Optimising the Procurement of External Print Services

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Industrial Printer.jpgBased on the Aberdeen Research Group Report , which was highlighted in SmartProcurement's August 2008 feature article, Outsourcing Management of Print Can Lead to 30% Cost Savings, it is clear that the main processes by which print is procured, are:
  • Manually sourced / procured by local procurement person / department.
  • Manually sourced / procured by whoever has the need.
  • Manually sourced / procured by a centralised procurement group.
  • Automated process using generic e-procurement / e-sourcing solution.
  • Automated process using a specific print procurement / management solution.
However, the question begs to be answered as to what are the key issues to consider when trying to understand the complexity of external print services.  This is then the topic of our article.

Key Issues to Consider when Trying to Understanding the Complexity of External Print Services
Once again, the Aberdeen Research Group Report throws light on this by ring-fencing the following considerations:
  • Print is a significant spend category in many industries.
  • In addition to cost, print has significant impact in hard-to-qualify areas such as brand awareness and image.
  • Off-contract spend is rampant in print.
  • Performance of print suppliers is lower on average than other categories of similar sizes.

Bearing in mind that print expenses can, on average, account for between 3% and 5% of total operating expenses, it is no wonder that print is a commodity where the reduction of cost is a primary concern.

An organisation's strategy, should, accordingly, revolve around the following four points:
  1. Increase Efforts to Reduce Print Costs
    As print is a large area of spend for many organisations, reducing print expenses should be a high priority.  For a consumer products company with high packaging and labelling costs, this particular category of spend is of high strategic importance.  This is due to the criticality of maintaining brand consistency and quality while keeping costs at an acceptable level.
  2. Procurement's Involvement in Print-Buying Decisions
    Cost is not always a priority when an organisation's printing needs are handled by the marketing or design department.  Hence, there is an increased need for procurement professionals to be involved when buying print.  Aberdeen research has shown that purchases made outside of a procurement department's control result in premium prices, and in many cases, poor supplier performance.  The habit of marketing professionals to stick with favoured vendors for fear of lessened quality can lead to less competitive bidding and a lack of systematic supplier performance measurement.
  3. Increase Efforts to Centralise Spend Categories
    In recent years, the procurement function has begun to prove its strategic importance and it is in spend categories such as print services that various functions are, in fact, learning from procurement.  This allows for an easier and more structured method to improve and monitor compliance.  It further includes analysing spend, which results in the improved sourcing of printing needs, better management and compliance with contracts, and ensuring supplier compliance with negotiated price.
  4. Decrease Fragmented and Inconsistent Methods of Buying Print
    According to nearly 45% of Aberdeen survey respondents, the methods used to purchase printed materials vary largely from organisation to organisation.  In many cases, there is no defined method and thus printing materials are bought on an as-needed basis with little consideration for rush charges or prior inventory (often resulting in wasted materials).  Even though print is a complex category of spend, it should be approached in a systematic manner enforcing basic procurement principles.

Gary Davies.JPGGary Davies, Managing Director of Print Outsource International (POINT), told SmartProcurement that he agrees with the findings of the Aberdeen Group's survey:  "Very few organisations actually get a handle on all the print projects undertaken by external suppliers.  Nor do they apply strict procurement and supply management methodology and processes, and, as a result, we have come across instances where hundreds of thousands of Rands are simply lying on the table."  "As a complex commodity", Davies concludes, "external print services are best left to specialists who earn their keep straight off the back of measured savings".

For more information, Gary Davies can be contacted on the details below:
Telephone:  +27 11 783 0295
Cell:  +27 76 859 1304
Email:  gary.davies@pointsa.co.za

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