The Value and Challenges of First Right of Refusal
In the middle of 2022, more than a dozen in-plants were surveyed about how they use Web-to-print software to manage their shops. Within that survey, which was conducted by edu Business Solutions, producer of Print Shop Pro management software for in-plants, questions explored the concept of first right of refusal (FROR).
The survey report, “First Right of Refusal: Benefits and Tips for In-plant Printers,” authored by former in-plant manager Gordon Rivera, provides useful data, and highlights the FROR experiences of two in-plant operations.
To set the stage, the survey defined FROR as “a contractual agreement between a parent organization and its in-plant, which typically stipulates that any person or entity in the organization must first submit their graphic communication work to the in-plant prior to sending the project out to an external vendor.”
The report cited the 2022 In-plant Impressions “Trends and Services in the In-plant Industry” report, which revealed that 75% of responding in-plants said their greatest ongoing challenges were finding new work to replace decreasing print volumes and keeping internal work from being outsourced. Despite the degree to which these challenges affect respondents, it is interesting to note that only 37% possess FROR, according to the IPI report — an agreement which, to some degree, could remedy those challenges. Not having FROR in place, however, does not mean these in-plants don’t want it: in edu Business Solutions’ survey, 83% said they would be interested in gaining FROR.
The biggest barrier to in-plants establishing FROR agreements, the report states, is the “sheer difficulty of getting administrative approval for this policy.” The reason for this difficulty may be a perception within the parent company’s culture that the freedom to choose a vendor would be limited if FROR was in place. Establishing FROR is described in the report as an “arduous task few in-plant managers have accomplished.” And, even if established, FROR may not cover all work an in-plant is capable of producing. For instance, while 100% of respondents’ FROR agreements cover digital and offset printing services, only 50% cover the production of signage. For an in-plant to possess a “blanket” FROR covering all its services is rare.
Two Views of FROR in Action
Within the survey report, two in-plant managers, Al Goranson, business officer at Western Carolina University (WCU), and John Heiser, director of creative services at Hudson Valley Community College (HVCC), shared their FROR experiences, discussing challenges, benefits, and tips for implementation.
For Goranson, the agreement between his self-funded in-plant and Western Carolina University has been an ongoing project over the past few years. The FROR agreement, Goranson says, was piggy-backed onto an existing, food-service-related agreement, already in place. Approved in early 2022, it gives the in-plant a truly formalized agreement with its parent organization. What is not currently covered — graphic design, for example — is addressed in a memorandum of understanding (MOU), which is useful in compelling those working within the school’s marketing and communication department to always turn to the in-plant first.
At HVCC, the FROR between the college and its in-plant was enacted more than 25 years ago, when the school removed printing and marketing services from departmental budgets. Despite being an informal agreement, Heiser says it has become deeply engrained into campus culture; even new hires are trained to send their print work to the in-plant.
For both in-plants, the report says, having FROR in place protects the parent organization’s brand. Because the in-plant can enforce how brand elements such colors and logos are used and presented, the in-plant gains an additional role: keeper of brand integrity. This function is best served by an entity housed within the parent organization.
A Deeper Partnership
Another value FROR can bring to an in-plant is that of a deeper partnership with the parent organization. Under an agreement, Heiser noted, collaborative partnerships with, for instance, the purchasing department, mean both are more likely to work together as a team, “for what is best for the institution.” Having buy-in for the FROR from top-level administration helps to establish and support it. Open communication with higher-ups, such as a university president, can be essential to successfully maintaining the agreement.
While the guarantee of having consistent work funneled to the in-plant is an obvious benefit of FROR, fitting the capabilities of the in-plant with the needs of the client — perhaps on exceptionally large jobs or those that require warehousing or other services — may also require creative solutions. Because of this, Goranson and Heiser say that serving as a solutions provider and not having a heavy hand about the agreement promotes the in-plant and makes it a convenient, useful experience for the customer.
Finally, having FROR does not necessarily mean the in-plant must produce all work in-house. Based on equipment capability and other factors, shops operating under FROR agreements may choose to send work off-site or solicit bids from authorized print vendors. Monitoring the nature of work that can’t be done internally can serve as an indicator of future services, thus increasing the value of the in-plant to the parent.
The report concludes with strategies in-plants can use to establish and implement their own FRORs, the first of which is to be able to prove to the parent organization that the in-plant can accommodate and produce the work a FROR can generate. This includes work that previously had not come to the in-plant. Essential in establishing this proof are data and analytics that align with the parent’s organizational goals. In-plants should be able to produce reliable data on costs and revenues that can bolster the enforcement of FROR. Robust MIS or W2P systems can help capture needed data.
Careful coordination of the FROR can reinforce its presence and bring value beyond its inherent mandate. For instance, it can communicate to top administration and the public affairs department that a benefit of the agreement is improved adherence to the parent’s brand. Firm buy-in from the parent organization’s purchasing department is also essential.
Identify Existing FROR Agreements
Further, the report says, identifying and researching existing FROR agreements held by other departments (examples include food services, housing, and athletics) may present opportunities for the in-plant to piggy-back onto them. Communication within the broader organization is essential: there should be no furor surrounding your FROR.
Real-world performance is essential in maintaining the health of FROR, and positive customer impressions of the agreement are essential. For example, the report advises having the infrastructure in place to offer effective, user-friendly online ordering. FROR should not be used as a combative tool that is used defensively — with power comes responsibility.
One strategy for long-term FROR success is in thoughtful customer service. A “we are here to help you” approach, the report states, can go a long way. An agreement, when implemented, can serve as a valuable legacy that provides extended life and viability to the in-plant. It should be seen as valuable by all involved.
Be the ‘Go-To’ for Printing
Once FROR is in place, the report continues, in-plants should take on the role of “the in-house print professional whose job is to develop specifications and locate vendors for all print and creative work that cannot be done in-house.” The approach: be a solutions provider by building relationships with a roster of print/creative service vendors, and build an understanding within the parent organization that the in-plant is a true “go-to” for print and related services.
Finally, the report notes that while formal FRORs and MOUs are ideal, it is important to understand that even informal FROR can provide a benefit and funnel work toward the in-plant. It may also be a step along the way to a more formal agreement, a reality the report’s author says, “can take years to develop and fully implement.”
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