Ten Smart Ways to Save Money on Print Procurement in 2010
Think about $150 billion! That is what organizations spend on printing in the United States each year. If 25% to 45% of that could be saved annually, that would be $37.5 billion to $67.5 billion that could be redirected for other purposes such as new jobs, new facilities, employee health care, product development, debt reduction, etc. - even good old fashioned profit.
Without a change in print procurement methodologies and management tools this level of print procurement cost reduction is simply not attainable. Yet U.S. patented procurement procedures are available to make 25% to 45% savings a reality without compromising quality or delivery requirements. The patented methodology strengthens the procurement process by pre-qualifying the buyer's print suppliers, matching suppliers to only jobs they can perform and creating a competitive bidding environment. Every detail from design to delivery is tracked and documented, and 100% transparency is provided. Embracing this approach should be a new year's resolution for every C-suite occupant.
As a matter of background, let's define print. Often the only items to be considered print are business cards, stationery and copies. Not so, as any item where upon ink is applied to its substrate is print, such as when ink is applied to paper or information is applied to a CD ROM. Examples of print include direct mail, brochures, catalogues, financial documents, annual reports, advertising circulars, point-of-purchase displays https://www.sourcing-force.com/, labels and marketing materials. Print also includes creative services, customized packaging, premiums or ad specialties, fulfillment services and all other items where information is placed on a substrate.
So what are excess print expenditures costing you? Print usage varies widely from organization to organization, but on average print spend accounts for about 3% of operating revenues. Doctors, lawyers and other licensed professionals typically spend less than 1%. Others, like those who depend heavily on direct mail or those in the food processing or packaging businesses, spend 5% to 20% (or more) of their operating revenues on print.
Because the savings are there to be had, savvy executives are analyzing their print spends like never before, centralizing print procurement policy making and identifying print as a line item on profit and loss statements. They also are applying 10 best practices to achieve maximum new methodology benefits:
1. Creating a pre-qualified supplier pool in which all suppliers are uniformly and objectively evaluated. This allows the buyer to hand pick suppliers and limit the pool to just those with which the buyer has done business. Other suppliers can be added, but the key is objectively qualifying each supplier in the pool as integral to quality control. You only want suppliers bidding on your projects that have proven that they can deliver quality work on time.
2. Creating thorough bid specifications with full details before an invitation for bid is sent to pre-qualified suppliers in the supplier pool. It is essential for specifications to be complete prior to final award of the job so expensive changes are avoided later. This allows suppliers to price accurately and best to determine when there will be a production opening for doing the job.
3. Creating a fair bidding environment in which the computer matches project specifications to supplier attributes to determine objectively which pre-qualified suppliers are capable of doing the work. With detailed project and supplier data, the computer can automatically match each project available for bid with only those suppliers with matching capabilities. This levels the playing field.
4. Creating efficiencies to save time and money. Since critical data already is in the computer, the buyer does not have to "reinvent the wheel" each time a project is put out for bid.
5. Creating mutual acceptance of the process whereby every supplier in the pool knows that it can bid low on any project without setting future expectations and new price levels. Suppliers will reduce their prices when they have open production time provided they are not expected to bid the same low price even when they are busy.
6. Calling for and awarding bids in a timely manner so the winning supplier will hold a production slot for the project, schedule staff, prepare equipment, order materials and make other preparations required to do the work. Suppliers learn that performance is required to receive opportunities, while price is the criteria to win projects.
7. Establishing full transparency by sending bid results to all suppliers that submitted a bid. This not only creates greater credibility for the buyer among suppliers, it promotes improved competition.
8. Monitoring every step of the workflow process to ensure clear communications, attention to every detail and a deliverable end product. This must begin with the conceptualization of the project and continue through edits, changes, reporting, production, packaging and delivery.
9. Ensuring that work is performed per specifications and on time. By establishing full accountability, the buyer is protected against delays that could cause artificial pricing hedges in future bids from the winning supplier.
10. Completing the project with accurate invoicing. By making sure the invoice is complete, correct, agreed upon and reconciled, before being sent to accounts receivable, extra charges are not overlooked and erroneously paid.
A question that is sometimes asked is how it benefits suppliers if suppliers are being cut throat competitive in order to fill downtime. The answer is that suppliers increase their own bottom line profitability by 10% to 15% of revenue when participating in this type environment. Remember, the alternative is to allow downtime to sit idle resulting in no income. Because the buyer is inviting only trusted suppliers to compete for the print work, it is a win-win for all involved.
About William Gindlesperger, Chairman and CEO of e-LYNXX Corporation
Mr. Gindlesperger is a nationally recognized entrepreneur, inventor, author and consultant in print and procurement. He founded ABC Advisors and its successor, e-LYNXX Corporation, in 1975. Print buyers and suppliers alike have benefited from his insight and innovation.
Mr. Gindlesperger has testified before the U. S. Senate Committee on Rules and Administration regarding government print and procurement policy. He also has worked directly with numerous Congressional and Senatorial members and staff and has advised Congress on the development, operations and future of the U.S. Government Printing Office (GPO). print procurement and the federal print program in general.
He has been recognized for his contributions to PIA and services to the printing industry. He was inducted into PIA's Ben Franklin Honor Society of print industry leaders in 2009 for his lifetime contributions to the print industry.
Mr. Gindlesperger invented the methodology that optimizes cost reduction in the procurement of specification-defined goods and services. He has been granted two separate business method patents by the U.S. Patent Office, first for the competitive procurement of print and then for the competitive procurement of all customized and specification-defined goods and services.
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