Changing the In-plant Perspective: Part Two
Part two of this article explains how your in-plant can create a more accurate estimate of its financial savings, based upon job types.January 2011 By Greg Cholmondeley
LAST MONTH, we explored the value of elevating our in-plant perspectives from a production level to a corporate or institutional level. We discussed the benefits of showing the financial savings an in-plant brings to the organization and how to craft strategic value statements. This month's article focuses on an efficient way to accomplish this.
Financial savings can be calculated in a variety of ways. The most accurate is to get a quote for each and every job. The obvious drawback to this method is that it is incredibly labor intensive and probably not worth the effort.
Another avenue is to get quotes on a sampling of the most common jobs and calculate a percentage savings versus the cost of going outside. Unfortunately, a single savings value may not be sufficient to satisfy a discerning CFO. Estimating that jobs printed in-house cost 20 percent less, on average, than those printed outside is a very broad statement. Most likely there are different savings for different types of jobs, which makes a single savings estimate insufficient.
Here is a third approach that creates a more accurate estimate, based upon job types:
Step 1: Define Standard Job Types
Start by defining standard job types based upon the work you do. The goal is to keep this list as short as possible, while separating job types that are likely to have different savings percentages. With a little thought, you should be able to create standard job list with 50 to 100 jobs such as:
• Black-and-white print
• Office-quality color print
• Managed quality color unfinished print
• Managed quality color booklet
• Managed quality color perfect bound
• Wide-format color
• DVD duplication
Step 2: Map Each Incoming Job to a Standard Job Type
Take each job that comes into your shop and map it to the standard job type that most accurately matches it. Be sure to include the client department and the internal chargeback price as well.
Step 3: Calculate the Savings Percentages
At the end of a month, quarter or year, compile a list of all the jobs you produced, subtotaling by standard job type. (For example, 200 black-and-white print jobs, 89 managed quality color booklet jobs, etc.) Create sample jobs for the 10 most common jobs, and get outside quotes for them. Be careful to completely specify the sample jobs including quality, paper, delivery time, and so forth. Compare these quotes to what you would charge for the exact same job to generate a unique percentage of how much more (or less) each standard job type would cost going outside. Use what you've learned to create estimated percentages for the less common jobs.