Equipment That Fits Perfectly
Recently, I was giving someone a tour of my publishing facility. The gentleman stopped me in the middle of it and asked, "How is it you have no problem getting the latest technology, while most in-plants struggle to keep up?"
It was a good question. While there's no single answer, what's most important is understanding the process of selecting and justifying equipment. Over the last three years this knowledge has helped me acquire new equipment in almost every area of my operation. I'd like to share this proven method with you.
Selecting and justifying equipment is like buying a new suit. It has to be comfortable, affordable, functional, appropriate for your surroundings and make you look great. Not paying attention to all the criteria can be disastrous.
Some publishing needs, like holes in your socks, are obvious. The frustrating copier that constantly breaks down falls into this category. The ancient, temperamental offset press may be another.
This however doesn't mean you should make a hasty replacement decision. Every decision, big or small, should be well informed. It you do your homework right, this could be an opportunity to not only replace equipment, but also upgrade your services in ways you might not have imagined.
What Services Are Really Needed?
Sometimes we are so involved in keeping the presses running that customer needs escape us. You may be trying to drum up forms work while full color presentation and marketing printing is being bought by your company at a premium. While scratching your head wondering where the envelope jobs went, maybe there is a need for large-format printing. Instead of concentrating on what you think should be done, learn the real publishing needs of your parent organization.
Also, what fit and made you look great years ago probably doesn't today. You've either grown out of it or it isn't practical any more. The same applies to technology. Don't be so quick to replace it with the same model.
Ask current, prospective and future customers what you can do for them to make them successful. Just as you feel more comfortable when you're involved in decision-making, so will they. It shows you are interested in them, as you should be. The customers will get excited and motivated about your equipment selection because it will directly benefit them without any capital investment on their part.
Having customer feedback makes equipment selection and justification easier, and it eliminates guesswork. The in-plant manager can quickly narrow his or her focus on the capabilities needed and evaluate the projected utilization of the technology. Plus, if customers are excited, it's easier to get management to accept your proposal.
By involving customers, you can tailor your equipment acquisitions and services to meet the distinct needs of your organization. This can make you a hero by saving money and increasing service level. Any outside publishing provider would find it hard to match this.
Involve customers in the feedback process. Send customer satisfaction and survey cards out, either periodically or with every job. They can supply great input into technology selection.
Likewise, customer focus groups let you gather more in-depth information. Also, assemble project teams, and include even the most critical opponents of your services.
After evaluating customer feedback, you know the capabilities that are required and the expected volume. This narrows down the selection process, letting you proceed with a degree of confidence. Also, knowing precisely what you need keeps you from settling for an off-the-rack solution.
Before you contact the vendors, do some benchmarking. This is a necessary step in the selection of new equipment. It saves time, money and helps the in-plant avoid the pitfalls others fell into. Organizations like the International Publishing Management Association are great for this. They share information freely. Annual conferences and shows like Graph Expo and On Demand are also great for benchmarking. Trade magazines like In-Plant Graphics are another valuable source.
Armed with feedback and information garnered by benchmarking, the in-plant manager can start to select equipment. Don't let vendors talk you into something that doesn't fit. Everyone knows of at least one in-plant that installed the wrong piece of equipment, with the best intentions. By following the process, you should be able to select equipment that satisfies your customers' needs, for a price that will ensure your organization big savings.
Be sure the equipment you select also fits well with your existing processes. For it to work, will you have to make drastic and expensive changes elsewhere, maybe in the prepress or bindery.
Get multiple bids from reputable dealers. The only way you can get the best deal is by letting dealers compete for your business. Conversely, cheap isn't always good. If a dealer cannot provide satisfactory support, you will not receive value.
Did you ever buy a suit and have it fall apart, or get shiny or threadbare within the first few times you wore it? It's pretty embarrassing. Don't let that happen with your next equipment purchase.
Most equipment purchases are depreciated over five to seven years, so if you pick a clunker, you're stuck with it. If you go to a demo, make sure it is in a working facility, not just a showroom. Talk to the operator, not just the salesperson. Check the technology's track record. Make sure the equipment you select not only will satisfy your current publishing needs, but can also meet future demands.
With technology that is rapidly improving you might not want to purchase. Look into rentals, or cost-per-copy plans. You don't want it to be obsolete before you get it out of the box. Be very careful with the contracts and installation schedules. Sometimes these alternate acquisitions methods are easier to justify, since they don't require any capital and can be simply expensed.
You Better Ask
Many in-plant managers struggle with old technology because they are afraid to ask for new equipment. Some fear that proposing upgrades or needed replacements might put them under a financial microscope. They think they will be viewed as an expense, rather than an asset. Evaluations by inside and even outside concerns might ensue. Outsourcing looms in the background. These managers prefer to suffer in silence and keep a low profile. Others are frustrated by the process, or feel they won't get the support they need.
Burying your head in the sand isn't a good solution. You might think your cost is low because your equipment is already paid for—but that probably isn't the case. Your technology is outdated and not up to today's printing demands. It takes you longer to get results, and the product is less satisfying to your customers. Even though your rates might be cheaper, it's still costing more.
Management and outsourcing providers will pick up on that. Recommend changes before they do. Your financial overlords expect you to replace equipment when it is fully written off. It's up to you to recommend it.
Don't know how to write up an equipment proposal? Ask. Many managers aren't sure what format to use, or they have been shot down so many times they give up. You'd be surprised how responsive your financial people are. Simply ask them if there is a standard format to use. This also makes their job easier. Often, they will help you with the justification process. Benchmarking with peers who have been successful in acquiring equipment also eliminates guesswork.
There are some tried-and-true guidelines to follow. If you are justifying an equipment replacement for existing production volumes, emphasize savings and efficiencies, such as eliminating overtime, downtime and maintenance costs. If you are proposing the acquisition of a new/add-on piece of gear, you'll have to identify and bring in additional volumes. Existing volumes aren't enough to justify add-ons, unless you are willing to give up staff. Make sure the equipment you select will be utilized at least 80 percent of the time. Forget about that nasty job that comes in once or twice a year. Outsource it.
Don't be afraid to propose new equipment. It shows management that you are trying to lower the bottom line for the company.
Submitting The Proposal
Like any good suit, your equipment justification should make you look good, while covering your butt. If you've done a good job of analyzing publishing needs, benchmarking, selecting appropriate equipment and negotiating a price, then preparing the written justification for management approval is the easy part.
It should be short, very sweet and to the point. Don't get bogged down in technical details and jargon. You're dealing with people who read spreadsheets for a living. Your proposal has to be in plain language with hard numbers to support it.
What management is looking for, almost exclusively, is to decrease expenses while increasing productivity and revenue. Sorry, that's it. Increased quality and turnaround are nice, but more of a concern of your customers, so don't waste space writing about it.
A typical equipment proposal is two pages, plus attachments. The first page is the teaser. It explains the needs not being met, the solution and the savings attainable.
The second page is usually a spreadsheet. Figures tell the story. Actual outside printing expenses are weighed alongside the acquisition price of the proposed equipment and the savings, based on competition price comparisons. You'll need to build an estimating model of the new equipment. It should be fully loaded with all the associated overhead to do accurate price comparisons. The savings should stand out and say: "no brainer." The attachments should include: three qualified vendor bids and verification of new volumes and savings to be captured (vendor invoices, bids, etc.).
The return on investment has to be in a year or less. Anything more and it will be rejected. This isn't a bad thing. Today's world demands fast results. If you know this going in, you will look for the right mix of work and technology to produce quick, dramatic savings.
After all, isn't that what we are suppose to do?
Mike Renn was assistant vice president of corporate services at Mellon Financial Corp., in Philadelphia.