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Direct Marketing Article |
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The Hidden Cost in Plain Sight -- Printing
by William Gindlesperger, Chief Executive Officer, e-LYNXX Corporation
Few CEOs worry about the cost of printing marketing brochures. Likewise, few
worry about the cost of printing packaging, labels, direct mail pieces or
any number of other separate print categories. Some may worry about the cost
of printing the annual report because that often is a question asked by a
stockholder who is concerned about the company's bottom line.
What that stockholder should be asking is how much does the company spend
overall for print – everything from advertising flyers to CD-ROMs to proxy
statements to vehicle wraps. It all adds up, but few companies identify
printing as a corporate expense. Printing typically is an expense that is
buried in a host of departmental budgets so it never appears in aggregate as
a bottom line item. If it did, shareholders and maybe many CEOs would be
surprised to learn that the company may be spending as much as 20% of its
operating revenues on print if the company is a heavy marketer and
consumer-driven business. On average, most organizations spend about 3% of
operating revenues on printing.
In today's belt-tightening environment, savvy executives are examining
"hidden" printing costs. They are learning that 25% to 50% can be shaved
from their corporate print spend without disrupting the supply chain and
without risk of quality and service infractions. When this is done,
three-quarters of one point to one and a half points of gross operating
revenues will be added to the bottom line. This will impress stockholders.
But how is the 25% to 50% in print savings realized? That comes first by
getting those in the C-suites engaged and educated about how printing is
bought, whether handled by a procurement office, the marketing department,
the supply chain or all of the above. Print buying is traditionally the
single most out-of-control major buying activity and expenditure of any
organization.
Being decentralized, printing is too often -- and unfortunately -- not
considered strategic by C-suite occupants. In those type organizations, few
at the top seem to be concerned about overall printing costs as long
departmental printing is within budget. Consequently in those type
organizations, every department has its own preferred way of buying print –
including putting in place huge contracts that only a few vendors can
handle, negotiation, designing projects so competition is limited, bidding
and then subjectively choosing the best value (not the lowest responsible
bid), and allowing everyone except procurement professionals to manage print
buying.
Now, however, new technology and procurement practices developed and tested
over the past dozen years are giving executives a better and welcomed
option. No longer are prices driven by negotiations with a few favored
printers who set pricing on their terms. New automated vendor selection (AVS)
technology, technical services and a web-based communications and workflow
system make it possible to automate, streamline the print buying process,
expand the vendor base and lower costs without comprising quality or on-time
delivery.
With an AVS Technology license, organizations are benefitting from
patented competitive procurement methods, best practices, a secure
communications and workflow system and the guidance of print experts. This
eliminates the haphazardness of traditional print procurement methods by
creating a competitive bidding environment. Here is how: Preferred print
suppliers -- all chosen by the buyer – are entered into the AVS computer
database. (It is imperative for each printer to meet quality, timeliness and
other specifications to remain in good standing with the buyer.) Once the
buyer has entered job specifications in the AVS system, the computer matches
the job with only those printers capable of doing the work and only they are
invited to bid. Typically, returned bids offer deep discounts because those
bidding realize that bidders are lowering their prices by 25% to 50% to fill
otherwise non-productive, non-revenue producing scheduling gaps.
Rather than days or weeks of meeting face-to-face with printers, this 21st
Century approach returns results in a matter of minutes. The buyer feels
comfortable with any of the competing printers, because each has been
pre-qualified by rigorous vetting. A low bid is not a concern, because all
know that the winning printer is filling downtime, not cutting corners or
skimping on quality.
Adding to the attractiveness of this new way of buying print is the detail
with which the buyer can control the entire process, from start to finish.
The robust communications and workflow system begins working from the time
the first printer is entered into the buyer's supplier database, and the
first job specifications are written, to when changes are made, and reports
are provided showing the exact amount of savings.
Who makes changes, who reviews and who approves are all determined by the
buyer. The buyer also decides who can see what and when. To all with access,
everything is transparent and easy to understand. This continues through
production to packaging, delivery and billing. An indelible and auditable
task-by-task record of each project also is established for future
reference.
Organizations in the United States and Canada are realizing an average 42%
cost savings on procured print comparing the historical cost of projects
prior to the usage of AVS Technology with the pricing obtained thereafter.
When all the print bills are tallied at the end of the fiscal year, everyone
wants to be on board when credit is handed out for saving the organization
42% on printing and adding 1.2% of gross operating revenues to the bottom
line. Leaders in the parcel delivery, electric utility, hospital,
construction materials, heavy equipment manufacturing, grocery, financial,
higher education and association sectors are now reaping these rewards by
embracing change and licensing AVS Technology.
About the Author:
William Gindlesperger is a nationally recognized entrepreneur, inventor,
author and consultant. He founded ABC Advisors and its successor, e-LYNXX
Corporation, in 1975. Profit, non-profit and government organizations alike
have benefited from his strategic insight and innovation that result in
measured and substantial cost reduction.
www.e-LYNXX.com –
888-876-5432
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