Undoubtedly one of the hardest and most stressful parts of configuring and then running your Print MIS is the job costing component. Being in a position to use your Print MIS to accurately compare estimate to actual costs is often given up on in frustration due to the complexity of the setup and configuration. However, when it is done, and done properly it is the ultimate definition of a successful Print MIS system.
Below are some of the common challenges that are encountered and debated and some ideas on how to approach them.
What should I include in my costs? I don't want to generate estimates that we will lose based on price because my costs are too high.
For sure, this is probably the number one question that is out there in terms of setting up job costing. People are concerned that putting 'too many costs' in will skew the numbers in an unfavorable way. There are always debates within companies of what true costs are and what should be included or excluded from the cost calculations. The fear of having all overhead costs in as part of the cost calculation is a justified concern of putting yourself in a position of being ‘out-priced’ against your competitors. However choosing to exclude costs can feel like an exercise of smoke and mirrors.
Some companies choose to put in all costs and all overhead to do with their company and others exclude all overhead completely and you see everything in between that. I am in the camp of put it all in. If you want your Print MIS to be a complete and accurate representation of your costs you need to include everything. Every aspect of what goes into a job should be accounted for. However the argument of "I don't want certain aspects of our costs impacting our estimates, we will never win a deal" is a completely valid concern. As an example let's say you have renovated your building and there are a lot of costs to go along with that. You don't want to have those costs impacting your estimated cost and associated markup. However, those 'overhead' costs are a true cost of running your business. Most Print MIS systems will allow you to define certain cost components as 'cost' or 'cost & sell'. If your system does that, you definitely should be identifying all costs as components flagged as 'cost only' which will have no impact on the estimated price, but it will show as a cost to you. It is important that you have all costs accounted for because it helps you to make better business decisions long term. Leaving costs out may make you feel better but that is an emotional decision not a fact based one.
Should I include costs for the sales and CSR process? I don't want to bog that team down tracking time and I also don’t see that as a true cost that should be included in an estimate.
My colleague Jennifer Matt wrote a blog post last week on this very subject of pre-production cost tracking that was based on some of her recent conversations with printers about how front-end loaded some of the work is just to get the orders into production. There is a lot of debate around this issue but I firmly believe just like Jen that it is absolutely critical to capture these costs. Now, again the concern of the sales and CSR teams not having time to track time (no pun intended) when they are so busy multi-tasking and dealing with the critical task of customer service that brings in orders is very legitimate. However, just like most Print MIS systems allow you to define costs as ‘cost only’ or ‘cost and sell’, most also let you associate fixed costs to various tasks. I am a big advocate of this for front end order capture and processing. As an example, one task I often recommend be set up is ‘send to production’. This step involves a lot of ‘pre-work’ before someone can send the job to production: order entry, file receipt, shipping information etc. You can work to calculate a fixed cost for this so the customer support staff does not have to track time for each order they set up. Maybe you calculate that on average this process takes 12 minutes. Sometimes more, sometimes less but 12 minutes is a good average for your company. You can then calculate a cost for it and put in to the Print MIS system. That way your people only have to say ‘send to production’ when they are ready to submit the order and a fixed cost can be attributed (and often a job status updated).
This gives you the best of both worlds – still lets you associate a cost to the upstream work and also not bog down the staff responsible with tracking time. Most importantly the data from this lets you assess key business decisions many of you are thinking about: Is it worth the investment to integrate a customer facing system to your Print MIS? Do you need to invest in some new web-to-print technology or refresh and integrate the one you have? Without this type of cost data, it is hard to make a fact-based decision.
How do I get production to comply with tracking all of their time?
I cannot think of a time that I have not been asked this question, and from past experience, it is one of the biggest challenges to get that compliance. It takes a long time before this becomes habitual and you have to play a big part in the data collection becoming a habit. You also have to play a big part in it not being seen as a big brother type of tactic. My top tips for this:
- Make production print a daily timesheet from the system, sign it and hand it in to their supervisor. This gives them a visual at the end of the day that they can see what they missed. It helps them become more aware during transition. No one likes to see that they ‘did nothing’ and they will be more apt to get in the habit sooner of properly tracking their time if they have to hand in a sheet at the end of the day.
- Tell production that after 90 days you will be using your Print MIS system to validate payroll. Nothing gets compliance faster than when people think that it might impact their pay.
- Make it fun. That’s right, fun. You can make a bigger deal out of rewarding the compliance than fighting the lack of it. Define a measurement for the time tracking and tell the staff that if they exceed it you will spring for a pizza party at the end of two weeks. You can then up the prize and tell them that for whoever achieves a goal of x% time-tracking in a 30 day time period their name will be entered in to a draw to win a Visa gift card or something along those lines.
Bottom line is you are asking production to make a big change and once they are in the habit it will not be hard for them, but getting them there is hard. It’s much easier if you can help nudge people a bit to comply rather than having to pull them kicking and screaming into the new world.
Avoid death by job-by-job costing
Ok, death might be too dramatic a statement but for sure you will succumb to some major headaches if you try to analyze costing for each and every job. This is a very quick way to convince you job costing is not worthwhile. The beauty of a well implemented and managed job costing system is to look at trends and attack issue areas that present from those trends. Of course you are going to look at certain jobs in a very granular way when you need to do a post-mortem on a job or when you are looking to estimate or quote future jobs that are similar. However, you do not want to be doing this on every job. This is not a good use of your time or your management team’s time. However, looking at data at a high level will put you in a really strategic position to make great business decisions.
While job costing is a beast to set up and configure, it is one of the biggest advantages you have to run your business more effectively. It lets you be strategic, think big picture and be proactive and not reactive. Facing and using the job costs can be one of the best ways to get the ROI you deserve from your Print MIS investment.