May You Thrive in Interesting Times
The economy and concerns about the environment are forcing in-plants to change the way they operate. Only those that become “solutions partners” will thrive.
December 2008 By Greg Cholmondeley
NEARLY TWO decades ago a major production trend called “print on demand” emerged. Its effects not only changed the way documents were produced, but also how they were stored, packaged and shipped—and, more importantly, how quickly they needed to be fulfilled.
Then the “Internet revolution” took hold and once again traditional in-plant applications were impacted. Forms moved to laptop computers while rate guides and directories became Web sites.
These days, offering on-demand digital printing or having a Web site is about as revolutionary as owning a car. It’s no longer important to clients whether documents are printed on digital printers or offset presses—the only things that matter to them are quality, cost and delivery.
Today, we are experiencing two additional powerful, disruptive forces that are changing the production industry at least as profoundly as digital printing and the Internet: the economy and concerns about the environment. These are forcing changes in the ways in-plants successfully operate that will drive decisions, investments and business practices for the next eight to 10 years. How savvy in-plant managers will evolve their operations to survive and thrive in this era of change is worth exploration.
The Economic Realities
In-plants face a never-ending fight for retaining and growing print volume—and this is as it should be. It is always in an enterprise’s best interest to find the most effective and efficient way to produce work. For in-plants, this simply means the need to constantly evolve as technologies, competitors, applications and business practices change. It is an evolution that impacts every aspect of an in-plant’s operation from workflow to service offerings, and from technology to marketing. The cost focus will only intensify as the economy tightens over the next few years.
As an example of changing business practices, consider digital color printing. Caslon and Co. reported that in 2006, for the first time ever, the retail value of digital color printing in the U.S exceeded that of black and white—even though digital color print volumes are a fraction of monochrome. Digital color production costs are higher—but then so are the margins.
Caslon further predicts that these color volumes will increase twentyfold over the next decade while digital monochrome printing will stay flat or decline. So businesses might want to consider that there is a valuable savings opportunity in ensuring that digital color production is done in-house—even more than with digital monochrome printing with its razor-thin margins. But color brings new requirements.
Unlike the black-and-white digital production revolution of a decade or two ago, the digital color revolution is not about transferring jobs from offset presses. Instead, it is about doing color work that could never be done on a press. Digital color work brings new types of jobs with new requirements. They involve personalization and customization on each piece, whether they’re direct mailings or transpromo statements. This is occurring now for two reasons:
- The cost of acceptable quality digital production color has dropped.
- Organizations are realizing that improving ROI (return on investment) involves more than simply minimizing their investment; it also involves increasing the return.
Leading in-plants are working with client organizations and discovering ways to use their production expertise and capabilities to improve their clients’ results—not just minimize their costs. Doing both is how organizations will win in today’s economy.
The Environmental Realities
Sustainability and the environment are hot topics. By 2007, virtually every company, school and government agency had included some sort of environmental impact wording into its core values. For some, this involved ISO 14001 certification; for others it was simply a value statement. By 2008, this shifted from words to action—or at least to examples. Organizations had to prove they were doing their part, which often took the form of reporting existing, tactical actions like “30 percent of our paper is recycled.”
By 2009, this strategy will no longer be sufficient. All organizations, including in-plants, will increasingly need to show and demonstrate progress on strategies to improve their environmental friendliness. This will place new constraints on in-plants, but will also provide investment justifications for improvements on systems and processes that might be decades out of date.
The Effects of Both
So what do these improvements and investments mean for in-plants? One obvious effect will be the need to invest in digital color production printing. The challenge will be to select equipment that is justifiable for the volumes associated with a new capability, while still delivering the performance and capacity to handle expected growth.
Another related area of investment will be in variable data printing and transpromo capabilities. Investments in these areas are not just limited to technologies, but also in the skills required for database manipulation, mailing techniques and programming.
Finally, there will be continued investment in Web-to-print and workflow management solutions to capture market share and increase efficiency in order to drive down job handling and production costs.
As stated earlier, some business justification for these investments can come from the current environmental focus. Targeted and personalized direct mail, for example, can improve response rates while reducing the waste (paper, printing, shipping fuel, etc.) of broad-spectrum mass mailings. This approach alone, however, will probably not provide a sufficient business case.
Another technique that in-plants have successfully used is to work with a customer to improve its results on a key activity. They partner to develop a specific program, for example a personalized alumni giving campaign for the alumni affairs office. Program dollars from the client fund the investment, which is justified with a measurable business result. The in-plant can then leverage that investment as it grows its business with more clients and projects.
Keys to Future Success
The most successful in-plants in the coming decade will:
- Offer more than just printing. This can include database organization and filtering, mailing list cleansing, business rule programming, efficient outbound mail handling, results tracking, return mail and opt-out processing, PURLs, Web sites, e-mails, etc.
- Become integral members of core business departments. This means solving non-print business problems and offering consultative advice while investing in new capabilities via specific program funding from these organizations.
- Be able to clearly document savings (economic and waste) and business improvements (both for the in-plant and for the parent organization).
- Increasingly insource printing to help subsidize internal operations.
- Proactively market and sell their services internally and externally both online and in person.
- Ensure that profitable work (like color direct mail) is kept in-house and not outsourced.
- Be able and willing to change.
- Start simple while learning, proving and improving abilities.
- And start immediately!
Looking Forward
We are on the cusp of a major industry shift where successful in-plant operations will evolve from print suppliers to communications providers. This will not only affect their services and volumes, but will also tie their operations more closely to the core objectives of the organizations they serve. This is critical because, just as economic and environmental concerns will reenergize the drive to reduce unnecessary printing, there will also be senior executive interest in programs that increase overall business effectiveness.
The in-plants that thrive in these ever-changing times will be the ones that become solutions partners: acquiring new skills, offering new services and developing new relationships higher and deeper in organizations than ever before.