New Customer Implementation

I am doing a new customer implementation in December so I thought I would touch on some of the things that are involved with implementation of Cross-Wind. One of the very first questions I get asked is;
"How long is this going to take?" knowing that everyone's time is extremely valuable a standard implementation of Cross-Wind takes only 5 days (Technically 4 and a half but who's counting?)
"Is there work I need to do before the implementation?" Yes, typically we send a spreadsheet prior to implementation asking for user information to upload to the customers site prior to implementation. This information is typically Buyers, Suppliers, and Customers that will be accessing the system. If the customer already has this information contained in a database or spreadsheet we will clean the information for them and help to fill-in the blanks. One of the other things we ask customers to consider is what products do they associate to which suppliers. This helps us in the building of there custom product templates to know which templates are associated to which suppliers. We also ask our customers to supply us with copies of any forms that they are currently using to spec print so we can develop the product templates to meet their current processes.
"What is the agenda for implementation week?" I won't get into specific detail here but typical implementation consists of understanding the customers current buying process. If the customer has there process clearly defined then this goes very fast. I have spent time in advance of an implementation sitting with the customers buyers to watch how they quote print and to produce a map of the process. This helps in understanding which pieces of Cross-Wind will be needed in the development of the customers application. During implementation week we cover the basic set-up of the site and administration, how to add modules, users, templates, modify existing templates, supplier associations, buyer training, and supplier training.
"How long will it take to do the training?" Buyer training will usually take 4 to 8 hours depending on how quickly and how knowledgeable the buyers are of their processes. Supplier training typically lasts 45 minutes to an hour and a half. Supplier access to the system is very straightforward and easy to use so the suppliers can usually start processing quotes with only an hour of training. The buyer side of the system is more complex because of all of the capabilities the buyer has to specify and request print.
I typically try to schedule implementation to start on Monday morning and will try to get out of the customers office by Friday noon. The customer then has access to myself and our client services staff at no additional charge to ask any questions or walk through any issues they may have. The Call period usually only lasts about two weeks after implementation and the customer is usually very comfortable with using Cross-Wind after that. We also provide user guides and online help to our customers and their suppliers.
Thanks for taking the time to read this and if you have questions please contact me.

Are Reverse Auctions good for the Print Industry?

So the question has come up again; "does Cross-Wind do Reverse Auctions?" My biggest concern is why are buyers so infatuated with reverse auctions? I find it hard to believe that anyone in the print industry would even consider these. Have the lessons not been learned? I really would like further feedback on this from the print supplier/printers perspective.

I can tell you that I have personally sat in on reverse auctions with a printer, as an observer and I can tell you it was quite painful for the print supplier. The auction was a long duration auction lasting 3 days. The supplier reviewed the specifications and had questions as did other suppliers apparently by the feedback response that was given to the questions. Of course no one really wants to ask a question about the specs on an open forum as that may give away something none of the other bidders had considered and if the customer is not accepting questions any other way then the questions often go unanswered. The specifications in the suppliers eyes were not complete so therefore they felt they were unable to provide the best pricing and without being able to consult directly with the customer the price would not be complete. Also pricing did not start coming in to the auction site until the last 3 or 4 hours and then got really heated in the last few minutes which by looking at the price differences that printers were providing there was margin the whole time. In addition, the customer was fairly savy in that they were using a ringer. They had a supplier that truly had no intention of doing the job but was there strictly to drive the price as low as possible. Every time pricing was submitted the ringer would respond within a minute or two and counter the price by a percentage point. So if a print supplier was truly interested in the job they were forced to drop the price even further if they wanted it. The print supplier I was working with had decided early on that they were not going to get the work and that this was a waste of their time. The supplier estimated the job with their standard markup, a discounted price, and with their cost. When the auction started he offered up his discount price immediately which was a 0.5% profit margin. Within an hour he countered with his cost price which meant no profit on the job. One minute later the ringer countered that price which would have put the print supplier at a 1% loss. The right thing to do for the printer would have been to walk away at that point. However the printer knew e needed to fill the press and chose to go .5% lower (now at a 1.5% loss.) With a half hour left in the auction another supplier countered his offer. The printer while frustrated chose at this point to walk away from the job. Now once the price went below cost the printer spent most of his time that afternoon trying to run different scenarios as to how they could cut cost on the project to win the bid. This was a very painful experience for the supplier as they met and engaged the production department and pre-press in devising ways that cost could be trimmed, but without the answers or the ability to ask questions of the customer their was no way to respond without taking a complete loss on the project. The supplier walked away frustrated and realized later how much time was truly wasted in trying to respond blindly to the auction. This supplier politely turned down the next invitation to a reverse auction for this customer, and when the customer called to ask why, they politely told them that if this was the way they intended to do business from now on that they were not interested in being a supplier for them.

The customer lost out on having a consultative resource available to them. The bottom line for the supplier was that if doing business meant doing it at a loss they were not willing to risk losing their company to satisfy a customers need to save money. There is a balance and companies are in business to make money.

What are your thoughts? I am interested in hearing what Printers and Print Buyers think regarding using and completing Reverse Auctions. Post your comments! All will be posted. Thanks!

Print Procurement Questions

I am not going to say that "I am the leading authority on print procurement and print buying." But I will say that If I am asked a question I will find an answer. It may not always be the answer your looking for but I will get an answer. I have had extensive experience in purchasing and as I stated in a previous post the process of purchasing is really not much different between print or an other commodity. Now I said that word, "Commodity". Believe what you will, and I plan to address this further in a later post, print is a commodity. My background in working with both printers and print buyers gives me a unique perspective of hearing both sides objectively as compared to other pundits in the business who have an "either...or" background. I encourage, you to ask me questions. I am not going to give fluffy answers. I will tell you the way I see it or as I have heard it said. If you have a question related to print or print procurement send me an email at: jgangerjt@gmail.com

Reverse Auctions the Gold Rush is Over!

Is anybody still using these things? If they are and you are reading this then I guess I am about to stir a hornets nest!

I read probably the best article ever on reverse auctions a couple of months ago By Mohanbir Sawhney at CIO.com called: Reverse Auctions Cutting Costs. In the article he points out the historical facts that the biggest reason these became popular is because GE claimed huge savings by doing them. Mohanbir also points out that Reverse Auctions can be damaging to supplier relationships. I believe most are finding out that this statement is quite true. I have talked with several suppliers who have out and out refused to do reverse auctions and have told even valued, long time customers that they would rather lose the business than participate in a reverse auction. Suppliers are revolting because of the consumption of time involved in responding to a reverse auction. Often times these auctions are open for hours and usually tie up an estimator and a production manager during the entire auction attempting to shave pennies off an already profitless project. Reverse auctions may serve a purpose in industries where there are bloated profit margins. But in the print industry where the profit leaders are netting between 2 and 3 per cent and the rest are lucky to net .5% profits, reverse auctions can be detrimental to a printers business. I know someone will claim they are saving 20% or better on jobs they have quoted using a reverse auction but I would counter that they were probably using the wrong supplier in the first place. The bottom line is you could probably research suppliers, submit and receive well priced quotes in less time than it takes to conduct a reverse auction. I would also venture to guess that you will get comparable pricing with less work on every one's part.

Reverse auctions are a fad in the print industry and fads usually last about 18 months. Is anyone even doing reverse auctions anymore? If you are maybe you should seriously take a look at the time involved in conducting a reverse auction and what suppliers you are quoting with. As a wise man said at Print Oasis in 2005 "Reverse Auctions, I wouldn't do'em"

Print Procurement Outsourcing is it all it is cracked up to be?

There are companies that will tell you that print is not your core competency so why are you spending money to procure print when you will save money outsourcing that function. Well with that mentality why just stop at print why not outsource ALL of your procurement? What these companies are telling you is that they know how to spend your money better than you do so let them spend it for you. I want you to know that these companies are feeding you a great line. Never the less, a line. You may even hear that outsourcing is the trend. But for every company that you can name that is moving to outsourcing I can name a company that is pulling sourcing back in house. I talked to another company today in the wireless industry that has just terminated an outsource contract and is pulling print procurement back in-house. Why? because the promises of saving big dollars are unfulfilled promises. The key to sourcing either out or in, is about process, efficiencies, and compliance. The reason these companies think they can do better is because they have focused on the process to improve the efficiencies. It is about working smarter not harder! In some cases it is about paying substandard wages to inexperienced buyers and giving them a tool to do the job of two experienced buyers. Their training consists of take the request, enter the data, and the machine will spit out three prices, give the customer the lowest price, don't worry about who is printing the job or the quality just send the job to them when you get the approval. Heck if all your looking for is bottom line price on every job Hire Me! I will even give you a guarantee that I WILL save you money don't ask about the quality and don't ask about delivery. Let's talk about a Pyramid commonly used in business and let's put a twist to it.
Let's call it the outsource triangle:

Now the game is you pick one and I get to pick two...Oh you want to pick two OK pick two...I pick one! Either way this is a losing proposition, You pick Price and Delivery, that means I get to choose Quality. Oh you want Quality and Delivery, That's fine...I get Price and you will pay for it. You want ALL THREE? Sorry it doesn't work that way in outsourcing! It doesn't work that way with in-sourcing either the difference is YOU KNOW what you are getting, how much it will cost to get, when you want it, and the way you want it. The difference is in-sourcing YOU make the decision, and it has to be a conscious one. Business owners and CEO's are entrepreneur's, they are constantly thinking about and making decisions that will impact their bottom line. And, if they make poor decisions their business will fail. I challenge you as a print buyer or print director to think like an entrepreneur, think about that buy decision as if YOU owned the company. Is the decision I am making the best decision I can make for my company? Will I get a paycheck at the end of the week if I go with company A over company B because I like the sales rep? Yeah, his price is higher but at lunch yesterday he told me how his kid needs braces and poor Junior may not be popular without straight teeth. Stop worrying about their business, worry about yours! They won't care when your CEO comes in and tells all of you that they are moving to an outsource company and that you will have to apply for a job with them or go do a job in the mail room that you left 15 years ago when you were an intern and oh yeah that comes with a pay cut! Is that Sales Rep going to be knocking on your door offering to share his commission check with you? You'll be lucky if you can get him to answer your voice mails. If you treat your job like your an owner of the company and make decisions like a responsible owner would I think you would find that your job will be just fine and your boss will even be able to give you a raise because they will see the value you can bring to the company.

OK, now some outsourcing company is going to tell you; YOU CAN HAVE ALL THREE! Well what they are doing is not rocket science and they are thinking like a business owner that needs to make good business decisions. They will balance the triangle on one of it's points and they will make trade offs where they can. Some jobs will come in with poor quality, but not enough that will make you complain. Some jobs will come in higher priced than you expected but not enough to make you complain. Other jobs will come in late delivery, but not enough that you complain. Seeing the pattern? Most outsourcing companies can be successful because they have put process efficiencies in place such as sourcing and vendor management systems that reduce the time to production, they also have vendor agreements that they fall back on that they guarantee certain volumes of print to certain suppliers in exchange for "Rebates" or some like to call these kickback's (but that's such a dirty word).

The best recommendation I can give any company is take a long hard look at your vendor base.
Who are you doing business with?
Are there companies that can do more of the jobs thereby eliminating a vendor or two?
If I offer them a guarantee of work can I get better pricing?
Can I get "Rebates"?

The right suppliers are willing to give rebates or even price reductions because they now know where their next job is going to come from and they know that you are guaranteeing work to them so that now they are going to be able to make payroll. See, they are in the same boat as you and they know you need to spend money and they need to spend money as well, it's just nicer knowing up front how much you are going to make in the next year before you need to budget.

The biggest thing to remember as a company is that either way you are paying money, so why do you want to pay an outsource provider to do exactly what you can do and probably cheaper than the outsource provider? If the outsource provider wasn't making money do you really think they would offer a service like this? You can do this yourself it is not that hard if you have the print buyers in place now you really need to pay attention to the process and how to make the print buyer more efficient. Give them the tools to do what an outsource provider does and you will make them more efficient.

Specification Gathering in Print Procurement

When purchasing print the key to getting what is desired is the specifications that are provided to the supplier. I will try to walk through the specification process. When specifying a print job two key elements can make the Quoting process go smoothly, Good Specifications, and Samples. (we will discuss samples in another post) Specifying the job is usually done through some sort of interview process. This process can be a formal or informal interview.

Formal Interview

The formal interview is conducted by asking a series of questions designed to get the job specs. This is usually performed as a meeting or phone interview in which the print buyer gleans the specification for the job from the requester (customer). A series of questions is usually on some sort of formal document or an experienced buyer may know the questions that need to be asked. I caution even the most veteran of buyers that "off the top of the head" is not the wisest way to gather specifications from a customer. Most of the time this can make a customer quite nervous about the overall outcome of the job being produced. If this is an external customer they may lose confidence and will walk away unsure if all of the information was gathered no matter how confident you may appear. I recommend using or at least have a form in front of you during the interview process. Whether you actually use it or not, having it out on the table will give the customer more confidence in your ability. It often times can be used as a prompt for your questions or to at least ensure that you have gathered all of the pertinent information. The drawback to a formal interview is that they can be time consuming and if you are like most buyers your days are pretty full already and it may be a couple of days to schedule and complete the interview. Often times the customer either perceives they do not have time or they REALLY don't have time before they need the job completed. A personal side note; I found blocking an hour per day off on my calendar will allow me time to do those urgent interviews and still get my work done for the day. The formal interview can also be conducted as a survey form that is submitted to the customer. I highly recommend this form either as a complete or as a preliminary to a meeting. This will give the customer an opportunity to answer at least the questions that they know and will expedite your meeting. In the formal meeting you simply need to review the answered questions and help the requester understand the unanswered ones.

Informal Interview

The informal interview is usually conducted by way of email, phone, fax, or sending a sample with chicken scratch all over it and your expected to interpret (my favorite). Any way you get these requests they can be time consuming and often key items can be missed. The buyer and customer usually go back and forth either by email or phone calls over and over. Usually, additional questions are prompted by suppliers after the buyer has submitted the RFQ and then you're putting undue delay on the project because you either have to guess at what the answers are or go back to the customer again and ask. This also does not give your customer a warm fuzzy feeling that they are going to get what they want.

I am a firm believer in the formal interview process and have found that it can be used in almost any industry. When I worked in the medical field I would use this strategy when working with a team of medical specialists wanting the latest and greatest medical device. Whether I knew how the piece of equipment worked or not was beside the point I could usually go to a potential suppliers web site and at least get the pertinent questions from the listed product specification information or from their marketing information. An hour of reading often times saved me three or four hours of back and forth questioning.

Building the interview form

When building an interview form I suggest creating one for each of the specific types of items you may purchase and to use them as templates. The reason for separate templates is because the questions you ask for an envelope job are going to be different than questions for a continuous form. No reason to know number of pages on an envelope! I challenge those buyers not using a template when interviewing to try it and see if the reaction you get from your customer changes. I think you will be pleasantly surprised at the reaction of your customers.

Was this helpful? I am always open for recommendations as to how to make this better and I invite those of you using a formal interview process to post your thoughts.