By William Gindlesperger
Think about $150 billion! That is what organizations spend on printing in the United States each year. If 25 percent to 45 percent of that could be saved annually, that would be $37.5 billion to $67.5 billion that could be redirected for other purposes, such as new jobs, new facilities, employee health care, product development, debt reduction, etc. — even good old fashioned profit.
Without a change in print procurement methodologies and management tools, this level of print procurement cost reduction is simply not attainable. Yet U.S. patented procurement procedures are available to make 25 percent to 45 percent savings a reality without compromising quality or delivery requirements. The patented methodology strengthens the procurement process by prequalifying the buyer's print suppliers, matching suppliers to only jobs they can perform and creating a competitive bidding environment. Every detail from design to delivery is tracked and documented, and 100 percent transparency is provided. Embracing this approach should be a New Year's resolution for every C-suite occupant.
As a matter of background, let's define print. Often the only items to be considered print are business cards, stationery and copies. Not so, as any item whereupon ink is applied to its substrate is print, such as when ink is applied to paper or to a CD ROM. Examples of print include direct mail, brochures, catalogues, financial documents, annual reports, advertising circulars, point-of-purchase displays, labels and marketing materials. Print also includes creative services, customized packaging, premiums or ad specialties, fulfillment services and all other items where information is placed on a substrate.
So what are excess print expenditures costing you? Print usage varies widely from organization to organization, but on average print spend accounts for about 3 percent of operating revenues. Doctors, lawyers and other licensed professionals typically spend less than 1 percent. Others, like those who depend heavily on direct mail or those in the food processing or packaging businesses, spend 5 percent to 20 percent (or more) of their operating revenues on print.
Because the savings are there to be had, savvy executives are analyzing their print spends like never before, centralizing print procurement policy making and identifying print as a line item on profit and loss statements. They also are applying the following 10 best practices to achieve maximum new methodology benefits:
1. Creating a pre-qualified supplier pool in which all suppliers are uniformly and objectively evaluated. This allows the buyer to handpick suppliers and limit the pool to just those with which the buyer has done business. Other suppliers can be added, but the key is objectively qualifying each supplier in the pool as integral to quality control. You only want suppliers bidding on your projects that have proven that they can deliver quality work on time.
2. Creating thorough bid specifications with full details before an invitation for bid is sent to prequalified suppliers in the supplier pool. It is essential for specifications to be complete prior to final award of the job so expensive changes are avoided later. This allows suppliers to price accurately and to best determine when there will be a production opening for doing the job.
3. Creating a fair bidding environment in which the computer matches project specifications to supplier attributes to determine objectively which prequalified suppliers are capable of doing the work. With detailed project and supplier data, the computer can automatically match each project available for bid with only those suppliers with matching capabilities. This levels the playing field.
4. Creating efficiencies to save time and money. Since critical data already are in the computer, the buyer does not have to "reinvent the wheel" each time a project is put out for bid.
5. Creating mutual acceptance of the process, whereby every supplier in the pool knows that it can bid low on any project without setting future expectations and new price levels. Suppliers will reduce their prices when they have open production time provided they are not expected to bid the same low price even when they are busy.
6. Calling for and awarding bids in a timely manner so the winning supplier will hold a production slot for the project, schedule staff, prepare equipment, order materials and make other preparations required to do the work. Suppliers learn that performance is required to receive opportunities, while price is the criteria to win projects.
7. Establishing full transparency by sending bid results to all suppliers that submitted a bid. This not only creates greater credibility for the buyer among suppliers, it promotes improved competition.
8. Monitoring every step of the workflow process to ensure clear communications, attention to every detail and a deliverable end product. This must begin with the conceptualization of the project and continue through edits, changes, reporting, production, packaging and delivery.
9. Ensuring that work is performed per specifications and on time. By establishing full accountability, the buyer is protected against delays that could cause artificial pricing hedges in future bids from the winning supplier.
10. Completing the project with accurate invoicing. By making sure the invoice is complete, correct, agreed upon and reconciled before being sent to accounts receivable, extra charges are not overlooked and erroneously paid.
A question that is sometimes asked is how this process benefits suppliers if they are being cut-throat competitive in order to fill downtime. The answer is that suppliers increase their own bottom line profitability by 10 percent to 15 percent of revenue when participating in this type environment. Remember, the alternative is to allow downtime, resulting in no income. Because the buyer is inviting only trusted suppliers to compete for the print work, it is a win-win for all involved. ¦
About the Author: William Gindlesperger is chairman and CEO of e-LYNXX Corporation. He is a nationally recognized entrepreneur, inventor, author and consultant in print and procurement. He invented the methodology that optimizes cost reduction in the procurement of specification-defined goods and services, and he has been granted two separate business method patents by the U. S. Patent Office, first for the competitive procurement of print and then for the competitive procurement of all specification-defined goods and services. More information on e-LYNXX Corporation at www.e-lynxx.com.
By William Gindlesperger