In-plant Market Size, Trends and Battle Plans
As I write this, 2016 is coming to an end, and there are three things worth remembering. First, it’s been a year since I joined IMG (Integrated Methods Group), and I am happy to say that I continue to work with and research in-plant service providers. In fact, immediately after joining IMG, we were contracted by IDC to work on the NPES/PRIMIR study called, “Digital Printing Technology’s Influence on the U.S. In-Plant Printing Market.”
The recently released study contains interesting new data when compared to previous studies. In-plant studies have been done by a variety of organizations, most notably this publication and the In-plant Printing and Mailing Association (IPMA). However, not many estimate market size; the last in-depth market research project was published by CAP Ventures (which later became InfoTrends and is now Keypoint Intelligence) in 2003 and updated several times. Compared to previous research a lot has changed: the in-plant market is smaller, in-plants are faring better than expected, and the number of small in-plants has changed.
Earlier studies reported the number of in-plant printers exceeding 50,000 and projected a gradual decline to about 40,000. The latest report estimates the current in-plant market size at approximately 19,400, of which about 75% are graphic arts in-plants and 25% are transactional in-plants. The overall number of in-plants is projected to decline slightly in the next five years, with transactional in-plants accounting for two-thirds of that decline.The value (dollars) of work will remain flat, with graphic arts in-plants increasing and transactional in-plants decreasing in work.
Many so-called prognosticators read the headlines of large in-plants closing and conclude that they are closing faster than commercial printers. According to this recent report, however, commercial printing sites are closing faster than in-plants and will continue to close faster in the next five years.
Previous research reported that 87% of in-plants were staffed with fewer than five people. The latest report agrees with the size of small in-plants but finds that 55% of in-plants have fewer than five employees and 33% employ 5-19 people.
For years we have been claiming that the decision to outsource or use an in-plant is a management trend that swings back and forth like a pendulum. Many disagree and claim that outsourcing is the prevailing trend. If you look back a few years that is true, but if you look back even further, it is false.
Evidence for this comes from a 2005 white paper by Deloitte Consulting. Titled, “Calling a Change in the Outsourcing Market: The Realities for the World’s Largest Organizations,” the white paper reviewed the literature and found that pro-outsourcing articles outnumbered anti-outsourcing (or pro in-plant) articles for just five out of the six years studied (1999-2004). That means in one of those six years the pendulum swung back from pro- to anti-outsourcing.
Building Your Battle Plan
A few years ago, Catherine Ciardi, the director of Document Services for Excellus BlueCross BlueShield, made a presentation at the IPMA conference and talked about her “battle book.” In fact, she held it up and described it as a tool to help the in-plant battle claims made by outsourcers and facilities management (FM) firms about less expensive prices and better service. She explained that she used to update it when needed, but updating it was a huge chore and now she simply keeps it up to date at all times.
This was a great idea, and I have been thinking about how all in-plants can build their own battle books. The first step is to find supporting materials. Here are three articles for your arsenal.
The first was published in 2007 in the Wall Street Journal and was titled, “Seven Myths about Outsourcing.” In this article, the authors discuss the results of outsourcing research and conclude, “The transition to outsourcing often proves to be much more costly and complicated than expected. And companies often find that their high hopes about cost and greater efficiency don’t pan out.”
The second article is the Booz, Allen, Hamilton White Paper, “Profits or Perils? The Bottom Line on Outsourcing.” The authors reported that more than 50% of companies that outsourced reported problems in outsourcing; 25% failed in two years, and 50% failed within five years.
The third article is one we discussed earlier, the 2005 white paper by Deloitte Consulting. This article describes the disappointments companies encountered with their outsourcing efforts:
- 70% expected cost savings, but 38% reported paying additional/hidden costs;
- 57% expected best practices/quality/innovation, but 31% reported vendors were complacent;
- 35% expected greater flexibility/capacity/scalability but found they were willing to accommodate changes;
- 35% expected to be able to focus more on core competencies but could not, so one in four brought the outsourced work back in;
- 22% expected higher quality staffing but one in five experienced greater turnover;
- 22% expected to be able to transfer risk to the vendor but could not;
- 16% expected more expertise, but 44% found that vendors could not provide it.
The NPES/PRIMIR study reveals that there are fewer in-plants than previously thought, that they are more resilient to closure than their commercial counterparts, and they are not quite as small as many expected. Also, there is evidence that the management trend to outsource swings back and forth.
If you’re tired of recreating the wheel every time your company is approached by an outsourcing provider, consider creating and updating a “battle book.” For those without battle books, you can start by downloading the three articles described in this story.
Howie Fenton is an independent consultant who focuses on analyzing/benchmarking the performance of printing operations. Fenton helps companies use metrics, best practices and workflow strategies to streamline operations. Call (720) 872-6339 or email firstname.lastname@example.org