop is self supporting and charges for its services, eliminating it does not reduce the organization’s print spend. Why? Because printing is typically budgeted at the department level. The departments are cutting their budgets, to be sure, but they still have funds for print. The departments that depend on print to do their jobs will continue to need print, and in the absence of an in-plant or a skilled print buyer, print users will resort to higher-cost copiers or desktop printers, or they’ll be forced to navigate the print-buying maze on their own, and the organization will ultimately pay more for printing.
If an organization does not have the skills or competencies to manage an internal print operation, then it doesn't have the skills and competencies to outsource printing either, and that is especially true if everyone that needs print becomes a print buyer. Outsourcing requires not only print-management skills, but also skills in contract development and management.
Waiting until management asks the question "Should we outsource printing?” is a big mistake. Successful in-plant managers are the ones that understand that you can’t spend your way to success. The only way to be successful as an in-plant operator is to spend every day trying to find ways to contribute to the organization.
Remember: if you wait until someone asks the outsourcing question, you probably waited too long.