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Commentary & Analysis

The Pluses and Minuses of Inkjet ROI

There’s no denying how much the inkjet market has changed in the last few years. It has come so far, so fast that it’s probably an appropriate time to step back and ask: Is it a cost effective printing solution? Does it deliver ROI?

By Dustin Graupman
Published: July 1, 2013

There’s no denying how much the inkjet market has changed in the last few years. It has come so far, so fast that it’s probably an appropriate time to step back and ask: Is it a cost effective printing solution? Does it deliver ROI?

Maybe the best place to start the discussion is around the cost to acquire an inkjet printer. Obviously, there is an initial capital investment. It is lower than some devices, higher than others. But what device is it replacing? Or, perhaps we should say, what devices? Often, a single high-speed continuous-feed inkjet printer can replace several less capable machines.

What capabilities does it make possible that weren’t possible before? Increased speed and wider media latitudes open up new opportunities for jobs that used to go elsewhere. And there are whole new areas of revenue that aren’t possible with an offset solution, as profitable as they may have been for you over the years. More on that later.

But that initial acquisition cost really is really an initial investment…in growth. That’s a plus.

But ROI also is a function of minuses—reducing costs throughout your operation. For example, our waterless ink technology prints on plain paper to make the cost of day-to-day operation more affordable. And while our aqueous-based inkjet printers use coated papers that come at a slightly higher price, they are also flexible enough to print on many materials beyond paper.

Do I buy the diesel engine with the corresponding higher price for fuel but higher day-to-day miles per gallon? Or do I opt for the gas engine, which might get slightly fewer miles per gallon but costs less to fill? We can’t answer that question for you. We can, however, offer a range of technology so that we can partner with you to provide the answer you need to be able to answer your customers’ demands.

With an inkjet solution, other things are reduced as well. Turnaround time is one. Work in progress is another. And waste. And labor. Consider that the traditional way of doing things has always called for thousands of preprinted offset shells to be printed and stored until a small amount of personalized information was added digitally. Jobs require multiple passes and multiple people. Because jobs take longer, they often sit partially complete, paid for by you, but not generating revenue. And to make sure enough of the offset shells are on hand to compete a job, a percentage are often unneeded and thrown away.

All of those are reduced with an inkjet solution. One day. One person. Virtually no waste. 

Which brings us to perhaps the biggest consideration of all. Productivity. It’s the game-changer that can make the ROI decision a virtual no-brainer. Right off the bat, the high speeds of solutions like our CiPress or Impika family of printers allow you to produce more in a shift, a day, a year. It’s an ever-present truth, not only about print, but about every kind of manufacturing. Produce more in a finite amount of time, and the costs come down. It’s true in every business, but nowhere more than ours. It’s that calculation that happens multiple times a day—is this job best produced digitally or offset?

That in itself makes the ROI of inkjet attractive, particularly if you are in the offset business and considering adding digital to your shop floor. Jobs that used to straddle that line between offset and digital now fit perfectly into the digital inkjet side of your business and contribute to its ROI.

So far, that’s everything you would expect in a discussion of ROI. But let’s take a slightly different look at a “return.” With a digital inkjet solution, personalization goes to another level. Rather than just the simplest levels of variability, virtually everything can be tailored to the recipient. And the results can be revolutionary. Response rates are often orders of magnitude higher than with a static printed piece.

Consider CW Niemeyer, who used a Xerox CiPress 500 Production Inkjet System to digitally printing 500,000 catalogs with a complex personalized front and back covers featuring targeted offers according to previous buying patterns. Customers who typically shop for fashion saw clothing images while customers who shop for housewares saw furniture. The results were dramatic, generating four to five times more revenue than static covers.

But even a personalized piece becomes static after it’s printed. Digital inkjet solutions have the unique ability to link print to the Web so that content, and your relationships with customers, remain fresh. Through the use of techniques that belong to digital alone, such as personalized URLs and QR codes, inkjet can continue to drive higher response rates in marketing campaigns and transactional statements as the years pass.

Factoring that into a calculation of ROI—with the huge pluses of added revenue and the “positive minuses” (if there is such a thing) of reduced labor, waste, storage, etc.—makes digital inkjet something worthy of a good hard look.

Because it really can change the equation. 

Dustin Graupman is the Vice President, General Manager of the Ink Jet Business in the Graphic Communications Business Group at Xerox. He is responsible for Marketing, Business Management and Go to Market for all Xerox Ink Jet product offerings.

 

Discussion

By Marco Boer on Jul 01, 2013

Dustin,

As you indicated, the reality is the return-on-investment calculations are infinitely more complex for a production ink jet press than an offset press due to the wide range of other variables that need to be considered. But where there is complexity there is opportunity for those who do the hard work to understand the issues. Even those who have bought and are running these ink jet production printers on a daily basis may not fully understand their costs; all they know is that they are making profit. This is the benefit of being early in the market: there is enough "slack" and margin for most to learn as they go along. It is a case for listening closely to the manufacturers who sell these devices - they know which type of ink jet press owner is likely to do well and which one might struggle. After all, the IJ press manufacturers are truly co-dependent upon the success of their customers. The investments are just too big to let anyone fail.

Marco Boer
Vice-President
IT Strategies, Inc.

 

By Tony Hodgson on Jul 02, 2013

The full story about the CW Niemeyer personalised catalogue covers for bonprix in Germany is written up as a PODi case study here: http://bit.ly/15SLY5z.

In the UK, Howard Hunt Group did a similar personalised catalogue with a run of 250,000 for Boden on a Xeikon 8000 which gained a 30% higher response rate than the static version. They too have now adopted high speed inkjet with a Kodak Prosper 5000XL. The case study for this is also in the PODi database: http://bit.ly/12bZxZ8.

Both free for PODi members!

 

By Chris Lynn on Jul 05, 2013

There are 3 levels of potential ROI when considering digital versus analog printing and finishing technologies:
1. Improving operational efficiency, especially for short-run work.
2. Getting premium pricing for fast turn-around work.
3. Entering new markets with premium pricing because the digital technology supports functions (like personalization, or laser-cutting) that cannot be done conventionally.

The first of these is relatively straightforward (though, as Marco says, not always simple) to quantify. The second and - especially - third benefits are the hardest to quantify in advance because they are new business opportunities. But they potentially greatly outweigh the productivity aspects, and it is a mistake to focus exclusively on cost savings. Productivity is always important, but getting into new sources of profit will always do more for enterprise value than efficiency improvements alone.

 

By Andy McCourt on Jul 09, 2013

Dustin, a great well-written article on high volume inkjet.I can only speak for the Australian/New Zealand markets where there are now about 40 HV inkjet webs either installed or on order: the statement "Obviously, there is an initial capital investment" is not so obvious here as vendors have begun putting in machines capital-risk-free in return for a guaranteed volume of 'click' impressions per month. I regard this as a very dangerous practice - if a printer can not afford a press, should he/she be a printer?
Second, Marco's observation: "The investments are just too big to let anyone fail." would be great to believe, but fail they have here; with terrible passed-on effects. SEMA is one (Impika)- now bought out of receivership by former management. BPA (Oce) is another - guess what also bought out of receivership by former management. Debts wiped, staff not paid, paper suppliers burned - chaos.
My view is that, as inkjet gets faster and can do medium or high offset print runs; the presses need to be sold like offset. Buy the press; get a service & parts contract; pay for ink used. I hope the ANZ experiences don't come your way - more the fools us for letting it happen. (Hi to old colleague Chris Lynn BTW)

 

By Dustin Graupman on Jul 12, 2013

All,

Thanks for the toughtful and thought provoking replies. Almost too much to respond to so I will pick out a few nuggets.

Marco - I think you hit the nail on the head regarding co-dependency yet Andy makes a valid point that there are some failures - aren't there always though? Fortunately the failures are very much the exception and the indsutry is getting better and better at predicting and preparing for success before install. Yet still it is very difficult to predict everything which might occur post install like economic downturns and lost accounts. From a technical standpoint the capability of the equipment to perform the intended application set is almost always well vetted before the machine ever hits the floor. In my view that is insurance for all involved and a practice that will sustain for a long time.

Tony - Thanks for link to the case study at PODi. It is encouraging to start to ink jet case studies populate PODi as it helps provide proof points that printers are really out there "doing it" and finding new ways to deliver value to their clients, and their client's clients. Ultimately that is what the indsutry needs is to share successes and build upon them.

Chris - You touched on premium pricing but I personally think the added value per page is where the premiums will come from in ink jet - not so much the fast turnaround. The printing indsutry has a historically poor track record of cost-plus pricing. All too often that turns into "at cost" and "below cost" over the course of time. If there is ever for our industry to assess opportunities to demand premium pricing for the value which our technology can bring that time is now. I really hope that with the ramp up of ink jet we don't repeat the same cost-plus mistakes of the past.

 

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