Sourcing of external print services & managing supply challenges explored

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Printing.jpgThe process of printing on large scale and in big volumes requires a substantial investment in expensive printing machines and in highly expert manpower. This has given rise to a stand-alone sector of External Print Suppliers such as CTP Book Printers, Tandym Print and the Caxton Group, to mention but a few. These organisations offer the end-user a wide variety of print options tailored to the multitude of products you find out in the market today...

The high quality print product remains one of the highest demand mediums of communication in the knowledge economy despite the forecasts of its demise during the dotcom boom and bust. 


Aberdeen Research makes it abundantly clear that the purchasing of print services from external, specialist suppliers is not as simple a task as many organisations seem to think, as there are many complexities involved.

The report refers to a case where the procurement manager of a large manufacturer pointed out that: "We recently completed a deep dive into our print spend and have a plan to reduce our 400 suppliers to around 50. The company has 600 plants throughout the country and printing expenses and processes were disjointed and difficult to monitor and control”.

 “The fact of the matter is that in most organisations the purchase of print is fragmented throughout the departments and by default, the decision to order can often be made at secretary level on an entirely ad hoc basis - that is about as good a definition of 'maverick spend' as you can get”, Gary Davies, Managing Director of Print Outsource International (POINT), told SmartProcurement.

For example, the Accounts and Administration Departments in Johannesburg, and Marketing and Sales Departments in Centurion, all order their own brochures, business cards, complimentary slips, continuous print invoices and stationary from any local suppliers. Neither Finance nor Procurement have prescribed categories of print or contracts in place and are thus accordingly unable to leverage these group-wide purchases to negotiate value discounts, which, in turn, requires an optimised supply base.

 

This tendency to allow random bidding for each job as opposed to longer-term contracted print is aptly illustrated in the next graph:

Aberdeen6.png

 

 The question is then whether your organisation is prone to the 'spot-buying' approach or whether you have instituted controls and a monitored print purchasing environment. In the latter case you are able to exercise control on spend and to measure supplier performance.

 

The Aberdeen Research found that:

  • 41% of organisations have no formal procedures for supplier performance measurement.
  • 20% of organisations have general procedures for measuring supplier performance, but applies these inconsistently.
  • 14% of organisations have standardised procedures and metrics that are applied across all areas of print spend.
  • 11% of organisations employ periodic market pricing comparisons.
  • 10% or organisations employ proactive market pricing comparisons on a job-by-job basis.
  • 4% of organisations pay what suppliers quote for services with little to no market pricing comparisons.

 

“Where procurement is tasked with the strategic cost management function, there is a strong case to outsource the management of this spend commodity. The 'indirect print spend commodity' should be entrusted to a specialist in order to leverage value for your enterprise on an ongoing and sustainable basis. This will, in turn, lead to greater efficiencies throughout the enterprise and will result in higher service levels being met by suppliers. This is not because print management waves a magic wand, but because it applies well developed (procurement) disciplines, especially when it comes to supplier performance”, Davies concluded.


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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