Pay attention at the back

Minimising Risk

2010-12-12T10:08:00.000-08:00

In view of the risks that businessmen, especially printers, routinely face, it's increasingly important to minimise them. It must be at the back of every printer's mind. Let's face it - they say that 80% of all businesses fail in the first year.

So are printers good at avoiding risk? On the whole, possibly not. In general many think that any added value left after paying the external costs must be all bunce. What they never remember is that any job can go wrong, and (increasingly) any customer can go bankrupt. So if you have to lay out 40% of a job to buy the stock and artwork, you are risking that 40% on the chance of gaining the remaining 60%. It's tempting to say that in horseracing terms thats odds of 3 to 2 on, for a horse thats, say, 99% sure to win. But its more complicated than that.

When you include the internal costs, if 10% of the total is net profit, that gives you 10% return for 90% layout, which is precious little. Yet some printers will even disciount jobs 'just to keep the presses rolling'... and then other printers try to compete with them (instead of waiting for them to go bankrupt).

But the really nasty part is that if you accept a job at a 10% discount you have to do another job of similar size at 10% profit just to break even.

One of the great advantages in costing a job properly, with all the costs taken into account, is that you really can identify which jobs to walk away from. And some printers have found to their surprise that simply by avoiding those worthless jobs they get a higher net return while doing less work!

So the first thing to do is to cost your jobs accurately. Not 'what the market will bear' or 'I suppose we could run the press faster which would reduce the price', but 'really how much would it cost to produce'. And use that as the starting position.

Even in these uncertain times we keep finding printers, and indeed many other tradesmen, don't really know what any individual job really costs them. And that's sad.

Its a mad world.

Ever heard of 6S? It’s a Japanese methodology used to make the workplace more efficient.

2010-01-14T04:56:00.000-08:00

6S certainly seems to pay dividends - it’s in use at many successful Japanese companies. Honda and Toyota claim that 25%-35% of all customer-seen problems are the result of not adhering to 6S principles.

The good news is that it applies just as much to printing as it does to other industries.

6S is so called because it is divided into 6 different ‘phases’ each beginning with S, both in the original Japanese, and in English. The 6th phase, Safety, was a bit of an afterthought, but some people say it’s unnecessary as adherence to the first 5 should result in a safe work-place automatically.

In this modern short-of-time world we often neglect good organization, and that, in turn can create inefficiencies which take up even more time. This applies not just in the printroom, but in the office too, and even in the organization of the items in your desktop computer.

6S was designed to help. It will also impress the hell out of your customers! Anyway - here it is, then - 6S for your company.

Phase 1 – Sort – Store or Sling: Sort through your offices and shopfloor and either put into store or sling out everything that is not essential. When was the last time you really had a good clear-out? You mean you’re going to re-use that damaged plate? Don’t make me laugh! And those extra promotional tickets for the big event last summer? What about those old job tickets? You printed the jobs two years ago!

Phase 2 - Set in Order: With an eye to efficiency, arrange your departments and equipment and stores in the way that streamlines your workflow and minimizes effort. Make sure there is a place for everything and that everything is in its place.

Phase 3 – Sweep and Shine: Let’s face it, most printshops could do with a serious clean-up. Before going off shift, make it a rule that the work area is cleaned and tidied. That applies to office staff as well as shop floor. That way everyone can rely on starting work each day in a clean environment, and confident of knowing where everything is. Being clean and tidy should be a part of daily work - not an extra occasional chore.

Phase 4 – Standardize: Doing things in a standard and consistent way helps people operate efficiently and to know their responsibilities. Lay down rules of working and make sure people stick to them.

Phase 5 - Sustain the discipline: A continuous re-assessment of these principles makes sure they continue to be reinforced as part of daily life, rather than slipping back into the old slip-shod way of working. Changing circumstances may need reassessment of the first 4 phases, but the principles should be maintained. New equipment and new products make it essential to change things and provide training.

Phase 6 – Safety: The first 5 phases lead to a safe workplace, but safety should always be reviewed after every change in work practices.

What's that? You already do all this stuff? Then I'm pleased (if a little sceptical). Drop us an email so I can buy shares in your company!

So what lost us that sale?

2009-11-23T07:41:00.000-08:00

It’s relatively straightforward to work out the ratio of estimates that turn into live orders, and for that reason, most printers regularly do it. But what’s less often done is to track the REASON you win or lose jobs. And that’s how you measure all sorts of useful things, from identifying the weak spots of a salesman, to revising your pricing strategies.
So how can you manage this? Well for a start you could make a list of reasons why your company loses quotes (or wins them). The list will be a permanent work in progress and you will doubtless add to it as required, but for starters you could include:

Reasons for getting the job:

Best price by up to 10%
Best price by a mile
Liked the quality
Liked the service

Reasons for NOT getting the job:

Price was a little (up to 10%) too high
Price was too high by 10-20%
Price was substantially too high
Couldn’t deliver in the timescale required
We don’t have the right kit for the job
The customer cancelled because he doesn’t need it now

You could also include your competitor's name in the reason codes so you can keep an eye on who you are losing work to, and vice versa. That might just give you the edge the next time you’re up against them.

So if you add them all up you could have a code such as “RW3L” where the digits stand for:
The Reason that we Won was: 3 (they liked the quality) when compared with the Local Printing Company.

You could get your sales people to enter the code as a matter of course, as soon as a potential sale is resolved either way. You could perhaps store it code in the job reference somewhere, so you’ll be able to use it to analyse your results and track how you’re getting on. It will also provide invaluable ammunition for your sales team themselves.

In this way you get more insight into the products and market segments you should be concentrating on (or not, as the case may be), and into the areas where you need to be more competitive.

Well begun is half done

2009-10-21T03:35:00.000-07:00

One way to maximise your available production time is to streamline your pre-press processes. But if that means cutting corners preparing the job for production, then your print quality can suffer. So you need to concentrate on the aspects of preproduction workflow which won’t impinge on quality.

Communication between customer, salesman and production is the key. And paradoxically although printers are actually in the communication business their own communication is often, let’s face it, pretty abysmal. Customers’ requirements get misinterpreted, job sheets get mistyped, or worse still, missing information is simply guessed rather than properly verified.

As with any such process the most cost-effective time to rectify any mistakes is right at the outset. That’s when you should work hard to remove any ambiguities, and to clarify the customer’s requirements. The further into the printing process the job gets the more expensive it is to make changes. So the inescapable conclusion is that your sales people have to learn to communicate effectively. Right at the outset – even before the job is quoted if possible – they must assemble the necessary specification accurately.

So before you can even quote a job, you should know enough about it to plan exactly how your shop-floor will produce it. You should know what resources are required, what equipment, and the estimated amount of paper and time needed. And this plan is required before the production process starts – even before you accept the job. All of which allows a company to use its production capacity to the full.

Consistency in the job sheet (or job ticket) is essential, because that’s the key document for all the departments from origination through to finishing. Computer-generated job tickets ensure greater consistency, and reduce the likelihood of mistakes.

To streamline the pre-production stage, it also pays to reduce the number of people involved at the front end to a minimum. If the job has to go from the salesman to the customer service department to the estimator, and then the planner, time is wasted, profit is lost, mistakes creep in and inefficiency grows. Moreover no one person will then be familiar with the whole job – just his or her own domain. So the customer can find himself repeating himself over and over again to different people. So keep the pre-press communications line as short as possible.

In short, make the beginning of a job lean and efficient and the rest follows. “Well begun is half done” is a proverb made for printers.

2009-08-26T03:59:00.001-07:00

Cash-flow is every printer’s headache, especially nowadays. Sounds easy in principle, doesn’t it? Speed up the money coming in, and slow down the money going out. But not so easy in practice, is it? Here are a dozen ideas you might be able to use to help. They may seem obvious, but...

1)      Credit. Will (or can) the customer pay? For new customers, if you can’t take the money up-front, get 3 trade references and a bank reference. A credit report can warn you (with luck) whether a company is in danger of going under, and can also tell you whether it pays its bills on time. So don’t give credit unless you’re sure you will be paid. It’s also a good idea to re-check the credit ratings of your larger customers on a regular basis. Larger customers often seem more secure, but don’t forget that they are the ones who are likely to go bust owing you 20k!

2)      Make sure your emailed quotes include your "Terms and Conditions of Sale", just to make sure there are no arguments.

3)      Get every job out of the door as quickly as possible and then invoice it immediately, not at the end of the week. Sounds obvious really, but some people have a tendency to say ‘That’s OK – it’s not needed till next Thursday’. Don’t listen – every day’s delay is a day in which your customer’s company can be ‘wasting’ its money paying someone else, not you – or even, in a worst case scenario, going bankrupt.

4)      Every invoice should include a payment due date. It saves arguments.

5)       Discounts for prompt payment can help get the money flowing. It only needs to be a few percent to make a difference.

6)      Chase overdue accounts firmly and regularly. It needn’t be aggressive. Everyone understands. They are all in the same boat. Ask “when can I expect payment?”, and ring them back then if necessary.

7)      Pay cheques in on the same day you receive them. They take long enough to clear, so you might as well try to minimise the waiting period.

8)      Ask your suppliers for longer credit periods. One large UK company used to say to all its suppliers ‘We are a 90 day company – take it or leave it.’ Most suppliers took it!

9)      Don’t carry excess paper stock. Just-in-time stock control means ordering what you need when you need it.

10)    Reduce expenses. Most printers reckon they are pretty lean and mean, when in practice they could save a lot from the cumulative effect of small efficiencies.

11)   Don’t pay bills earlier than you have to, unless there’s a prompt payment discount. Again, sounds obvious, but …   On the other hand don’t pay late or you might find yourself penalized in some way (e.g. poor service).

12)   Make sure you recover all your costs. So the customer made you send a courier so he could see a proof? Charge it – it wasn’t in the quote. That last minute revision – it wasn’t anticipated – add it in.