If you’re sticking to your in-house print shop production model, the cost impacts may be providing your competitors a significant advantage. In the face of declining print volumes, the fixed costs of your shop are bound to drive up unit costs. Combined with capital expenditures for new capabilities or aging equipment replacement, it becomes difficult to justify the continued in-house operations.
Industry and global trends are driving communications and customer engagements in a variety of channels and modes which previously were dominated by printed communications. This digitization of your customer experience and brand presence has serious implications for your near-term and longer term operating cost models. In the past 5 years, digital communications have helped companies save millions of dollars annually through reduction in print and postage spend. Many large corporations have embraced this trend and have made the decision to get out of the in-house print shop business. Yet many are hanging on to their in-plant services, perhaps to their own detriment.
Surely it is a tough decision to outsource a significant operation within your business that has an annual spend of $10M to $20M. Concerns for employee welfare are paramount. Other concerns include quality of output, internal business services delivery, timeliness of production delivery, and regulatory compliance. A well-planned approach to outsourcing can and must address each of these areas. (FYI I plan to address what such an approach would look like in upcoming posts.)
In the meantime, here are the top reasons to consider outsourcing your print shop:
- Trend toward increasing digital forms of communication and reduced print volume
- Reduce total cost of print and delivery
- Leverage emerging technologies that may not exist within your shop
- Focus human and monetary capital on your core business and competencies
- Achieve a variable cost model that optimizes spend across various types of print
Once you begin the sourcing investigation, understand that multiple options exist for sourcing your print production and delivery services. These options are not a one-size-fits-all, so thorough evaluation is required. Often a combination of service and vendor options is appropriate. Look at the types of work performed in your shop and determine the appropriate model for each. The table below presents some high-level options to consider:
Each of the options above has a right fit and place within a solution set. The difficulty is in determining the right option or options, based on your firm’s needs and business requirements.
Make no mistake. This effort is a large and time-consuming process. But it’s one that can yield savings of 10 to 15 percent of production costs, once the transition is complete. Expect the evaluation and due diligence to take in the neighborhood of 6 to 12 months and the work transition to take 9 to 18 months. Of course, these timelines vary based on the size and complexity of each organization.
The bottom line is that print production and delivery has become commodity-based, with continued reductions in volume expected. Your competitors are leveraging variable cost models for commodity services; why aren’t you?