Fragmented Document and Label Part Management Adds Cost,
Hampers Productivity for Manufacturers

This article, the first in a series of four, is designed to provide you with an overview of the issues and costs associated with enterprise document and label part management.  Subsequent articles will focus on specific print environments and opportunities for improvement.

   

For manufacturers, documents and label parts are at the heart of every process.  In production, that document may take the form of a product warning label or an instructional manual that is essential component in the bill of materials.  In the front office, there are countless documents that support accounting, sales and marketing, customer service, human resources and information technology.  No matter the industry, documents are essential to managing every aspect of a business.

Despite their importance, however, documents and labels can be an expensive, wasteful drain on the time and resources of an organization. According to industry analyst InfoTrends, the average company spends 6 percent of its annual revenues on the hard costs of document production alone. Moreover, for every dollar spent on printing, ten more dollars are spent on managing those documents.

Fragmented Structure, Disparate Activities
Most manufacturers lack a complete understanding of their total investment in creating, printing and managing documents.  They tend to view document management in a highly fragmented way, often only within a specific department or function, rather than looking at the process company-wide.  As a result, opportunities for cost containment and process improvement are frequently overlooked.

This is because printing occurs in several environments, each with its own discrete management and reporting structure. Production label parts and documents are typically sourced by materials management since they are critical components of the product and the bill of materials; however, both manufacturing engineering and marketing play pivotal roles in material and branding specifications.

Desktop printing is generally under the auspices of the computer network group, while copiers and faxes have traditionally been the responsibility of administrative services or purchasing departments.  Centralized reprographics, more commonly known as the print shop or copy center, may be a part of mail or graphics services, whereas data center printing remains staunchly part of the information technology organization.  The marketing department most often contracts with outside providers for high-end printing, while various individuals and work groups procure their ad hoc print jobs from local copy shops.

With this disconnected document activity, most companies do not have a clear view of their total document-related expenses and they can’t be sure whether employees’ printing habits are in the best interest of the organization as a whole. In fact, little if any attention is paid to how, where and why users engage printing resources. More cost-effective and efficient printing methods may indeed exist, but they are overlooked because of lack of information, force of habit or urgency of producing an out-of-stock document. 

Increased Regulation, Heightened Risks
Regulatory compliance has added to the cost and complexity of document and label part management. Changing regulations and industry standards challenge manufacturers to keep processes, products and suppliers in their various plants compliant.  With lawsuits and penalties on the rise, how a company’s supporting documents are managed has a direct influence on corporate risk. Organizations with a strategic view of documents are better equipped to comply with requirements and mitigate their risks.

Globalization Magnifies Challenges
As manufacturers move production facilities to other countries and explore new export markets, they face additional product safety and environmental mandates as well as language requirements that impact the way they do business.  Multinational firms must ensure that plants and partners throughout their supply chains are meeting the multitude of governmental regulations.  At the same time, these manufacturers need to be able to transfer knowledge and information throughout their global networks. This capability is essential to product and production consistency, and essential to assuring brand integrity, manufacturing efficiencies and profitable growth.

A High Cost for Flawed Processes
Clearly, printing expense is only part of the cost equation. Inefficiencies translate to lost productivity, missed shipments and customer dissatisfaction.  If documents and the processes they support are flawed, the overall performance of the enterprise is greatly impacted.  By gaining a holistic view of document and label part management and applying Lean Manufacturing and Six Sigma methodologies, manufacturers can streamline processes and reduce costs across the entire document-related life cycle and all associated supply chains.

The Total Cost of Ownership
When companies look at the documents they produce as a whole, they are destined to find undiscovered opportunities for savings.  Research indicates that more than 30 billion documents are used each year in the United States and the total cost of producing and managing them is estimated to reach as much as 15 percent of annual corporate revenue.  That is about $1.2 billion annually for an average Fortune 500 company. 

By closely examining the entire enterprise document supply chain, including documents produced internally as well as those procured externally, organizations find that much of their supply chain is more costly than necessary and the resulting expense is significantly higher than anticipated.  According to InfoTrends, companies that have implemented an enterprise approach to document management have decreased maverick spending by an average of 51 percent, reduced inventory expense between 25 and 50 percent, and decreased the price of goods paid by as much as 10 percent.

Improving Business Outcomes
Understanding an organization’s overall document and label management expense is a challenge.  Nonetheless, with a comprehensive view of the enterprise, manufacturers can develop meaningful document management strategies to reduce costs, improve processes and equip themselves to meet the challenges posed by increased competition, regulation and globalization.

Next Insight: Production Documents and Label Parts
The next issue of Insight will give you a closer look at the challenges related to managing production documents and label parts, and offer best practices for improving processes and reducing expenses.  However, if you would like more immediate information about gaining a comprehensive view of your enterprise practices and expenses, contact us now.