Marketings need to track print procurement costs

I was reading a recent article on whattheythink.com by Brian Wolfenden titled: The Future of Print in Marketing Communications. Brian raises a great point in the article; "Today's marketing professionals...They have to make sure that the campaign delivers tangible and quantifiable results quickly. And these results must show a return on investment for the budget they spend on the campaign." Brian goes on in the next paragraph; "As service providers, this offers an opportunity to partner with the marketer to help them produce effective marketing campaigns that have a fresh approach that stresses targeted, customer-centric communications, measurable results and concrete return on investment." These are both excellent points that point back to "Return on Investment."

The key to all of this is knowing what your spend is in the first place and knowing whether or not your getting the best return on that investment. Most companies are still "shooting from the hip" when it comes to tracking spend or evaluating supplier effectiveness. They audit their purchase orders for cost or survey their buyers or buyers of others companies to determine quality delivery from suppliers. All valid tools but time consuming. Tools like Cross-Wind are designed specifically to provide the information to help marketing departments in determining Return on Investment by tracking costs from purchase orders and invoices, and evaluating supplier quality, turnaround, and responsiveness. Getting the best value starts in the estimating phase not in the purchasing phase of a project. In addition, all of these numbers need to come together fast and effectively with your other media spend numbers. Measureable Results...not just in campaign effectiveness but in spend. Am I getting the best quality, delivery, service, and price. You need to have a set of tools in your arsenal that help you to make the best decision regarding return on investment and to do it effectively. It is not a single tool but a set of tools that help you to track the information specific to their areas and then output the data in an effective manner to provide you with a picture of the whole not just a segment. Are you tracking your spend?

The Importance of Supplier Equipment Lists

Patrick Henry blogged a great article recently on Print CEO about the importance of equipment lists to print buyers. I want to expound on this a bit in that not only is it important but as much information as you can provide about your services and capabilities the better. Our customers find that one of the most important pieces in our system is the ability for the supplier to add their equipment to a master list and the ability for the buyer to sort and look for suppliers with certain capabilities. We give the buyers and suppliers a set of profile tools that give them the flexibility to look for or provide information about Equipment, Products, Users, Quality Managers or Key contacts, and any additional profile information the supplier would like to provide to arm the buyer with as much information about their company as possible. Cross-Wind also allows the buying organization to categorize suppliers based on Minority or Women owned businesses and add regions to their supplier base to allow buyers to look for suppliers in certain regions of the country. Those regions can also be defined by the buying organization to tailor to their specific needs. We are also working with our customers to make the supplier profiles even more interactive to give the most information possible to the buyers including current supplier scoring as determined by the buying organization. Equipment lists are extremely important but so is as much information as a supplier can provide to the buyer to help them make a more informed buying decision. Specialized Procurement Platforms (SSP's) should not be about quoting and buying but about informing the buyer.

Fuel prices impacting print spend?

Appended:
I apparently wrote this before the DOE announced the National average of $3.39 per gallon yesterday afternoon so the news gets better and better! The message is still the same just even more urgent than last week.

According to the Department of Energy's Energy Information Administration, Fuel prices are up 32% over this time last year. From an April 2007 average price of $2.36 per gallon to $3.11 per gallon this week. Diesel Prices currently average $3.95 per gallon up 111 cents since this time last year. Cost of shipping is definitely on the rise, paper is heavy and costly to ship, both to the printer and to the consumer. At the same time personal income has only rose 0.9% in the same period. Companies are taking a hard look at how to cut costs and anything involving freight charges will be scrutinized heavily.

Now is the time to be evaluating print production costs and focus heavily on freight charges.
What is freight costing?
Can I get a better freight cost at the expense of production costs?
Am I better served producing a job closer to the delivery destination?

If you don't have strategic suppliers providing you with cost effective print; YOU ARE LOSING MONEY. No question about it at this point. I would also heavily consider which jobs can be split to make production closer to destination so if you are split shipping consider split production. Ask your suppliers where they are producing if they have multiple facilities and challenge them if they are producing in a plant further from the destination than another plant. Now is not the time to let your suppliers dictate. I believe that the breaking point is very close. The word "Recession" is getting used daily on the news. I heard from a colleague today that his company is now on a hiring freeze. Companies are looking for cost effective ways to measure and source print spend consider looking at sourcing solutions that can help you evaluate based on these and other criteria.

Cross-Wind® Project List New Release

Good Morning,
The latest Cross-Wind enhancement release includes major changes to the Project List page. The Project List page now includes Drag and Drop capabilities within the project list and allows access to project information by highlighting a specific project. Now while you may be thinking whats the big deal? Well this is all being done within a web based application and without going through page refreshes. The is a HUGE deal!. In addition, you can view which vendors have responded to your project without going to the RFQ page. These changes will impact the way you view your projects and will make management easier. Also, included is the ability to view RFQ's that are coming due and to see which projects have supplier responses. All of this functionality will be available on Monday.

Evaluating Supplier Responsiveness

Supplier Responsiveness is one of the key issues that management teams are always concerned with. "How do I know many suppliers are responding in a timely manner to my requests?" Some might ask "Why should I even be concerned with this?" If you are in an outsourcing environment where you have customers relying on you to provide responses to a request in a timely manner then this becomes extremely important. Even if your customer is an internal customer likely their projects are time sensitive and if your suppliers are not submitting responses in a timely fashion then how responsive can you be to your customers? Well I often hear buyers say; "I have a pretty good idea of market price so I will just submit my own estimated cost with fudge factor built in." EEGGAADDSS!!! Your suppliers are the cost experts, they are the ones that should be supplying you with pricing not by educated guess.

The ability to measure supplier responsiveness is crucial in being able to evaluate your suppliers. Tools should be available to tell you how long it takes a supplier, from the time the request is submitted to the time the request is responded too. On a per request basis and overall for a time period. You should be reporting on the following areas:
Supplier, Quote ID, Time Sent, Time Opened, Time Submitted or Time Declined.
Then from a time range you should be able to evaluate;
Number of Quotes Submitted, Number Responded Too, Percentage of Responded, Number Declined, Percentage of Declined, Average Response Time, Average Decline Time.

This will give the buyer the ability to evaluate supplier responsiveness on an on-going basis to keep suppliers responding in a timely manner. Now if you do not actually DO anything with this information then what good is the information.

What to do with the information -
Once you have begun collecting this information you should make this information accessible to your suppliers instantaneously so a supplier can review at any time and be able to adjust their processes to keep up with your response standards. OH you don't have any response standards? Well take some time (3 to 6 months) to look at your suppliers response time overall and average out based on what ALL of your suppliers response times are and establish a set of criteria to meet your companies needs. There is not a given set of times or national standards for responsiveness, nor should there be. These standards should be set by each company to be able to meet their needs. Suppliers should be informed of your companies expectations and should decide whether they can meet those expectations on a regular basis. If they do not feel they can meet YOUR needs then you should consider whether they are the right supplier choice for your company. I can almost guarantee with a high degree of confidence, that if your expectations are reasonable, that most suppliers can meet those expectations that you establish and if they won't there is a supplier in the industry that will! Suppliers are willing to meet your needs as long as they have a way to be able to measure themselves and to be able to communicate with you when they cannot.
Once your criteria is established and you have communicated that criteria with your suppliers you MUST measure and evaluate them and be willing to call suppliers on the carpet when they do not meet your standards. In other words, some suppliers may pay you lip service when you communicate that criteria so you need to be prepared to implement any penalties that were agreed upon. The first time you issue penalties will likely be the last time you have to issue penalties. Suppliers learn quickly that if they agreed up front and you show that you are serious, they will comply with your standards. If they honestly have looked at their processes and cannot comply they will tell you and likely pull themselves out of the competition. Suppliers are in business to make money just like your company so if something is costing them they would rather walk away than to constantly flush money down a hole.

Is Data Reporting important to Print Buyers?

Is reporting important to Print Buyers?
In my humble opinion it is the MOST important aspect of any Print Buyers job. Print Buyers are analyst's they are hired to be able to evaluate suppliers from a wide range of areas; quality, turn-around, equipment capability, etc. However at the end of a job the buyer needs to be able to track costs from every aspect possible. I will try to provide a base overview of some of the things my customers say are important to them from a reporting perspective.

One of the very first things most organizations want to know is Tracking Purchases. Organizations want to be able to tell how many of any given item was purchased in a week, month, or year. This includes many aspects such as How many brochures did we order? How many weretri-fold, c-fold, etc? What was the total cost of all Brochures? Of tri -fold, c-fold, etc? Systems must be flexible enough to capture basic information, Product, Attribute, Quantity, Cost. Or the templates must be granular enough to capture some of this information such as;Tri -Fold brochure, C-Fold brochure, or Miscellaneous brochure, for those items that may not be high quantity purchases or do not fit within regular standards. Either way is appropriate it is based on what level of granularity and or how easy you want your templates to be when specifying. This type of report becomes probably the most important when you are considering establishment of single source providers for individual product purchases or when trying to get a handle on what, when, and how much you are purchasing. A lot of potential customers tell me their single most point of frustration is their lack of knowledge about WHAT they are purchasing! Before you say it...yes, you can go back to your accounting system and trackPO's back to suppliers and likely they are even coded within your accounting system to allow you to see they where budgeted against your print budget. But even this is flawed as I just had a discussion with a customer that their departments would use their print budget code to make purchases for other things such as; shop rags, or for other NON-PRINT related items. So when the president of the company says; "How much did we spend on print?" it is not the easiest question to answer. One organization (actually several that I know of) have had to resort to hiring an outside consulting firm to help them get a grasp on their actual print spend. The sad part of this is that by implementing a system to track print procurement you could easily get an accurate count of your spend down to what was purchased. One customer was able to identify that they were spending $100 million per year on print but it took them 6 months and several thousands of dollars to find that out, when with a system they could have simply clicked a few buttons and had the most up to date information available at their fingertips.

So why should I be so concerned with what I am spending in print?
Because likely your companies CORE business is not print procurement. It is more likely things like manufacturing or service related industry. So when budget crunch comes, a couple of the most likely areas that management will look to cut will be the marketing department where likely all of the print purchases come from. So indirectly (or quite directly) print procurement is the likely area to be cut without any solid information as to whether that is the best choice or not. If a buyer can show and provide accurate and solid information to the company president as to what is being spent, it is easier for them to weigh the Return On Investment and likely they will look to cut costs in other areas of the company if you can show the value that print is providing to the organization. Presidents are going to cut areas that cannot show or even have a handle on the spend. Reporting provides the president with not only the information but assurance that your department is aware and can react quickly to decisions that may need to be made.

How equipped is your organization to be able to respond quickly and accurately to your managements inquiries?

Next episode - evaluating supplier responsiveness!

Has it all been said?

One of the interesting things about going to conference's is the opportunity to talk to people and explore the surroundings of a conference find restaurants nearby etc. A part of that interest comes in hearing the topics of the conference being discussed over the dinner table with people you have met only a day or two before and sometimes people you work with for years. I find it interesting in hearing the conversations of what was missing or what the conference lacked because likely those things do not get on the evaluations after the conference. At this show I have heard a recurring theme over the last couple of days there is some great information but none of it really applies to my business or my situation. Or, "they should have..." you know...they should have talked about this... OR they should have talked about that...Or why didn't they have this company or that company at the show. Sometimes this is just "Babble" you know the kind where the person saying it doesn't really know what they are talking about they just want to hear their own voice...or their afraid of the silence that might suddenly appear around the table. Other times though there are some good ideas...the one I heard today seemed very pertinent to this particular show. Companies are using systems to purchase and track their print costs and sometimes they are not always the right system for the job. So why did we not hear about purchasing and procurement systems? Why did we not hear about processes to make your production more efficient? Or even what kind of reporting is important to our supervisors or is reporting important even? The short answer for most of this is that I think there is a wide variety of personalities in this type of work. You have creative types that by their own admission spreadsheets scare them, and then you have the analytical's, the ones that if you stuck a paint brush in their hand they would think you wanted them to paint the house! It is a tough mix in this industry and I am not saying it should be all one way or the other, I just think there isn't enough focus on the analytics, the business side of producing print the processes involved in actually take a set of specifications and turning them into a brochure. For the next few weeks I think I will try to answer some of these questions you may have walked away without answers to. I think the reporting questions are probably some of the most important questions to answer as from a system producer perspective this is always one of the first questions about our system that I get from the decision makers in a company. So I will try to start with the questions and hopefully provide some answers for your boss. So back to my original question; Has it all been said? I don't even think it's been asked yet!!!
By the Way! This is a great show and has a LOT of variety!
JG

A Quick Note From Print Oasis 2008

Good Morning from Amelia Island FL.
The weather has been incredible these past few days...Sunshine, Warmth, the Ocean Breeze! The conference is busy and active as usual with great speakers and LOT's of Exhibitor's.
There are more exhibitor's at this years show than at least the last 4 years reaching more and more Print Buyers. It is 8:30 in the morning and the lecture I am sitting in is full of attendee's. My rough count is 250. The show floor is busy and filled with Print Buyers looking for everything form the latest in promotional items to variable data printing formats and technologies. There are Printers, Office Supply companies to Software Solutions providers exhibiting at the show. Tonight is the Paper show where some of the leading paper companies will be displaying their goods and materials for all to consider.
I am currently sitting in on Steven Lance and Paul Kurnit as they discuss branding 2.0 The session is focused on advertising and the print industry. The show is full of great information for all print buyers across any industry. Steven and Paul will be doing a book signing later today on the exhibit floor. Well time to get back to the show! Wishing you were here!

Print Oasis 2008 this weekend!

This weekend is Print Oasis 2008 being held at Amelia Island Plantation resort in Amelia Island Florida. The show begins Saturday and runs through Tuesday, with opportunities for Print Buyers and Suppliers to mingle and gain knowledge of the latest happenings in print procurement. This is a great opportunity as well to talk with print buyers from all over the country and gain insight into the needs of print buyers. James Tower will again be exhibiting at the show. I will be there along with one of our sales reps to discuss Cross-Wind and our many other services we provide to print buyers. If you are at the show please stop by and say hi and tell me what you think. You never know you might just get mentioned in my blog! Hope to see you there!!
Information about the show can be found at: www.printoasis.com

Busy, Busy, Busy, Are you busy too?

Good Morning!
Or is it afternoon I am not sure! It has been a very busy start to 2008 for me. I hope your 2008 is starting out with a bang as well. I was at the Corporate Express National Sales Meeting last week. What a great show! The Keynote speaker was Astronaut Jim Lovell who talked about his experiences on Apollo 13. A very inspiring talk. I got the opportunity to visit with almost all of the Strategic Suppliers for Corporate Express and talk with them about their experiences with Cross-Wind and how it is working for them. Almost all of them were very pleased with how it works and expressed that it helps improve their processes when quoting to their customer. In addition, the Strategic Sourcing supplier manager did a supplier survey in early December asking for the suppliers input and the preliminary analysis is showing that an overwhelming majority of Suppliers are please with the tools. I hope to have the raw data soon and to share that analysis here as well. While the weather wasn't the greatest (Cloudy and rainy Wednesday through Saturday) it sure beat the Minnesota weather I came home too (-10 degrees) on Saturday.
Next week I am off to New Jersey for another customer implementation of Cross-Wind and hopefully I will be able to announce very soon the customers name. I am out of the office all next week but will have some time to start keeping up on this blog! As always if you have questions please feel free to send me a note.
John

Why professional print buyers are a needed commodity

So I started to read a blog article about how printing is priced, and without even looking at the authors profile I instantly knew within the first paragraph that this was written by a designer. How did I know? The first paragraph immediately pointed out that it should never be about the cost to produce the job but about the quality of the final piece. And budget should be a secondary concern. Statements like these are exactly why a professional print buyer should be quoting and selecting the printers.

The need for balance
Designers are very talented and creative people and can put things in designs that can wow the senses. But they are also very close to the piece and they take great pride and ownership in their designs. So it is important for them to know what will make a piece POP to the end user. However, the cost of the final product is always of great concern and while designers will almost always tell you cost is secondary. The bottom line comes down to; can the piece be produced within the designer's specifications AND on budget? If the answer is No, then alternatives must be sought to still produce the piece and keep it in budget. A professional print buyer can provide an objective eye on the project and help keep the project grounded. I have worked with designers who upon hearing that the piece they want produced is out of budget instantly react with; "increase the budget then because it cannot be done any other way." A print buyer can look at the various aspects of a job and recognize alternatives to the job that will produce a quality piece at the right price. Print buyers provide a needed balance to the order of printed pieces, without them, designer's will pretty much have carte blanc. Printers love the idea of no controls to the price. They can produce the PERFECT print piece, but perfection comes with a cost, and most companies in today's market do not have unlimited print budgets.

Designers should continue to design the most creative pieces they can for their customer. But print buyers should recognize production issues and be able to adjust the specification's of a piece to produce a high quality piece at the best possible price.

DMIA Print Solutions Conference and Expo

The DMIA Print Solutions Expo is just around the corner. This year the Conference and Expo are being held in glamorous Las Vegas on October 17 - 19. At the Las Vegas Convention Center. This is a great opportunity for print distributors and buyers to hear the latest about technologies and processes in the print industry. I was at last years event in Chicago and was just overwhelmed with all of the exhibits and opportunities to hear some great insights. This year I am going to put a little different twist in my attendance, I am planning to blog right from the floor of the exhibition center. You got it live and on the scenes coverage of the conference sessions, and the exhibit hall. I plan to blog about the sights and sounds and the insights from the attendees.

I would like to know; What sessions you think I should attend, what exhibitors should I talk to and discuss in my blog, and what questions should I ask. Here's how you can help? If you click on the questions link you can fill out the form and I will ask the questions of the suppliers or attendees and post responses back here. You can find all of the information including exhibitors and sessions at: www.printsolutionsshow.com. If you are attending the show stop by at booth 1012 and say hi! I love to hear readers thoughts and would love to discuss them with you. I will post more information as we get closer to the show.

I encourage anyone that has the opportunity to take advantage of attending this show. There are always a lot of great suppliers and a great opportunity to learn more about the print and print services industries. It is a great opportunity to go to these shows for me and discuss procurement and sometimes show Cross-Wind. I hope to see you all there!

Does the price of Fuel impact Print Production costs?

The national average for the price of gasoline today is $2.81 per gallon. But the price of gasoline has nothing to do with the equation. It is the price of diesel fuel that has an impact on print production costs. The average price per gallon of diesel fuel is $2.92, an $0.11 per gallon difference. And the price is higher today than it was a year ago by $0.067. Now that doesn't seem like much but it is significant because prices are on the rise and winter is coming.

Economics 101
Sorry for the economics lesson but in order to understand the significance let's consider just a couple of factors. Fuel Prices are already high in the mid-west and IF we have a bad winter (meaning lot's of cold and snow) combined with a shortage of refineries and lot's of competition from overseas markets for fuel oil (Asia and Europe) the price of diesel fuel will continue to rise to all time highs. Now throw in just one hurricane in the Gulf of Mexico (that shuts down production and refineries) and we will be toast. Here endth the lesson.

OK so why is diesel higher than gasoline it didn't used to be?
That's very true diesel prices before 2004 were always lower than gas. For this I will give you the Department of Energy's explanation;
Until several years ago, the average price of diesel fuel was usually lower than the average price of gasoline. In some winters when the demand for distillate heating oil was high, the price of diesel fuel rose above the gasoline price. Since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline all year round for several reasons. Worldwide demand for diesel fuel and other distillate fuel oils has been increasing steadily, with strong demand in China, Europe, and the U.S., putting more pressure on the tight global refining capacity. In the U.S., the transition to low-sulfur diesel fuel has affected diesel fuel production and distribution costs. Also, the Federal excise tax on diesel fuel is 6 cents higher per gallon (24.4 cents per gallon) than the tax on gasoline.

Alright so let's put it all together...
The cost of fuel is high, it is going to remain high, and if foreign competition is will to pay more per barrel for oil, then we are going to lose out.

So what if I buy my print in Asia?
Cost of fuel is still high, but labor and living conditions are low so it balances out you can only work a human for low pay for so long...ever here of sweat shops? I don't think it is a win to print in Asia, and with all of the substandard products coming out of that part of the world are you really willing to sacrifice cost for potential hazardous chemicals?

What can I do?
The best thing to do in today's market is to look at suppliers that can produce your job close to the destination thereby reducing freight costs. If the job is shipping to two locations seriously look for split production not split shipping. The cost of production may be higher BUT you may save overall, by reduced freight. Print Buyers should seriously evaluate freight cost first when determining production then look at the total cost for the job not just production price not just freight but the total. In today's market it is extremely important to consider freight. I have stated in an earlier post that I had a customer that routinely evaluated freight and made production decisions based on that. Now if you are using a procurement system it should have the ability to break freight out as a separate line item in pricing and to go one step further it should also be able to sub-total your production costs and your freight costs. If your procurement system doesn't allow for freight as a line item then get a new system! I am betting the cost savings in freight alone will pay for a GOOD procurement system. If your suppliers are not breaking freight out then ask them too. Don't let them give you excuses either because if they think they might lose the job because of their freight price they will hesitate to provide it. Also, now is the time to be supplier shopping. Look at your shipping destinations closely and then start looking for suppliers that are in those areas that can provide the same services that Charlie down the street is providing, just at $250.00 per shipment more. A little trick that the big boys have learned is...When a large print supplier is involved and you know the companies I am talking about, they have figured out that, if you have a job that is shipping to Cleveland and your quoting with the plant in Dallas they will get the quote from the Dayton plant and then estimate freight from Dallas for the quote. Then when you order they will produce in Dayton and charge you for shipping from Dallas. So another question I would be asking your suppliers in the quote is; where is the producing facility located? If you ask that question and get a response of; "Why is that important? OR it doesn't matter! OR my favorite...we haven't determined that yet. (Yeah right) They knew EXACTLY where they were going to produce this the minute that quote came in the door!! With the press operating systems that these major printers have they know when the pressman is on coffee break and when he will return to the press halfway across the world.

Summary
There are lot's of options available to help you cut freight costs and you need to be taking advantage of each and every available option. I also encourage you to share those little tips and tricks with your peers. If you have an idea as to haw to save money or save on freight costs post a comment to my blog. I will share all ideas with the rest of the readers. If you want to know more about diesel fuel costs go to the DOE website located here.

Submitting Print Samples to your Printer

Everybody hates chicken scratch! So why torture your printers with it? Sometimes samples are a necessity when specifying print jobs but take the time to mark up your samples cleanly. The cleaner your samples are the easier it will be for your suppliers to review and provide accurate quotes. I suggest digitizing your samples if at all possible. The price of a cheap scanner is less than the price of a mistake in production because of miscommunication on the sample. If stock or matching ink color is the issue then obviously you need to send a sample but if your concern is the attributes then digitize that sucker and send it out via email, ftp, disk or whatever! Below are examples of a poor sample and a good sample. Put your chicken scratch on a separate sheet of paper and reference the attributes by number or letter. It makes life a lot easier for your printer and for you when referencing. Now obviously there are more sophisticated ways of doing this but if this is all you got then at least make it organized!

Marketing Materials Spend Survey

Aberdeen Group is conducting a survey for an upcoming report based on marketing material spends and are asking for corporate respondents. By participating, they are offering a complimentary copy of the report. This is a great opportunity to get an understanding of your spend against other companies. I believe it is worth the extra 15 minutes of your day.

The survey is located here: http://www.aberdeen.com/survey/pm/

According to their site:
This survey covers corporate spend on marketing with a focus on marketing materials and related services. The purpose of this survey is to better understand procurement's involvement in this category of spend.

All survey participants will receive a complimentary copy of the resulting benchmark report on September 4, 2007.