February 4, 2014 •Brian Watson
Let me start by stating the obvious: cutting expenses will be a major focal point for businesses in 2014.
Part of that is circumstance-driven: health insurance costs continue to rise. Energy and fuel prices outpaced inflation in 2013. And the proposed $2.85 minimum wage increase could apply additional upward pressure on employee salaries.
And part of it is just common-sense. After all, what business isn’t interested in cutting costs? Even companies planning to majorly ramp up spending in 2014 – by hiring employees, adding technology, or simply reinvesting in what makes them different – will be busy planning ways to offset their investment by eliminating red ink elsewhere from their balance sheets.
It’s Business 101: maximize profitability and limit expenditures.
And while there are seemingly countless ways to get there, the best options bake efficiency into current practices – through smarter use of resources or by integrating new technology – without the need for massive investments, tons of project babysitting, or damage to corporate culture.
That’s why many businesses are tuning to outsourcing – and the affordable expertise it offers – as a way to get a handle on escalating costs. Half of all businesses planned to increase application development and maintenance outsourcing in 2013, for example. And four-of-ten were expecting to increase accounting and finance outsourcing.
In other words, contracting is a perfect way for businesses to access better technology, talent, and processes in critical areas like HR, IT, distribution, and print management.
Yes, I said printing. While it may not top your list, print is both a major spend category for most businesses and an area with a boatload of potential for tighter control, better cost containment, and more efficient management.
In this blog post, I’ll discuss how businesses are using outsource print management techniques to deliver lucrative cutbacks in the amount of money they spend on print.
Using Selective Sourcing to Lower Print Spend
Volume is important to businesses looking to control print costs. But it’s not everything.
A company can receive quantity discounts on an especially large order, only for it to sit in inventory – tying up cash that could be used to reinvest in the business, or reward employees, or pay creditors.
That’s why the most efficient print supply chains balance scale with flexibility, and combine volume discounts with the speed and responsiveness that comes from lean operations. Scale helps outsource print managers reach favorable terms with printers. But so too does recognizing the most profitable production facility to send each customer order.
Especially considering the current economics of the print industry.
For example, only 64% of available capacity was used industry-wide in 2013. And specific vendors regularly run below even that rate.
That means there’s the potential to purchase underutilized capacity at significantly below-market rates. Printing is capital intensive – presses are expensive to purchase and maintain. And employees are typically contracted to come to work whether or not there’s a job to be produced. So it pays for printers to keep machines active to cover fixed operational costs.
With plenty of excess capacity, and printers that are more than willing to trade lower costs for the assurance of consistent revenue, it’s very much a buyer’s market. If you know where to look. And have the scale and resources to capitalize.
Sourcing enables providers to do just that – tapping into the network of print providers they’ve cultivated for efficiencies that they can pass on to clients. Because they often don’t own any equipment of their own, they don’t have a vested interest in where a project goes.
Instead they seek out printers with the most economical bids. Printer agnosticism breeds efficiency. Savings are passed along to customers. And businesses receive the flexibility and lean operations that come from smaller orders.
What Tools Drive Effective Outsource Print Management?
• Purchasing Power
Outsource print managers have the ability to leverage the combined inventories of clients in a way that consistently delivers volume savings. So be sure your outsource partner offer significant savings – either through a savings guarantee or a gain-sharing agreement.
• Printer network
Having access to a diverse group of print suppliers allows outsource managers to take advantage of excess capacity and deliver savings to clients. Strong relationships with a core group of vendors enables outsource print providers to use scale ordering to receive favorable terms from pre-vetted sources for clients.
• Supplier Diversity
Although they all apply ink to paper, there’s a great deal of diversity among printers – in equipment, in services offered, in expertise, in sustainability and environmental certification. Outsourcing enables businesses to tap into a network of vetted production sources so that projects are allocated appropriately.
• Analytical Sourcing
Many outsource managers now use internal sourcing databases to manage the process. For example, tracking speed, cost, and quality to ensure that clients receive the best possible conditions, at the lowest possible price.
Ready to learn more about how outsource print management can help you reduce print spend? Download our free whitepaper, The Case For Outsource Print Management.