Looking at the bottom line: cost savings in production

In a time when print has been commodified and deemed superfluous in a digital age, it can be easy to fall into the trap of ‘cutting costs’. The problem with this phrase is that it doesn’t embrace what an actual ‘cost’ is. According to WallStreetMojo, in accounting a cost refers to a payment from which you expect some kind of return. Commonly, these are capital investments such as equipment and software that are purchased to match the market conditions of today and plan for the customers of tomorrow. However, an expense is money spent regularly to create revenue, like utilities. It’s one thing to cut an expense; it’s another to cut a cost that may directly affect the quality of the products you produce. Which is why I subscribe to the notion of “cost savings” instead. By assessing and rethinking the purpose of your investments and examining your workflow, you can identify ways to be more efficient and effective at producing products your clients want. Think (and work) smarter, not harder, I say. 

Most print companies have a variety of assets at their disposal: machines, software and people. Naturally, you want to optimize your company’s performance so that these three assets aren’t wasted. Therefore, it’s important to execute strategic planning with a holistic approach, examining your company’s workflow and assets, in order to make decisions that remove obstacles for operations. I spoke with Jay Mandarino, President and CEO of CJ Graphics, and Kevin Lanuke, President of Blitzprint, for their insights into cost savings.

I would caution there is no easy way to save money. Mandarino suggested many times, that in the effort to cut costs, the wrong thing is removed – people and salaries, a piece of equipment, or a finishing process that would elevate both the printed piece and price. There’s a saying that you have to spend money to make money. Many of the ideas in this article require the investment of time and/or money in order to bring a benefit to your company. But the three key takeaways are:

  1.   Measure and respond to your workflow
  2.   Automate where possible
  3.  Train and retain staff

Demystify your workflow: track everything

A company’s workflow exists from front end to back end. Cost tracking is key to understanding whether or not jobs are making money, and then responding to that information to effect change. For Lanuke, data is hugely important in understanding if you’re getting a return on your investment. Tracking can be done manually with careful reporting and spreadsheets, but many printers have opted for a management information system (MIS) to track all costs, expenses and sales for final analysis. In fact, WhatTheyThink’s Printing Outlook 2019, revealed that a MIS is the number two item print businesses are planning to buy in 2019.

For CJ Graphics and Blitzprint, their MIS systems are at the heart of understanding their workflow, allowing them to execute cost savings holistically across their companies. This can include understanding how to maximize equipment and staff time. “The workflow is the glue that binds everything,” said Lanuke. “Everyone knows their role and responsibilities. So, when a job is going through the plant, we have the greatest chance of utilizing the amount of time that we spend – and we’re very productive because our workflows are as tight as a drum.”

Careful analysis allows for better insight into your pricing and cost models. Mandarino felt that “a MIS is probably your best way of tracking actual costs. You really need to have your cost summary sheets done for every job and need someone to look at them and say, ‘Hey, we keep losing money on this customer.’ ” However, a MIS is a big investment. He advised: “when looking at a MIS, don’t buy the entire technology up front – negotiate. Do it in stages. It’s a big move to get into a new system.” The takeaway here:  examine the problem areas and invest the time in research and development to execute major changes.

Automate to save

Once you audit your workflow, automation is the next step to maximize productivity – be it through physical technologies such as robotics and automated equipment, to implementing software or processes that allow for ‘touchless’ operations. According to Keypoint Intelligence – InfoTrends’ 2018 North American Software Investment Outlook, 44% of printers reported that dealing with a high number of small jobs was their biggest workflow bottleneck. However, only 4% of these printers had fully automated processes that offered job onboarding. Online customer file submission, an automated preflight solution, and smart impositioning, are processes that can and should be automated.

Both CJ Graphics and Blitzprint have implemented automation processes to better manage production efficiency by removing touchpoints. As Mandarino pointed out: “We use Insite from Kodak. Customers love it and it saves us time. Our Agfa 3300 is full automation. It picks up one, two, three or four skids automatically, bringing the skids across to print them and then unloads them on the other side.” Blitzprint uses multiple storefront platforms. Lanuke added: “Customers order goods online. Job jackets and pick tickets are produced automatically, and print-ready files are ready at the print engines. This significantly reduces upfront costs and gives us a competitive edge.”

So, when implementing automation, start by looking for areas that’ll have the biggest return on value and cause the least disruption. Lanuke believes in the 80/20 rule” 80% of outcomes result from 20% of all inputs. By working backwards, he suggests you’ll identify what you need to change in order to maximize profits.

Value your people

If workflow is the heart of production, your team is the circulatory system. There are many individuals involved in the operations of a business, and having a forward-looking approach can help create cost savings. Looking outwards and building relationships with suppliers is also imperative. According to Mandarino, “CJ Graphics looks to our suppliers to minimize costs. We do volume purchases and work out deals and contracts with suppliers where we say, ‘We’re going to give you this amount of business in a year and we expect a return for that.

Staff training and support is a must to ensure longevity and cost savings. Of the 200 Canadian businesses surveyed for the report, Navigator: Made for the Future, 47% of respondents said their companies planned to spend more on training employees, and 42% said they’d spend more on employee satisfaction and wellbeing. For Lanuke, it’s simple math. “Over-extending employee-to-sales ratios is a killer in profitability in business. Providing leading-edge tools and proper training is a significant edge in today’s market. Acquiring new business should not always result in the hiring of more people.” Ideally, your business should be able to grow without having to hire more people by making employees more efficient. Mandarino has a similar philosophy. “We have a very high retention of staff. We’re proud that we have a great team and we have a social committee that plans activities all the time to get people involved. We’re always training in all our departments so that people become experts and mentors to others.”

Forming relationships and having transparent communication is key for automation and workflow changes to succeed, as there can be intimidation and trepidation when a new technology is introduced. “We help people understand the importance of technological changes, the benefits of them being better trained, and the value they bring to the table,” said Lanuke. Mandarino echoed: “When you get people involved in the process from the beginning, then it’s not like they’re being forced to use it and they tend to be more open.”

The bottom line

For cost savings there’s no easy answer. I believe the cost justification component may be the key to unlocking this mystery, as it’s difficult to justify the expense of implementations if you aren’t fully aware of the labour and process costs that’ll be incurred. As illustrated above, potential cost savings come as a result of careful and informed investment. But at the end of the day, you’re selling a service to customers. Quality can be subjective, but good service is memorable. Implementing an efficient workflow, using automation to simplify repetitive or time-consuming processes, and retaining highly trained and dedicated staff, is what will to lead to savings. However, whether you tackle each individually or together, you’ll be in a constant process of refinement as you assess, re-assess and change.

 

 

Olivia Parker, B.Tech, MPC completed her Masters of Professional Communication in 2014 to complement her Bachelor of Technology (2013) from Graphic Communications Management degree at Ryerson. She presently is the Innovation & Support Specialist at Taylor Printing Group Inc. in Fredericton. You can connect with her on LinkedIn.

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