How do you make money in the printing industry? To put it another way: if you think you are making money, do you know why? If you seem to be profitable, where exactly are the profits coming from?
Many of the answers can be pretty vague. In some cases, the questions aren’t being asked in the first place. There can be a gap in the understanding of certain business fundamentals—and it can be dangerous to the health of any printing firm.
Part of the problem in business is failing to see the bigger picture of cost center recovery (job costing). For example, no one would dispute that if a printing company wants to make money, it needs to keep its presses fully booked with jobs. The mistake is focusing only on the press as the sole cost center, when every other function that touches the job also affects margin. If the workload isn’t balanced among all cost centers, margins suffer.
Printers naturally are more confident when they are producing a lot of suitable products for their operational platform, but the number of jobs isn’t the crucial thing—it’s the continuity of the workflow in which they are produced. Inevitably, handling jobs as a series of individual events wastes time and more importantly, erodes margin. One way to make operational performance more continuous and cost-efficient is to batch-produce using standardized formats, stocks, and ink sets.
This technique is applicable to more product types than people sometimes realize; but, whatever you can do to minimize interruptions and press tweaks between jobs will improve your performance and protect your profits. Job and product transition can unlock double-digit margin by simply looking at your overall value proposition and evaluating the mix of work your business does now and can attract in the future. The process control will highlight the holy grail of your production “sweet spot.”
No matter how busy you are, your capacity must always work for you, not against you. Just having volume doesn’t assure that job margins will be satisfactory, because “margin” can be a relative term. The margins on individual jobs may be slim or even non-existent. Only by recovering costs across the entire spectrum of manufacturing can you be certain that your work is making more money than you are spending to produce it. Ultimately, what you are selling is time—and every minute of it must make a contribution, across all departments and production cost centers.
Boring is Good!
Consistency, continuity, and transparency are the cardinal virtues of a well-run and profitable printing business. Living up to these core aspects means basing every business decision on facts, not emotion. Your objective is to produce at the lowest operating cost for the highest return on selling price. You can achieve it by providing everyone on your management team with a set of numbers that clarifies their understanding of cost impacts and helps them validate key operational decisions. Having a comprehensive and flexible management information system is a must, because your need for updated job and cost data will be continuous. A platform-wide business audit may also be in order. For example, Heidelberg’s Performance Plus program drills deep into every aspect of production management to find savings opportunities that can be measured in hundreds of hours and hundreds of thousands of dollars.
Printing never was and isn’t now an easy business to be in. Many of the markets are mature, buyers are savvier than ever, and pressure on margins is intense. Still, there’s no need to give away beautiful print for free. Concentrate on understanding the cost impact of everything that takes place in the production sequence, and then bear down on eliminating the costs that are needlessly eroding your margins. Then, the financial results you want will be yours.