Print is custom manufacturing and there is an obsession around optimizing the manufacturing process. Our Print MIS systems have extensive capabilities to capture “shop-floor data” in order to accurately capture “actual” costs during the manufacturing process. When you run a more efficient manufacturing process, you get rewarded with higher margins and you can be more flexible with your pricing, I get this, and it makes perfect sense.
What I don’t get is the utter lack of obsession about all the activity that occurs before the job lands on the shop floor. Let’s start with sales and work our way through estimating and customer service to look at the crazy number of touches that occur by some of the most highly paid people in your business. Why aren’t we doing “sales force data collection” or “CSR data collection” so we can monitor the efficiencies or inefficiencies of these key areas?
We lack the processes and the systems in these areas because we are so focused on manufacturing. Most of the activity in these areas happens in unstructured, unconnected, and isolated systems like e-mail, FTP, and Microsoft Office. Think about the difference between a traditional full-service printer and a 100% online print provider? Virtually all this activity (and the associated costs) is eliminated when the customer orders online and the online order drops directly into production (no wonder online providers can be so price competitive).
I’m not saying that all printing can follow this path, I’m simply saying that printers should start looking at the labor costs of all the people in front of the production floor – introduce systems, start tracking activity so that you can find the inefficiencies. We should add to the industry lexicon: sales force data collection, order entry data collection along with shop-floor data collection. Everyone in the process from order inquiry to invoice should be operating in a system that can provide the data for individuals to keep refining their activities in order to create better results and allow management to make better business decisions.
Discussion
By Jane Mugford on Aug 14, 2014
Great post Jen. When the 'pre-order' steps get mapped out, printers are often shocked by the 'upstream' steps that it takes to get a job in to production in their facility. While the focus on the potential cost savings through production are very important, the cost savings that can often be found by re-engineering the 'steps to production' can be dramatic and where a lot of hidden 'lost' profit lies. Time is money and if it takes a lot of time and steps to get jobs in, a lot of order cost is accumulated pre-order.
By David Dodd on Aug 15, 2014
Jennifer,
Great post! The root cause of the problem lies with the structure of print costing systems. In a traditional budgeted hourly rate costing system, costs are only assigned to manufacturing cost centers. Indirect support costs, such as estimating, order processing, purchasing, etc., are treated as "overhead" and allocated to manufacturing cost centers to arrive at "all-inclusive" hourly cost rates. Since cost centers don't exist for these indirect support activities, the cost of these activities is invisible to company leaders.
About ten years ago, I did a series of cost studies for HP that involved several of their Indigo customers. The primary objective of the studies was to estimate the digital-offset crossover point for each customer. As part of each project, we created a cross-functional ("swimlane") process map for each customer's "pre-production" workflow (what typically happens from the time a customer requests an estimate until the job goes into production). As you can imagine, these process maps always revealed that the typical pre-production workflow contained multiple steps and usually involved multiple people. Because most of the HP customers in the studies had a web-to-print solution, we also prepared a cross-functional process map for the typical web-to-print pre-production workflow. The difference between the two workflows was dramatic.
But here's the important point. In every case, the costing system used by the printer treated jobs the same regardless of whether they used a "traditional" pre-production workflow or a web-to-print workflow.
With such a distorted view of costs, bad decisions are an inevitable result.
By Luther Erlund on Aug 18, 2014
David - Activity Based Costing - makes perfect sense but extremely difficult to implement and change thinking that this is necessary - Printing has always been about the iron and not so much the upfront process. I am not sure when this will change if ever -
I think the biggest challenge is the multi-tasking that CSR/Production Planners do as well as sales people. I do not necessarily know how you would really capture that time/effort without adding to the time spent thus slowing down the process. I also think that because they are often salaried positions that it is a bit easier to recover the expense as an overhead item. I do think it is important to understand what customers and or products produced incur the most time of the front office staff but again collecting the data is the challenge.
By Jennifer Matt on Aug 18, 2014
David and Luther - thanks for your comments. Tracking our time is difficult, I agree - it doesn't mean we shouldn't figure out a way to do it.
I don't work at a print shop but I do track my time. Once I started tracking my time I significantly changed my bad habit of multitasking. Its the myth of our time that we can more than one thing at a time. You can do lots of things at once very poorly. (text and driving, creating an estimate and talking to a customer on the phone, attending a meeting and checking your e-mail).
Here's one of my favorite quotes of all time:
"If you want to teach people a new way of thinking, don't bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking."
- Buckminster Fuller
From my experience, tracking your time changes your behavior AND makes you MORE efficient. We spend our time (our most precious resource) unconsciously. Tracking time helps people see how they are spending their most precious resource.
I use Toggl (basic free time tracking, more advanced is affordable), while I'm writing this response it is getting tracked under the Project: WTT Comments (non-billable). At the end of the month I can see how much time I'm doing this particular activity).
I also use a tool call Rescue Time which tracks where I am on my computer/web and then gives me a report. It categorizes time as productive (e.g. Microsoft Word, Basecamp, E-mail, Excel, etc.)and not productive - like during the World Cup when I was watching WAY TOO MANY GAMES.
Time is precious. We need to make every resource in our business understand how they are spending their time. Not just to monitor them but to change their behavior.
Jen
By Luther Erlund on Aug 27, 2014
Jennifer, I am not saying it is impossible and when I said multi-tasking, I was referring to stops and starts of working on tasks - checking on proof statuses, calling clients multiple times to check on artwork/job changes/delivery info/updating job tickets/etc., calling salespeople to intervene when the client is not responding etc. I certainly agree it can be done - just finding the right tool and discipline are the challenges to overcome.
By Bernd J. Luts on Aug 27, 2014
Jennifer, it depends very much on the MIS-System used and how deep the Integration of the sales processes in the MIS-System has been done. I'm facing daily a Situation like you described - but as said, there are Systems available which are fully end-2-end and includes the Sales / CRM aspects
By Jennifer Matt on Aug 29, 2014
Luther and Bernd,
It is difficult, sales is the last group that wants to be "managed". I think a very incremental approach to sales process is best.
For example: (minimum expectations)
1) All leads (company and contacts are entered into a CRM system). This is critical for business continuity - you have to have access to sales data in case someone leaves or gets ill.
2) Track the "state" the sale is in - do NOT OVER-COMPLICATE this. There is a spectrum: between just figured out who to call all the way through closed my first deal. No more than 3-5 states. This gives you the ability to track movement through your sales funnel.
3) If you're tracking contacts/leads AND your tracking sales state - you now can start monitoring sales activity and volume.
The biggest challenge for most sales people is they spend 85% of their time on defense and 15% of their time on offense. If your sales people are holding production's hand for everyone of their customer's jobs - they are on defense (protecting the customers they have). They have no time for offense! You hired them for offense.
Jen
Discussion
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