Expertise and Specialization Needed for Cost Effective Sourcing and Supply Chain Management

This article, the fourth in a series, is designed to provide you with an overview of the issues and costs associated with enterprise document management. Parts one, two and three are available for your review.

Each year, U.S. businesses—financial services providers included—spend an estimated $100 billion on annual reports, brochures, promotional sheets, direct mail and a wide array of other marketing collateral which are externally-procured from traditional offset printers, high-end digital printers and specialty printers. Analysts report that commercial printing represents the largest portion of a business’ print spending. Yet, most companies have little or no controls in place to manage it.

Print buying responsibility is often dispersed among many departments and spending is spread across a multitude of suppliers. Buyers typically focus on the cost per piece without evaluating the cost per marketing response or the total lifecycle cost of the printed document. And the process is frequently driven by end users’ immediate needs with little regard for corporate standards, alternative print technologies or effective sourcing and supply chain management.

Rethinking Document Output
Virtually all financial services organizations rely on externally-printed materials as the primary medium for important business communications directed at their customers and prospects like marketing brochures and promotional materials.  By engaging a broad array of graphic and printing services, these documents have longer turnaround times, generally days or weeks, and range from moderate to very high volumes. 

Externally-sourced printing has historically been provided by traditional offset lithographers, but in recent years has evolved to include digital printing.  Organizations often work with external printers because the nature of their documents require sophisticated setup, high-quality color, specialty papers or customized finishing.  Building this capability in-house is expensive and is dependent on specialized staffing and expertise. 

However, by developing an integrated approach to print supply chain management, the opportunity exists to leverage technology, create a competitive supplier marketplace and provide the expertise, measurements and accountability to improve customer service, simplify supplier management, exert control over spending and achieve your corporate goals.

Real and Measurable Cost Reductions
The procurement of commercial print is a complex process that requires significant expertise and specialization. In addition, most organizations lack visibility, and therefore, a complete understanding of their total print spend, and often focus on only one part of the process—per unit pricing for printed materials—foregoing opportunities for cost containment and process improvement that exist across the entire print-related supply chain.

Process improvement efforts focused on external printing not only ensure a competitive price, but also leverage best-in-class processes and technology.  In addition, by maintaining control over “by-pass” or rogue printing which results from users working outside the centralized print supply chain function, substantial cost savings can be had. 

Experience has shown that organizations achieve hard dollar savings of 42% on average — sometimes as much as 72% — by optimizing the process of externally-procured printing. Typically, half of that savings is derived from improved sourcing. The remaining savings is achieved through supply chain excellence.

Focus
With the output of U.S. commercial printing forecast to grow at an annual compounded rate of 7.1 percent between 2006 and 2009, financial services providers should examine the following in order to optimize the print supply chain within their organization and deliver substantial cost savings: 

• Whether focus is placed on the cost of printing and finishing, ignoring the larger expenses associated with the business document lifecycle
• Effective ways to ensure compliance within the enterprise and among the community of print suppliers
• Ways to leverage aggregated spend for print, paper, postage, freight & warehousing
• Creating a competitive market for each job

Because commercial printing makes up such a large percentage of a financial institution’s spend, often times companies can fund process-reengineering initiatives in the two previously covered environments (Desktop Printing and Centralized Production Printing), by the savings generated with well-managed external print sourcing.

Next Insights:
The next issue of Insights will give you a closer look at digital vs. offset printing, and when each method makes the most sense for your organization.  However, if you want immediate information about gaining a comprehensive view of your enterprise, contact us now.