Beruflich Dokumente
Kultur Dokumente
Strategic Assessment
Abstract
As the pressure builds for companies to reduce costs and maintain profitability, understanding and controlling print costs is critical to success. An effective document printing strategy leverages technology
Published by Document Outsourcing Consulting Service On Demand Printing and Publishing Consulting Service
and process efficiency to provide high quality, low cost printwhen and where it is needed. Outsourcing can be an attractive approach to producing high-quality documents on-time and at significant cost savings. To make an effective ROI comparison of outsourcing print versus doing the work in-house, it is critical to understand the total cost of document production and not just the direct costs of putting marks on paper. This document examines the total costs of producing certain types of documents. We consider not only the costs associated with the actual printing and finishing of these documents, but also other production components such as creative, editorial, storage, archiving, distribution, and obsolescence.
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Table of Contents
Introduction ............................................................................................................................... 2 Document Costs: Its More Than Just Printing ...................................................................... 4
Profiles of Common Business Documents ............................................................................................. 4 Non-Printing Costs vs. Printing Costs .................................................................................................... 5 Impact of Shorter Print Runs on Non-Print Costs ................................................................................... 7
The Cost of Printing Internally Perception vs. Reality......................................................... 9 Key Enablers to Automating the Print Process .................................................................... 11
E-Business Capabilities and Workflow Software .................................................................................. 11 Focus on Super Efficiency .................................................................................................................... 11 Decreasing Run Lengths ...................................................................................................................... 12
Conclusion .............................................................................................................................. 13
Introduction
Companies and organizations in todays economy must increasingly review and evaluate the costs associated with non-core business processes. As the pressure builds to reduce costs and maintain profitability, there is a greater need to understand and control the total cost of document production. Implementing an effective document management program can save organizations significant sums of money that flow directly to the bottom line. The proper mix of internal and external production provides an attractive approach to producing high-quality documents on-time and at significant cost savings. To make an effective return on investment (ROI) comparison of outsourcing print versus doing the work inhouse, or between print providers, it is critical to understand the total cost of document production and not just the direct costs of putting marks on paper. Over the years, InfoTrends has focused considerable attention on the subject of the total cost of business communications. Our initial, landmark research in 2001 titled The True Cost of Business Communications revealed that for every $1 spent on print, another $6 were spent on non-print related activities that were required to produce a given document. Back then, digital on-demand printing technologies were still in early stages of adoption. Since that time, the use of digital technologies has grown steadily at a rate of 20%-30% annually. In 2006, we revisited the topic and involved more than 1,000 print buyers and document owners. The results of that study found that non-printing costs had shifted downward and were, on average, about equal to printing costs. The reduction of nonprinting costs was enabled largely by the benefits of digital on-demand printing. Shorter printing runs (reducing the need for document inventory), automated finishing and distribution workflows, as well as e-procurement all helped reduce costs. Document obsolescence refers to the cost of producing quantities of documents that never get used and are eventually discarded. In traditional print and fulfill models, the cost of document obsolescence is very significant. In our 2001 study, we found that document obsolescence represented between 10% and 20% of the total document production costs. Of course, the adoption rate of digital printing hardware and software technologies was nowhere near the levels seen today. Nevertheless,
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even with the arrival of digital technology, document obsolescence still exists. In fact, in the traditional print and fulfill environments, the cost of document obsolescence remains at the same levels as in 2001. It is mainly within the more advanced, print-on-demand environments where the cost of document obsolescence has decreased significantly. Despite the fact that the ratio of print and non-print costs has shifted, non-print costs are still considerable. InfoTrends has found that non-print costs are often still higher than actual print costs in environments where older methods are used for producing, purchasing, creating, and managing printed documents. Larger print runs are still common, potentially resulting in documents being stored for future distribution. The print-on-demand concept allows for shorter and customized print runs, greatly reducing the need for maintaining inventories. Print-on-demand also facilitates the ability to produce updates, edits, and revisions. Our on-going research with Print Buyers consistently shows that design and internal approval of documents are still labor-intensive. Smaller firms also cite job specification, inventory management, and print job management as activities that consume time and significant labor. e-Procurement (Web-to-print) applications expedite the document submission process, simplify order tracking, and may also provide online layout, design, and editorial capabilities. Some of the moreadvanced Web-to-print tools are closely integrated with back-end, production workflow systems, enabling the print service provider to operate more efficiently. Web-to-print tools, along with the latest digital print technologies, have become a standard offering by successful print service providers. Another consideration when developing an effective document management strategy involves examining the costs associated with performing the work internally. Traditionally, the belief is that doing the work inhouse costs very littleand perhaps free, if chargeback processes are not in place for print. The reality is far from that. The total burdened cost per page for a typical document produced in-house (at the desktop or workgroup level) can range from $0.52 to $0.72. For organizations that print more color and graphicoriented documents (which increase the usage of ink and toner), the per-page costs can be even higher. The remainder of this document takes a closer, up-to-date look at the total costs associated with producing common business documents. We consider not only the costs associated with the actual printing and finishing of these documents, but also the other production components, such as creative, editorial, storage, archiving, and distribution. Our analysis also provides insight about the real cost implications of printing internally.
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Manual
8.5x11
200
Brochure
4/4
8.5x11
Sell sheet
4/1
8.5x11
60# Opaque
PowerPoint Presentation
4/4
8.5x11
60# Opaque
20
This figure represents the numbered pages or sides in each document. For example, the sell sheet is one 8.5 inch x 11 inch sheet printed front and back.
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*Excluding shipping/fulfillment. These costs appear in Table 3, and vary depending on quantity.
Table 3 shows shipping cost estimates for the various quantities that we are considering. For the sake of consistency, we are using a single shipping destination, average rates for standard, and ground shipping.
Table 3: Document Shipping/Distribution Costs
Quantity 1 25 50 100 500 1000 Manual $18 $25 $32 $67 $223 $445 Brochure $15 $24 $29 $43 $181 $220 Sell Sheet $15 $15 $15 $19 $20 $23 PowerPoint Presentation $15 $24 $29 $43 $181 $220
Table 4 shows average pricing obtained from four major national print service providers. These print service providers all have digital capabilities, and can therefore produce quantities as low as one set or up to 1,000. All of them also have finishing capabilities that can accommodate our specifications from Table 1.
Table 4: Document Printing and Finishing Costs
Quantity 1 25 50 100 500 1,000 Manual $20 $407 $777 $1,410 $6,086 $12,001 Brochure $10 $130 $247 $439 $1,980 $3,551 Sell Sheet $3 $32 $60 $114 $460 $873 PowerPoint Presentation $19 $338 $616 $1,425 $6,271 $12,539
The Data Tables above do not account for document obsolescence. In our more recent research, print buyers did not indicate an estimated cost for document obsolescence, but indicated they were not using 10%-20% of the pieces printed. We have found that this is most common with documents such as technical manuals, training manuals, assembly instructions, and several other multi-page bound documents. Taking these
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percentages into account, the cost of obsolescence for a quantity of 1,000 would be in the range of $1,200 to $2,400 for manuals, for example (based on printing and finishing costs as represented in Table 4). Considering the cost estimates presented in Tables 2, 3, and 4 above, we developed an aggregate, average percentage of cost estimate across all four documents in this study. This is illustrated below in Figure 1, where we display the various components and their percentage share of the total cost of document production.
Figure 1: Average Costs for Document Production
Printing
45.6%
Internal Creative External Creative Editorial Project Management Warehousing/Archiving Fulfillment/Shipping/Distribution Inventory Obsolescence
54.4%
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The critical point here is that non-print costs are still very significant. For documents created at shorter print runs, the greatest relative expense can be attributed to that creation process. Publication-type documents, such as manuals, frequently use expensive professional resources. Since this expense is not dependent on run length, it is not amortized over many documents for shorter print runs. The creative process, however, is not the only major expense. The time spent on editorial and project management activities is very significant, as well. For example, across all document types, project management represents 13% of the total non-printing costs. Document obsolescence can occur in a variety of ways. It is more evident within a traditional print and fulfill model. One example of this would be a physician directory for a health insurance company, where a large quantity would be printed annually and then stored in a warehouse for future distributions within that calendar year. Every year, the insurance company would print a new directory and the old ones from the previous year would be discarded. In this scenario, obsolescence occurs in two ways: (1) it would occur nearly immediately, since these directories would not reflect any physicians that had been added or removed from the network, and (2) any directories that were not shipped by the end of the year would be discarded. Another example would be a training manual for a training session of 15-20 people. In this scenario, we could even apply a short-run digital print on-demand model. A typical approach to supplying these manuals would be to print a few extra in anticipation that the total number of session attendees was not confirmed. If 20 are printed and only 15 people attend the session, there are 5 unused manuals (still a very high percentage of obsolescence at 25%). Removing or mitigating obsolescence from this type of digital short run, however, can be achieved by printing only the quantity for a confirmed number of attendees, and then printing any additional copies a day or even hours before the training session occurs. As run lengths get shorter and margin pressures increase, the focus needs to be on automation and lean print manufacturing, beginning with capabilities such as Internet-driven ordering and extending through fulfillment. New digital technology and software lead the way in terms of implementing these strategies. In todays difficult economy, relying on an outside print service provider may be the fastest way to take advantage of achieving the desired levels of automation, while driving down unnecessary costs.
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Avg Cost
5 to 7
5 to 7
2.5 to 3.5
15 to 20
25 to 33
52 to 70
Based on this analysis, the total burdened cost per page for a typical document produced in-house can range from $0.52 to $0.70. For organizations that print more color and graphic-oriented documents
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(which increase the usage of ink and toner), the per-page costs will be higher. These unaccounted for but very real burdened costs are in addition to the non-print related costs described earlier. Another effective manner to compare the internal costs of producing documents against outsourcing is to build an activity model that includes time and actual print costs. The assumptions and example below demonstrate a very simple cost model for printing a single manual internally and externally via several well established providers. Labor cost for knowledge worker: $0.52 per minute (equates to $65,000 annual salary/ benefits) Color print: $0.39 internal, $0.30 and $0.28 external B&W print: $0.05 internal, $0.049 and $0.028 external Binder and cover: $2.92 internal, $1.90 and $1.99 external
Table 7: Internal Document Production Activity Costs
Activity Driving/Walking time Creating new order Proofing Reordering Pick-up time Repeat due to errors Obsolescence Sub-total Direct print Total Costs In-House Min 10 12 5 12 12 15% 5% Cost $5.20 $6.24 $2.60 $6.24 $6.24 $3.98 $0.67 $31.17 $13.31 $44.48 Traditional Printer Min 10 10 5 7 12 9% 15% Cost $5.20 $5.20 $2.60 $3.64 $6.24 $2.06 $1.80 Internet Printer Min 0 5 2 2 0 0.3% 2% $4.85 $7.87 $12.72 Cost $0 $2.60 $1.04 $1.04 $0 $0.01 $0.16
This example is not intended to be all-inclusive, but it does demonstrate there are several factors to consider when printing even simple documents, such as manualsthe labor costs associated with manual tasks, the need to repeat tasks when there are manufacturing errors, and the actual cost of printing. In this example, one external provider clearly showed the benefits of automation through Internet-enabled software functionality.
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Some examples of functions that can be automated would be color management, job ganging/imposition, inventory counts, order processing, and integration of shop floor activity with accounting and customer service. A truly integrated workplace is one where various processes are linked in through a system that communicates relevant information to the various departments within a print production environment. Super Efficiency ultimately delivers greater levels of customer service satisfaction along with competitive pricing. There is a high level of assurance for the print customer that the work will be done accurately and on-time. Certain processes such as activity reports, billing, and pricing estimates are all expedited, saving the print customer time and accelerating the overall supply chain.
2004
100% 13% 6% 4% 8% 17% 32% 80% 46% 60% 48% 46% 53% 52% 45% 40% 41% 48% 50% 39% 30% 23% 15% 0% 50% 49% 44% 43% 42% 6% 9% 7%
2008
13% 23% 43% 49% 60% 57% 43% 33% 45% 27% 20% 55%
Percentage of Respondents
20%
40%
14%
12%
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<2 50
49 9
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Documents that are modified to create a different version ultimately become their own document and would not be considered additional copies of the original document. Most Web-To-Print software solutions offer the ability to create versions on the fly. This is an important contributor to the ongoing decreases in print run lengths.
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Conclusion
Print buyers and document owners need to be aware of the total costs of producing a document. Our research indicates that documents are still costly to produce, distribute, manage, and print. In all cases, the total quantity required must be taken seriously into consideration. Many organizations consider just the cost-per-page when printing documents. Nevertheless, there are non-printed related costs that must also be considered to accurately assess the total cost of producing a job. If the total quantity is ultimately going to be very large, then the cost ratio between non-print and print related costs will diminish. Regardless of the ratio, the cost of non-print activities is significant and these activities usually require some level of moderate-to-high wage people to do the work. Through the use of some of the Web-To-Print tools that print service providers offer, however, most of these functions can be migrated over to the Web and the labor costs can be reduced. To deploy an effective document management strategy, understanding the true cost of documents and business communications is critical. o Overall, documents are still costly to create, manage, distribute, and print. In addition, obsolescence remains an issue, despite the adoption of print-on-demand workflows. The ratio of non-print related costs to print costs can be very significant, particularly for short (low quantity) runs. The costs related to submitting, managing, and printing jobs internally can be much higher than most companies understand or expect.
The emergence of digital technology and automation software provides the ability to drive costs out: o True print-on-demand applications and shorter runs are enabled by digital printing technology. Super Efficiency through Internet-enabled, Web-to-print solutions, document workflow solutions, and other software applications ultimately lower production costs, enable faster job completion, and improve customer satisfaction. The lower cost of higher-speed, digital color technology allows organizations to produce quality color documents at affordable rates.
In todays economy, deploying the right document management solution can deliver significant results. Determining the proper mix of internal and external services is critical to success. It requires an understanding of all related costs. For most organizations this is not an either/or decision, but one that provides them with the most effective mix.
This material is prepared specifically for clients of InfoTrends, Inc. The opinions expressed represent our interpretation and analysis of information generally available to the public or released by responsible individuals in the subject companies. We believe that the sources of information on which our material is based are reliable and we have applied our best professional judgment to the data obtained.
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