How an in-house bindery can be a profit centre

My following comments are probably going to upset a few of my competitors, but since I often have them upset about something or another, I’ll let it fly.

Most printers should have their own bindery! I wouldn’t have said this 10 years ago, but a number of factors in the industry have changed. There are five specific reasons why I think a printer should have its own bindery. First, customers are requiring an increasingly faster turnaround. Second, the needed bindery skill sets for straightforward jobs are declining every year. Third, the space required to house a bindery today versus 20 years ago is substantially less. Fourth, if managed properly, an in-house bindery should have 100% utilization. Last, as printers increasingly understand the value of marketing, an in-house bindery should be a selling point, a marketing tool and an expanded printer’s offering.

Talk to some of your trade bindery suppliers ... the more progressive ones can give you good guidance on what new and used machinery models would be appropriate for your company. To elaborate my first point, an in-house bindery must focus on straightforward, problem-free jobs. With proper attention, such as managing “flow” of jobs directly from the press to the various bindery operations, delivery times can be tightened. The in-house bindery can anticipate (by simply looking across the plant) what is coming and what its priorities should be. This allows the printer to visually manage the process and have faster delivery times. An in-house bindery allows the printer to get advance samples to clients more quickly and permits the printer to see print problems more readily. If, for example, the colour is too light or too dark, this is a problem only the printer and the customers would see. It is almost impossible for a trade bindery to be a quality control source for variations in the printed product.

Second, 20 or more years ago, binderies required a much higher skill set than they do today. Trade binderies then, for a number of reasons, attracted and retained people with high skill levels. In my opinion, the skill set required to run new machinery, such as folders, has been remarkably reduced in recent years. With the use of stackers, electronic adjustment controls and computer driven setups, the skill required is greatly reduced. Compensation claims are also greatly reduced.
Third, 20 or more years ago, it took three folding machines to produce what one new machine produces today. Space requirements are, therefore, substantially reduced and the very fact that there are fewer people required means there is less room needed for lunchrooms etc. Because fewer people are needed for management and there is substantially faster flow, reduced space is required for an in-house bindery.

Fourth, an in-house bindery should be a component of an overall marketing effort. Your clients should be invited to see your bindery, your sales force should be more in tune with the technical capabilities of your in-house bindery and your sales people should sell to the bindery’s strong points. Whatever its strong points, sell your in-house bindery as an added reason for why your customers should buy from you.

My last point may be the strongest. An in-house bindery has potentially 100% utilization. A number of years ago, when I was the president of the world’s largest bindery association, a number of our members who ran large trade binderies did an interesting exercise. Each of us took our last five years of financial statements, broke them down per month for a total of 60 months, and wherever we found a loss, simply plugged in “zero.” A magical, unpredictable yet consistent result occurred. On average, our profits doubled. What that told us, as trade bindery owners, was that the issue of profit was not managing the busy months, but rather “plugging the holes” in the months where there were losses.

By and large, this exercise in the real world has limitations because a trade bindery always has slow months. Nevertheless, what does this exercise mean for printers when considering the option of installing their own bindery? Simply, when properly managed, a printer should have 100% utilization (or close to it). How? Calculate that your overflow work as well as many of the difficult jobs and the highly specialized ones will go to a trade bindery. Project volume so that there is always enough work to keep your people busy. This will require cross training, so that operators can run, for instance, a folder and a stitcher or a small perfect binder and cutter, etc. There is a phrase that is true: “Work always expands to fill the time.” If your workflow is properly managed, an in-house bindery will be a profit centre.

I would encourage you to talk to some of your trade bindery suppliers. One or two of them may be stuck in the dark ages and may be defensive, but the more progressive ones can give you good guidance on what new and used machinery models would be appropriate for your company. For instance, buying used folding machines is often an unwise decision, whereas a used stitcher is sometimes a smart buying choice. When your next budget discussion comes around, think bindery – your own. It would be another profit centre, another selling point, another volume builder and just a good choice to make.

Now, to conclude this counter-intuitive approach (especially from a bindery guy). It is my conviction that trade binderies will eventually have to focus more narrowly on single products and have highly-focused equipment. A bindery must evolve into doing specialty operations that no printer would ever want to spend the capital buying, such as spiral wire binding equipment, high speed tippers, miniature folders, etc. A bindery’s equipment also needs to be highly focused and must be the most productive tool that money can buy.

Trade binderies will always be around because they will always be needed for overflow work or when a printer’s bindery equipment is broken. Any trade bindery that continues to do just the same basic jobs that a printer’s in-house bindery can do, will not be successful and will eventually go out of business. So set up your own in-house bindery, it will surely be a profitable choice!

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