PERF Study: What's the True Cost of Processing a Print Job?

One of the aspects of print manufacturing that is transparent to most customers is the processing of the order. Customers understand prepress. Customers understand printing, binding, and mailing — all of the tangible services that go into the cost of a job. But processing is intangible. As far as customers know, it’s like making a retail purchase. Someone takes the order, punches a few buttons, and it’s done. It doesn’t take any time and it doesn’t cost anything to do.

Print manufacturers and distributors know better. Job specing, estimating, and processing is time consuming and costly. For complicated products, all of the steps across the entire workflow, from order entry to shipping, can add hours to the job. Not to mention the time spent communicating between vendors and transmitting documents, such as estimates, order acknowledgement, shipping notices, invoices, account statements, and so on.

PERF studies estimate that it takes a typical distributor company 200 steps and 23 different documents, and from 76 to 96 minutes, to process a print order. And that’s using automated forms management and processing software. Once the order comes in on the manufacturer side, PERF studies show that it takes a company 36-168 minutes to process a complete print job. Add it all up and that equals two to four hoursper print job spent on non-tangible, non-billable activities.

What does this mean for you? Whether you are a distributor or a manufacturer, the amount of time you spend processing a job matters—a lot. How efficiently is that being done? How often are those efforts duplicated at different steps in the process? If you are processing inefficiently, or if you are not taking into consideration all of the associated costs, your shop can be busy, just not busy making money. By contrast, reducing the internal cost of job processing and customer transactions results in faster customer service, faster to press and shipping, at a lower cost.

For this report, we asked manufacturers and distributors to outline all of the steps they take in processing an order and, if they know the amount of time each step takes, to include that, as well. The results were eye-opening. It’s one thing to go through the steps every day. It’s another to see them on paper. The process is far more complex than most companies realize.

Initially, we had planned this report to include cost ranges for each of the steps in a typical workflow, but in the course of interviews, it became clear that there were larger issues relating to order processing and workflow automation that needed to be addressed first. Therefore, in this report, we will look at the issues and workflows print manufacturers and distributors are dealing with; then, in the next installment, we will look in more detail at each of the steps and the costs associated with each.

The Workflow

It goes without saying that the time and costs of processing an order will depend on the complexity of the job. A simple cut laser sheet can fly through the system, while a multi-ply cut sheet form with blown-on labels will take much longer. Just how long each takes depends on the experience of the customer service rep (CSR) or equipment operator handling the file each step of the way.

Wrote one distributor, “One of my CSRs and I wrote down the steps to processing an order for a unit set form. This scenario assumed that a sales person got a three-part unit set form sample and brought it to the CSR to quote. Then we assumed that we got the order, so we set art and sent the order to a manufacturer. To process the order took the CSR from 76 to 96 minutes. This is just the actual keystrokes and handling, not including the time that the job was held waiting for art and customer approval. It also did not include the time or number of steps in accounting or in the warehouse.”

The steps in the manufacturing realm are equally complex. Here are the actual steps for processing a new carbonless snap set order from one of the manufacturers participating in this report. While every manufacturer’s workflow will be slightly different, this example illustrates just how much manual intervention is still required in the process, even when job processing software is used. Each of these steps has many sub-steps, as well.

— To view this workflow, click here —

In total, this is approximately 100 steps. And that’s a simplified version of a straightforward print job with no production problems. When each task is broken down into its sub-components, the number of actual steps could easily double. Each step takes several minutes or longer. Add them together and it’s clear why streamlining and automating the process becomes so important.

Shaving Time

The benefits to automating these steps can be substantial. When you consider the number of steps required to process each order, any streamlining can shave critical hours off the job. The more time you can save, the more profitable each job becomes.

Just consider how much time can be saved just by automatically generating purchase orders. Once the specs are input, most systems will generate P.O.s and email them to all of the vendors involved in the job. This can save half an hour or more per job.

Each vendor’s software has its own time savers, as well. Some allow distributors to transmit purchase orders electronically via XML or email, as well as traditional fax or printed copy. For repeat orders, distributors can create a reorder purchase order with a single mouse click. Another solution automatically sends out documents to multiple recipients simultaneously, according to each recipient’s preferred method of receipt—email, fax, or hard copy. CSRs can retrieve information and documents instantly, simplifying customer interaction. Yet another allows distributors to define all of the component materials and processes, establish a schedule, and track shortages and missed completions. The detailed status of any job is available at the touch of a button.

The benefits go beyond saving time to include production scheduling, as well. Manufacturers can immediately see when orders are complete and when and how to load their presses based on workflow as the job progresses.

“We’ve been able to improve our lineups by using our system to adjust our production scheduling based on requested ship dates,” notes one manufacturer. “By comparing the specs and ship dates with the capabilities of our equipment, we can match the right cylinder size, the right number of colors, and the right color sequences, not only with the right production schedule, but with the right machinery for maximum efficiency. We can even schedule based on order size to save set-up time.”

This manufacturer processes in excess of 20,000 orders per year, so these efficiencies are multiplied across the organization.

Most software solutions interface with the major shipping systems, and some even interface with proprietary applications, such as UPS, FedEx, and DHL through special modules. These modules track costs, date of shipment, time, freight amount, and tracking ID number, and process everything through freight handling rules defined by the customer. If the software is integrated with billing, it can complete the billing process automatically, as well.

Custom shipping preferences can be programmed into your system, if necessary. If your existing system is Open Data Base Compliant (ODBC), this makes the process much easier.

Of course, getting the most out of job processing automation requires continual tweaking. Initially, you may be working with estimates, but once the invoices start to roll in, the actual costs need to be entered before generating the invoice. Software typically has a series of cross checks to compare the actual costs with the anticipated costs, so if the difference between the two is within acceptable tolerances, the invoice can be accepted automatically.

If the software allows user customization, efficiencies can be even greater. In some versions, distributors have the option to set up different pricing options for different customers, or by type of product or shipment. For example, for the majority of a distributor’s customers, they might mark up freight 5%, but for a specific customer, they might pass it through dollar for dollar. Another customer might have its own freight account that it pays it directly. This requires setting up a system for making those kinds of decisions in an automated way, but once it’s done, it’s a real time-saver.

Costing Benefits

Although the benefits of automation have always been a boon, they become even more advantageous in today’s business climate. As the length of print orders shrinks, the time spent processing the job becomes a larger part of the overall job. You can’t spend two hours setting up a job that takes five minutes to print. In a POD environment, your order processing must be kept to an absolute minimum or your profitability will erode. Inefficiencies in processing might be okay if POD jobs are loss leaders to win longer-run jobs, but as the percentage of short-run jobs grows, reducing processing time will be critical if those jobs are to remain profitable.

The benefits are not just in time. They are also in costs and job pricing. How much does each step cost you? Does your pricing reflect your full time investment? This is where inputting cost estimates for each task has a real pay-off. Once the job is complete, someone—whether management, CSR, or press operator—can go back and adjust any discrepancies or update any changes, such as changes in the price of ink or paper). The better the information on the front end, the more accurately you can price jobs to maintain profitability.

Distributor software (available from companies like e-Quantum Incorporated, Kramer-Smilko, TopForm and Xetex Business Systems) simplify this process by including all of the charges from the vendors involved in the job. They also include costs for services rendered by the distributor, such as charges for artwork and inventory storage and management, often pro-rated across inventory, and so on. The software should be intelligent enough that, when vendor invoices start to roll in, the distributor can go back and update the costs as necessary.

On the manufacturing side (from vendors such as Plantrol), software is set up to track paper, ink, press run time, press down time (such as for plate changes or ink changes), and operating procedures. If product verification is required, or if there is subsequent inkjetting or other tasks, the time and costs at each station can be recorded and the charges applied accordingly.

Once JDF (Job Definition Format—the basis for the PrintTalk standard, now hosted by CIP4) is widely adopted, software will be able to track all of the job components, both time and materials, automatically. But while JDF is commercially available in the commercial printing industry and comes standard on most new digitally driven equipment, the special requirements of the forms management industry (represented by the PrintTalk portion of the standard) are still being ironed out. The latest published PrintTalk standard is 1.1a, published in January, 2003, but the standard has undergone much revision since then. Version 1.3 is out for review and unpublished, but is accessible to CIP4 members and is being used by some members for commercially viable forms management solutions today.

Eventually, full JDF/PrintTalk workflows will track every aspect of the workflow, from initial order processing to shipping. Although widespread implementation is years away (since these workflows require, not only further software development, but fully integrated distributor and manufacturer workflows), PrintTalk is being used in portions of the workflow that make sense. This means that individuals, from CSRs to press operators to managers and supervisors, are responsible for manually inputting data relating to their individual portions of the job.

This does take some additional effort, but it is worth it. After implementing its job processing software, for example, one distributor learned exactly how much of its profitability was being diluted by not passing on the inbound freight charges. Once the software was implemented, inbound freight was captured and automatically pro-rated as the product shipped. With pricing in line with costs, profitability on its jobs went up. In another example, a distributor discovered that some CSRs were entering business card orders into the customer’s online proofing/ordering system rather than the customers doing it themselves. This allowed the distributor to set up a procedure to train customers and remove the redundancy.

Custom? Or Off the Rack?

The benefits of such automation are tremendous, and with the forms manufacturing business in the mist of significant change, software vendors are both trying to keep up with those changes and stay one step ahead. There is a wide range of functionality in today’s software packages at a wide variety of prices, and for distributors and manufacturers, matching the right package to your workflow at the right time can be a real head-scratcher.

There are two major areas to consider. First, is integration into existing workflows. This is a bigger issue for manufacturers than distributors, since they may exist within much larger organizations with companywide ERP systems. Any modules must be able to integrate with all of the components of the existing system. Over the years, software manufacturers have broadened their compatibility with third-party vendors, or custom tweaks can be made.

Next is the amount of commercial printing work that a firm is doing. Very few manufacturers and distributors are doing forms alone anymore. They are doing a wide mix of jobs, including a growing amount of commercial print. One participant indicated that his business is up 15% over last year, largely due to his decision to go after commercial printing work, primarily print-on-demand.

Software vendors are not unaware of this shift, and most software now includes the ability to process commercial print jobs. Assuming that their software includes or can be updated with these modules, the challenge for manufacturers and distributors is not on the software side, but the human side. CSRs trained to handle forms processing cannot easily switch to processing commercial printing without training. One distributor sent one of its key CSRs for training in page layout and design for commercial printing, as well as an overview of print production, to prepare her for the growth in this area. This CSR was very impressed with the detail in the commercial print jobs screens, but says that she is the only CSR at the company using them. The rest of the CSRs simply write the specs in by hand because they don’t understand how to use it.

Using cost-based software for things that it was not intended for can further complicate matters. There are areas—specifically, services as opposed to products—that cannot be priced on a cost-plus basis. And what happens if the manufacturer or distributor wants to move into completely new areas, such as Web-to-print, database development, 1:1 personalization, or marketing services? How do you work those into this software?

Then there is the larger question of the future of cost-plus pricing itself. Today’s software—and print production business models—are designed around cost-plus. While the software will help print manufacturers and distributors get a handle on their costs, as the volume of forms printing decreases and customers move to different business models for handling forms, the business models of manufacturers and distributors must change with it.

Many manufacturers and distributors are already aggressively moving into commercial printing, digital printing, and print-on-demand. In this, they can take their cue from commercial printers, who are rapidly shedding the cost-plus pricing model. The focus is on providing comprehensive marketing and printing solutions, where the value is derived from more than the print itself. They are moving into business development, marketing services, and other communications support roles of which print is only a part. It’s not that there will be no role for cost-plus printers of any kind in the next five to 10 years. It’s that there is only room for so many cost-plus printers. If the industry, as a whole, is going to survive, it’s not going to be using traditional business models.

Impact of Web to Print

If this is the direction of forms manufacturers and distributors, automating job processing is important, but not a panacea. They will still need to adjust business models and pricing strategies as they evolve their businesses over the next several years.

As part of this shift, perhaps one of the biggest opportunities is Web-to-print. Many distributors, in particular, feel that the entire process of taking and processing forms orders is about to change. This shift has already begun in the commercial printing industry, where Web-to-print is rapidly being adopted for marketing applications. Now, it is starting to catch on for forms manufacturing, as well. These workflows have nothing to do with traditional forms manufacturing workflow or pricing.

One of the most time-consuming elements of order processing is taking in the information on the front end. But what if customers were responsible for inputting that information themselves? What if they could go onto a Web site, input their own specs, even design their forms in templates, so that proofs could be generated automatically and no prepress was needed? Even for custom and first-time orders, this would enable the kinds of efficiencies that are only found on repeat orders processed the traditional way.

And what if this model could be used to capture all of a customer’s printing business? Including marketing collateral, corporate identity, and promotional items?

Enter the move toward Web-to-print interfaces, where customers input their own specs, whether for forms or commercial print jobs, and all of the order processing—including proofing—happens automatically. Some companies launched into this business several years ago, and are now poised to market Web-to-print solutions. These are not your father’s forms manufacturing solutions. In fact, many of the demos look more like solutions in the commercial printing industry than they do forms.

The challenge for pricing is that there are large time investments on the front end in terms of concept development and design. This isn’t like putting together a form. It’s a process that, especially when it includes marketing collateral, can take weeks or months and the consultative and creative work carries its own substantial value. This is not a service that lends itself to cost-plus pricing. It’s another model entirely.

Another challenge is that the benefits of such systems must be sold to the marketing people, not the print buyers. Because the benefits to the customer fall under the umbrella of digital printing and print on demand—whereby customers can reduce or eliminate stored inventory, make changes quickly, and allow greater flexibility in forms management and design, while still maintaining brand control—this requires a whole new approach to marketing and selling print production services.

Where Can Improvements Be Made?

With all of this in mind, what are some of the immediate and practical steps that manufacturers and distributors can take to improve their profitability?

1. If you don’t already have some kind of automated form management and order processing system, invest in one. As print volumes decrease and order sizes shrink, the costs of job processing have a greater impact on profitability. The efficiencies created by the automation of previously manual tasks can make the difference between turning a profit and taking a loss. Whether this is a system optimized for forms, Web-to-print, or commercial printing is up to you.

2. Integrate your software components. Just because companies’ forms management and order processing is automated doesn’t mean that it’s a single, integrated system. Workflows kludged together with three, four, or more software packages are little more efficient than none at all. Consider replacing any makeshift automation with a single, comprehensive system. Integration of all the modules saves re-entry costs and eliminates errors and costly re-runs. Web site integration can save internal processing costs significantly.

3. Streamline data entry. To some extent, data collection will always be a manual process, but it can be done much more efficiently than it is today.

First, if your salesmen take orders on pieces of paper in the field, then ask the CSR to input that data into the computer when they get back, consider asking them to input specs directly into their laptop. This eliminates duplication that costs you time. At least one software solution provides a remote access database that allows sales representatives and others to work real time anywhere in the world that they can get an Internet connection.

Second, remove redundancy at other stages of the system. Especially at the manufacturer level, plants may have different software for estimating, print production, accounting, and even shipping. At each stage of the process, if someone has to re-enter the job specs into the system, you are losing time.

By integrating all of these systems, not only are you gaining back that time, but you gain access to feedback loops that offer time savings in automatic generation and emailing of proofs, invoices, acknowledgments, and other documents.

Many operational software packages also create complete electronic job jackets that automatically store electronic copies of the documents associated with the job. Too many distributors are still hanging onto unnecessary paper files and job jackets. This not only tends to single thread workflow, but it creates the potential for errors because changes are made based on paper notes that do not always reach the computer.

4. Implement XML interoperability. One of the areas of greatest—and unnecessary—duplication of effort is data entry, both on the distributor and manufacturer ends. PERF is proud to support the industry’s efforts to implement XML interoperability. At least one vendor has already introduced a commercially available PrintTalk solution so that its customers can receive vendor invoices electronically. Because no solutions for manufacturing software are currently available, print manufacturers (often working with software vendors as consultants) must develop their own custom integration solutions. Once created, however, the efficiencies are significant. For manufacturers, there is no order entry on the front end. All of the specs already input by the distributor are automatically read by their systems. For distributors, the software includes automatic feedback loops, including the comparison of the estimated cost to the actual costs, so if they are within acceptable tolerances (as set by the distributor), the invoice is automatically generated with no human intervention. You can get involved with this joint PERF/DMIA project by sending an email to dmcgarry@dmia.org, and be sure to mention XML.

5. Seriously consider the impact of Web-to-print on your operations. The way customers use print is changing. Nowhere is that more clear than in the forms industry. Web-to-print models increasingly fit into the way companies use and purchase print, and distributors and manufacturers who do not seriously consider how these workflows can be implemented by their customers will find themselves behind the curve very quickly. Commercial printers are already aggressively selling these systems. If you don’t start offering them to your customers, someone else—whether in the forms or commercial printing industry—will. Or your customers will start pursuing them on their own.

Got Leaky Processing?

In a nutshell, if you’ve ever wondered where your profits are going, they could be leaking out of your order processing. How tight is yours? Even if you have some level of automation, it could still be leaking profits at an alarming rate.

Yes, it costs money to invest in intangibles, and when there are tangible issues to be addressed, it might seem that software automation and integration ought to be low on the priority list. But the fact is, this business is changing. Run lengths are changing. The types of documents customers are asking for are changing. And the way that customers want to interface with vendors is changing. These changes are as fundamental and critical to profitability as your building, your equipment, and your personnel.

In this environment, suddenly intangibles can have very tangible benefits indeed.

The PERF Print Report is published by the Print Education & Research Foundation.