Commentary & Analysis
The Siren Song of CIM
By Bill Davison of Presstek December 6,
By WhatTheyThink Staff
Published: December 6, 2004
By Bill Davison of Presstek December 6, 2004 -- In Greek mythology, the Sirens are creatures with the head of a female and the body of a bird. They lived on three small rocky islands and with the irresistible charm of their song they lured mariners to their destruction on the rocks surrounding their island. The Sirens (1875) National Gallery of South Africa, Cape Town, South Africa As year-end approaches, it is a good time to collect one's thoughts about the New Year and what might be done differently in the spirit of continuous improvement. I don't mean that we should be making New Year's Resolutions--the kind that we usually end up not keeping--but rather, that we should use this as an opportunity to effect a change in behavior and thinking that will help us--whether we are printers or suppliers to the industry--to more readily adapt to the needs of the new world we find ourselves in. If the quality of the print and the price of the finished product are the primary buying criteria for printing, the value and the viability of print as a communications medium will continue to decline According to Dr. Joe Webb, printing industry economics commentator and WhatTheyThink.com columnist, the decline in printing shipments, as compared to 2003, finally stopped in mid-2004, and we are almost even with last year, ignoring any adjustment for inflation. He also reports that printing profitability improved in the first half of the year, as weak companies left the business and printing companies lowered their breakeven points with cost-cutting, restructuring and working more efficiently. But he warns that any increases in profitability should not be squandered; new media's competition will not cease, and printers must continue to be vigilant in their efforts to keep print viable and competitive as a communications medium. Let's face it, print can be an expensive medium compared to some of the alternatives, like e-mail, the Web and other electronic communications. At the same time, there has been much discussion in the industry relative to bringing the tried and true principles of computer integrated manufacturing (CIM) into play in the printing industry--one of the last segments of the manufacturing space to adopt these principles. This discussion has been spurred by the increased emphasis on process automation enabled by JDF and other standards, and the improved productivity and automation of the equipment available in today's increasingly digital environment. CIM: Only Part of the Story For a printer, the relentless pursuit of "better, cheaper, faster" manufacturing as the key value proposition will result in a business strategy that delivers a recipe for disaster While I wholeheartedly agree that printers must adopt increasing automation and improved manufacturing processes--and Presstek, for example, continues to bring to market products and solutions that are designed to help printers do just that--I also believe this production-centric approach addresses only part of the story. Part of the success of any printing business is, of course, directly related to the quality of the manufacturing processes that go into the preparation of the product--the printed piece. But this part of the business relationship between printer and customer is increasingly becoming a commodity, as evidenced by the rate at which print production is being outsourced to lower-cost geographic areas. If the quality of the print--which is a given these days--and the price of the finished product are the primary buying criteria for printing, the value and the viability of print as a communications medium will continue to decline, faced by an onslaught of less costly alternatives to print that are enabled by the Web and other means of electronic communication. A Recipe for Disaster What will differentiate print service providers in the future--and help print remain a vital, viable business--is the service element of the business. Although printers often describe themselves as a provider of a service, they have frequently restricted their definition of "service" to the activities around the actual manufacture and delivery of the printed product. Printers must think of themselves first and foremost as providers of a much broader set of services--and the moment they do, their world will change. They must understand the often unstated business needs of their customers and work to meet those needs with a set of services that will generally include some printed component. To do so, they must understand what it is that their customers are really buying. Their customers are not buying 50,000 printed brochures. They are purchasing the ability to communicate their brand and product to potential buyers in a way that is most likely to cause an action on the part of the potential buyer--seeking additional information, or actually buying something. Any printer in North America (or China, for that matter) can print and deliver 50,000 high quality brochures. For a printer, the relentless pursuit of "better, cheaper, faster" manufacturing as the key value proposition will result in a business strategy that delivers a recipe for disaster: Commodity products. Margin constraints. Bid-oriented one-time transactions. Changing the Picture But if those brochures are produced in short runs, on demand, in a way that allows the franchisee, dealer, sales rep or agent closest to the customer to create versions that leverage local knowledge while protecting brand integrity, suddenly, the picture changes. This is a business strategy that can deliver much more exciting results: Differentiated value-add. Higher margins. Annuity revenue streams. Increased customer loyalty. Long-term relationships. And this theory is being proven out every day by profitable, service-oriented printers--mostly digital, by the way--that have stepped up to the plate to keep their businesses, and the role of print in the businesses of their customers, vital and growing by delivering these types of products and services. The Siren Song For printers to think that CIM alone will return them to profitability is truly a Siren Song. Improving the efficiency of print production by taking cost and steps out of the process is important. Make no mistake about that. And it is here that CIM plays a role in continuing to take cost out of what is, comparatively, an expensive medium. But for printers to think that this, in and of itself, will solve their problems and return them to the revenue and profitability levels of past decades--this is truly a Siren Song. This was brought home to me recently in a conversation I had with an executive from a manufacturer of copier/printers who is working to expand his company's reach beyond the traditional copy center and office environments into commercial print. He is literally scratching his head at what he has found in the commercial print environment. Printers, he says, are missing the point relative to the "whole product" that is commonplace in the world of copy centers and office solutions. That is, the combination of products and services that will truly address the customer's unmet needs. And therein lies the concept of service in the printing industry. The "whole product" is not about the manufacturing process or the output of that process. In this regard, printers and suppliers to the industry are often equally guilty of thinking that the "whole product" is whatever it takes to manufacture a printed piece or a piece of printing equipment. That perspective has the potential of seducing us into thinking that things will get better if only we can manufacture product better, cheaper, faster--that things will return to the way they used to be for the printing industry. It is the Siren Song. What we as an industry need to do is to get different. Without that, we will suffer the fate of the seafarers of old when they allowed themselves to be seduced by the Siren Song--Sweet Singing. Big Rocks.