By Andrew K. Reese
Print procurement remains one of the most vexing categories for enterprises to get under control. On the supply side, the size of the potential supply base is enormous, with the trade group Printing Industries of America estimating that more than 36,000 different commercial printing facilities serve the $170 billion U.S. market, each with highly specialized capabilities and limited capacity at any given moment.
On the demand side, the job of reining in print procurement is all the more complex because, as technology research firm IDC writes in its executive brief "Understanding Your Options for Optimized Print Procurement," "Organizational print needs are inherently hybrid, spanning the very strategic, such as sales collateral and product literature, and the non-core, such as employee handbooks and internal company documentation."
As a result of this dynamic, responsibility for print buying is rarely centralized within organizations, according to Jeff Piluso, a principal with consulting firm A.T. Kearney. "We go into many clients and find the print buy scattered across many different parts of the business," says Piluso, who manages large transformation projects in procurement and supply chain for the consultancy's clients. Frequently, Piluso notes, the marketing function drives supplier selection, with Procurement serving in a more transactional role. In fact, research from the Center for Advanced Purchasing Studies (CAPS Research) suggests that fewer than half of companies have formal print procurement programs in place.
The highly specific technical nature of each print buy also makes it a challenge for procurement staff to properly match the organization's requirements for any given job to the most suited supplier, adds Anshu Prasad, a vice president with A.T. Kearney Procurement & Analytical Solution. Print, Prasad says, is a "combinatorially complex" category. "Each provider has its own unique set of capabilities and strengths that they want to play to. All the combinations of what each provider can bring to the table gives you a whole bunch of apples and oranges and pears," he says.
The print market also has traditionally been very relationship driven, adds Eric Belcher, CEO of InnerWorkings, the Chicago-based provider of managed print and promotional procurement solutions to corporate clients across a range of industries. "There are still long-term relationships around service and delivery schedules and trust that have been built up between buyers and the printers that they might have been working with for years," Belcher says. These relationships can make it difficult for Procurement to consolidate or switch suppliers, as the functional owners of the spend might view the incumbent as a "trusted partner" that can deliver against tight deadlines or make last-minute changes to an order.
William Gindlesperger, chairman and CEO of e-LYNXX Corporation, which uses its patented procurement method (dubbed "The Gindlesperger Method") to help companies reduce their print spend, points out that the deep relationships in the print industry can be a particular challenge in difficult economic times. "Print suppliers are dying like flies," Gindlesperger writes in "Suppliers. Here Today. Gone Tomorrow." "This leaves relationship buyers in the lurch, hanging out to dry."
Solutions for Print Procurement
Companies have various options for tapping outside expertise to address print procurement's challenges. A.T. Kearney, for example, will assist companies by introducing the procurement organization to analytical tools that can allow print buyers to better match their requirements to supplier capabilities. "Part of our approach is to embrace the complexity," explains Prasad. "You drive your decisions based on your business constraints and objectives, but you don't strip away the detail and the inherent complexity, which could hurt you in the course of the total cost of ownership analysis."
Greg Portell, a principal at A.T. Kearney who has been involved with print procurement since the dot.com era of the 1990s, emphasizes that the consultancy's goal is to leave a client in a position to manage its print spend on its own through the transfer of solutions and skills. "We're building these tools and making these changes so that our clients can maintain control of the execution," Portell says. He adds that part of A.T. Kearney's role is facilitating cross-functional discussions within a client. The consultants can provide transparency into the tradeoffs that Procurement and Marketing have to make to meet the overall business requirements.
e-LYNXX, through its American Print Management service offering, provides print domain expertise to help a client's procurement staff better manage the company's print spend, along with its patented business method aimed at allowing the company's suppliers to compete based on their production status. e-LYNXX also provides a Web-based management system tool to provide visibility into, and greater control over, the print spend.
Similarly, InnerWorkings will place a print category expert onsite at a client to facilitate the purchasing of print and print-related materials. Through its technology platform, dubbed PPM4, InnerWorkings offers a network of about 7,000 suppliers across the globe, with detailed equipment specifications so that they know what the suppliers can provide, quality ratings on the individual suppliers, as well as historical pricing data. That helps the InnerWorkings staff ensure that they can match their clients' needs with just the right supplier to meet those requirements.
Other companies offering a combination of procurement solutions and print industry expertise include Cirqit.com and NewlineNoosh (formerly Noosh). ICG Commerce, the procurement services provider, offers category expertise around print and also will help its clients source the best technology to support their print procurement efforts.
The good news is that a category as loosely controlled and widely dispersed as print offers significant potential for short-term savings. ICG Commerce asserts that its average savings on print procurement range from 12 percent to 35 percent, while e-LYNXX pledges to "reduce procured print costs by no less than 25 percent or you pay nothing." And InnerWorkings reports that it has helped its client McKesson Patient Relationship Solutions, a division of McKesson Corporation, "generate realizable and meaningful efficiencies for McKesson Patient Relationship Solutions in excess of 30 percent."
One key success factor in ensuring those sorts of savings is to view the supply base as a partner, print industry experts say. InnerWorkings' Belcher asserts that suppliers can benefit from participating in print procurement initiatives because they are more likely to win more business that is better suited to their capabilities. And A.T. Kearney's Prasad notes that the supply base has a keen understanding of the costs and efficiencies in print. "Companies that have the capability and sophistication and leverage to share information with suppliers and collaborate to reach a solution that is a win-win for both parties can tap into all the expertise that exists within the suppliers," he says.