Business Strategy

Understanding Business Strategic Planning

February 1, 2012

by Kenneth B. Lerman

The following current and often-expressed description of our 2011 US business economy suggests business erosion: “there are fewer opportunities to pursue and most of those have lower margins.” Like it or not, U.S. business opportunity is not what it used to be. So what?

During 2008-2010, the lethargic response of many US business owners to uncertainty, fear, lack and disappointment was moping and self-pity. In 2012, business owners need not fear, be threatened by, nor be held hostage to micro or macro economic trends. Owners, at all levels and throughout all categories, should strategically plan to effectively outperform their competition. Successful business owners in 2012 will attract new clients who value and will pay more for superior business solutions – superior solutions that are intelligently and skillfully presented to clients (current and new) – within an evident, demonstrated and merchandised value-added relationship.

US Business: Re-learn How to Sell!

Sell strategically that which is current and relevant to your customer’s 2012 wants and needs – not what you want to sell. 2012 business strategic planning should directly link to 2012 revenue-generating selling strategies and your selling process. If not, you’ve just contemplated your navel. Today’s global, competitive and vacillating business economies require sound strategic business thought and assertive strategic movement (implementation). Get it going, intelligently and strategically! No one said it would be easy and it isn’t.

History of Business Strategic Planning

The Marshall Plan to reorganize and rebuild Europe following World War II is considered by historians to be the foundation and beginning of contemporary strategic business planning. The Marshall Plan focused on European reconstruction with “Peace” as its objective. Its corresponding strategy was the theory that “Economic Stability” would provide “Political Stability” in Europe. A costly lesson was learned following WWI when harsh monetary reparations were levied to punish Germany.

A specific, exact objective and strategy, carried out in the most effective and efficient manner is the cardinal rule of strategic planning and thinking.

Effective: meaning most productive manner to reach and hold the objective.

Efficient: with the least amount of business resources invested or spent.

The first public seminar on business or corporate strategic planning was held for a week at the American Management Association in New York City, presented by Rob Allio of the North American Society for Corporate Planning (NASCP). Approximately 40 participants attended from aerospace (Martin Marietta and Morton-Thiokol), banking (Citibank) and consumer products (Johnson & Johnson and Proctor & Gamble). In addition, several Wall Street brokerage firms (Goldman Sachs, Merrill Lynch) also attended. Every participating business embraced and successfully applied strategic business planning.

In a nutshell, strategic business planning is the identification of a specific objective and strategy and the planned allocation of business resources to achieve the specific business objective and fund the strategy. The three business resources which all businesses have to invest in their strategic plan are time, talent and dollars. The better and deeper the resources, the better the plan and its outcome (one would hope). Which of the three business resources do you think is the most critical to successful implementation of a business strategy (i.e. the most effective and efficient implementation of strategy) time, talent or dollars? To me, talent is the most critical business resource, for talent spends your time and talent spends your money.

Strategic Tactical Implementation

Out on the horizon is your defined, measurable, affordable and doable business objective. To reach and hold the objective effectively – not just reach the objective, but hold it – you must control the area between where your business is today and where you want it to be tomorrow. The area has seven hills. You don’t have the time, talent or dollars to take and hold all seven hills. With the business resources you have, you might be able to take and hold three hills over the next two years. Which of the three hills will you take and control? How will you take them and hold or control them over time? Each hill is different and requires different amounts and deployment of resources.

Business “hills” might be acquisition of a northeast production facility or a new distribution channel, perhaps an upgrade of field sales talent or installation and use of plant preventive maintenance protocols versus reactive maintenance to equipment downtime. Taking a hill requires resources. If you take a hill and then lose it, you are back at the bottom of the hill with depleted business resources.

Ken Lerman is a national business growth consultant, national speaker, management trainer and author for US business across a diverse range of industries. He can be reached at www.kenlerman.com, via email at lermank@kenlerman.com or call 316.733.5800.

From Partnering with Printers to Achieving Independent Certification

November 21, 2011

by Amy Bauer

In the three years since its launch, Sustainable Green Printing (SGP) certification has been awarded to 35 printers, designating their commitment to environmental, social and ethical standards of operation. Today, binders, finishers and loose leaf companies also can pursue this certification specifically tailored to the graphic arts industry.

While there are a number of quality management and paper sourcing certification labels in the marketplace, in 2008, top print industry trade associations came together to form the independent, nonprofit Sustainable Green Printing (SGP) Partnership. The SGP was formed to create “the only whole-facility sustainability certification program for the graphic communications industry,” as the SGP website states.

Gary Jones, assistant vice president of environmental, health and safety affairs at the Printing Industries of America (PIA), helped develop the program as a member of the partnership’s board of directors and vice chair of its technical advisory committee. “It’s not just soy inks and recycled paper,” Jones said. “This is everything from A to Z. It looks at janitorial supplies, it looks at water consumption, it looks at energy use. From an operational perspective, SGP gives companies a framework for improvement,” he explained. “It gives them a lot of tools that they wouldn’t have otherwise and provides a more formal approach to managing their operation.”

Adding Post-Press Certification

In September 2010, the SGP expanded to include binding, finishing and loose leaf operations, and in May, newly integrated criteria were unveiled to apply across the board to any operation – from printer to post-press – applying for certification.

“There was a natural fit,” said Kris Bovay, general manager of Pacific Bindery Services in Vancouver, British Columbia, and an early proponent of including post-press operations in the certification process. She is a board member of the SGP and past chair and board member of the Binding Industries of America (BIA), as well as active on the board of British Columbia Printing and Imaging Association (BCPIA).

“If you are a binder or finisher, you do not ‘own’ the paper you process or finish,” she said. “However, from a bindery’s perspective, we work with the products and hold ourselves accountable for using sustainable methods and processes in our daily workflow.”

Bovay’s company is currently preparing its application for SGP certification. “It’s important for us to be part of an organization, like SGP, that recognizes the effort that needs to be invested and managed,” she said. “I think there will be an early adopter advantage to printers, binders and finishers who become SGP certified. The world is heading in this direction, and it makes good business sense to invest in this process.”

Working with Certified Printers

As more companies carry the “SGP-certified facility” label, it is important for binders, finishers and loose leaf facilities to know how this affects them and their operations. While Jones said the certification doesn’t preclude printers from working with binders and finishers who don’t have the SGP stamp of approval, or vice versa, it will require some cooperation.

For example, Jones said, certified printers have to work in their supply chain and discuss with customers sustainable options for each job. He used the example of a coil in a spiral-bound project where both nonrecyclable coil and coil made from recyclable or renewable materials is available. While the SGP certification standards don’t dictate which ingredient customers must choose, an SGP-certified printer has to make that information available to the customer. So binders, finishers and loose leaf manufacturers will be asked more and more to supply documentation about materials used and sustainable alternatives offered.

Bovay says binders and finishers are, in most cases, accustomed to working with Forest Stewardship Council (FSC)-certified printing partners in today’s printing environment. “We have learned to understand and follow the rules of FSC; we can learn to understand and follow the rules of the more broad-reaching SGP,” she said. “Printers will be looking for metrics: Can you demonstrate your commitment to the environment and to social responsibility and to economic viability?”

Chain of custody requirements, like those for the Forest Stewardship Council (FSC) certification label, aren’t a part of the SGP certification requirements. “However, there are ethical considerations for all certified printers,” Bovay said. “Do they need to disclose that their binderies/finishers aren’t certified? That is a question for printers to answer. Coming from an ethics background, I’d say that there is a duty to be transparent and open on this issue.”

She expects that certification numbers among post-press operations will grow. “As SGP and SGP-certified printers begin to drive more businesses to making sustainable choices – i.e. creating demand – the suppliers (binderies, finishers, loose leaf companies) that are committed to sustainability and that have gone through an independent, third-party certification process will have a competitive advantage. It’s also the right thing to do for all of us in the industry.”

Why Consider Certification

In some cases, Jones described, printers – or even the end clients themselves – will be looking for more detailed metrics about a company, beyond just the materials to be used in a particular job. He gave the example of a PIA member working for a large brewery customer that is very focused on water conservation. The brewery was asking the printer about its own water conservation efforts.

“This is not unusual from these very large companies, and you’ve got to put in place a program,” Jones said. PIA counseled its member. “They’re going into the supply chain, and it’s a supply-chain management issue. What the brewery wants to do is pull that forward so they can say, “Look, as a company we’ve reduced our water consumption by X amount. We did our internal operations. We went to our supply chain. We got reductions out of our supply chain.” So they can report metrics that are very favorable.

He said sustainability initiatives – and the credibility that comes along with certification allow printing and finishing operations to pursue new markets and customers who value sustainability and “green” practices.

As another example, he pointed to a PIA member looking to print for a large retail department store chain. In order to qualify as a vendor, they not only have to pass print quality requirements and have a quality control system in place, but also must have an environmental standard and be audited on both their print quality and environmental standards. “Now we’re waiting to see if the printer will approach the retailer to see if they are going to accept SGP as an alternative certification,” Jones said, because the environmental standards the printer was given were tailored to the apparel, mill and textile industry, and the retailer does allow alternative environmental certification programs.

Bovay pointed to an October announcement from toymaker Mattel, Inc. that set targets for sustainable paper and wood fiber sourcing. By the end of this year, 70 percent of the companys paper packaging is to be composed of recycled material or sustainable fiber. By the end of 2014, the goal increases to 85 percent.

As this type of demand grows from these largest of customers, Bovay explained, companies will find stronger incentives to put time and money into investing in sustainability efforts and pursuing certification. “Just because you get certified, that doesn’t mean people are going to beat a path to your door,” Jones said. “However, it becomes a very powerful tool that you can use to get people to beat a path to your door.”

Where he sees the largest demand so far for sustainability certifications among vendors is with Fortune 1000 or Fortune 100 companies, schools and universities, hospitals, government and the financial sector. Though that list is growing, he said. “We had another printer who said, ‘Without the certification, I couldn’t have even approached some of the customers I have now,'” Jones described.

Becoming Certified

SGP certification is open to stand-alone and in-plant printing, binding and finishing, loose-leaf facilities and printing departments within schools or government agencies in the United States and Canada, according to the SGP certification criteria, which can be found at www.sgppartnership.org. In the case of in-plant operations, only the printing or post-press portions of the facility are certified.

Among the requirements for certification are that companies create a sustainability team, implement a management system, develop an annual Continuous Improvement Project (CIP), use SGP program metrics, take steps to reduce the facility’s environmental footprint, implement pollution prevention activities and commit to social and ethical norms. Annual reporting and biennial audits by independent, third-party auditors are required.

“It’s not a how-to. It doesn’t say, ‘Step 1, do this and Step 2, do that.’ That’s for you to figure out how you work relative to your culture,” Jones said. “But it gives that framework that provides the ability to go through and lay out the steps. It allows a lot of flexibility and freedom for companies to put in the way that they do business or the way that the culture is set up in their company.” Jones said that those familiar with quality programs like ISO 9000 will find the approaches similar. ‘It’s built on a ‘plan, do, check, act’ approach,” he described.

From the time of application, a company has 12 months to request its initial audit. Jones said the paths to certification have varied so far, with some companies taking the entire 12 months – or in some cases, asking for extensions in the case of personnel changes or other hurdles – and other companies achieving certification within 30 days. It all depends on how much of the groundwork is laid before an application is submitted. If a company were to devote a person full-time to the certification process, Jones estimated it would take four to six weeks. But few, if any, companies have that luxury, and Jones said most have agreed that six to eight months is a fair estimate of the initial time required.

Application fees range from $295 to $595; base audit fees (not including auditor travel expenses, which are required) range from $1,500 to $3,000 and Corrective Action Report (CAR) fees – required if the audit finds corrective actions needed – range from $75 to $150 per hour. Annual renewal fees range from $250 to $400. The different pricing structures depend on a company’s membership in trade associations – several offer discounts for certification. Jones noted that the auditors SGP contracts are required to have familiarity with the print industry, attend a training class and pass a written test.

Certification Results

SGP-certified printers are reporting cost savings already related to their completion of certification. Jones described one company that chose for its continuous improvement project to focus on reducing its solid waste. “They were able to save almost $200,000 a year on solid waste, and essentially they’re just about done throwing things away,” Jones reports. “They went from dumping a 30-cubic-yard dumpster about eight times a year to not having one at all, period.”

That’s why Jones objects to those who call SGP just another certification label. “If you look at it and you look at how people have been successful with it, and those who truly embrace it, they have actually found it to be very rewarding,” he said.

The most successful companies, he says, are those where the entire workforce has been engaged in the effort. When the SGP certification program was being beta-tested, those companies that relegated the program to the marketing department struggled, Jones said. “We have to overcome the myth that this is just another certification. I think it is much deeper than that,” Jones said. “It actually can be transformative.”

Sacred Cows in an Economic Downturn

August 21, 2011

by Ed Rigsbee

What better time to grind sacred cows into hamburger than during an economic downturn? The sacred cow protectors in your organization experience lowered resistance when times are not so good. It is much more difficult for them to defend the pet projects, products and services that have reached their sunset when placed under the tight economic microscope.

If You are a Sacred Cow Defender

Upper level decision makers pay especially close attention to questionable activities in an economic downturn, organizational restructuring or during a merger. If you have even a faint indication that you might be a sacred cow protector, this is the time to realize that everyone will be attacking your pet sacred cow. Ask yourself if this cow is worth your career. Might it be time to let go?

To help you work through the process of either defending or letting go, consider the following:

Why should this cow continue?
Who cares most about this cow? Why do I protect it?
Which market or stakeholder segments does the cow still serve? Is this cow still profitable?
Is this cow worth the organizational resources necessary to sustain it? Has this cow reached its sunset?

If You are a Cow Grinder

This is the moment you’ve been waiting for – it is time to rid your organization of that outdated, resource-sucking albatross that has, in your opinion, been dragging everyone down. While this is a good time to bring out the meat grinder, you’d better be smart about your actions. This is not the time to pretend you are a bull in a china shop, but rather take a methodical approach to getting that cow into the grinder.

First, you must remain aware of the fact that most sacred cow protectors have their identify and self-worth complexly entwined with the cow that they protect so ferociously, much like a momma bear protecting her cub. And you do not want to get between them!

How do you help an iron-clad mind to open up? Perhaps oil and leverage will do the trick.

The oil relates to the idea of slipperiness verses friction. The iron-clad mind is the friction and you become the oil that helps movement. Your job is to help the protector see that there might be new or better ideas, products and services that might possibly… maybe perhaps serve the market or stakeholders better than the currently protected cow.

Leverage relates to an outside object or force that allows ease of movement for heavy or stuck objects. Needless to say, the stuck or heavy object is the cow protector. The outside force could be higher authority or replacement product/service. Higher authority needs no explanation. Replacement, however, is a formidable subject. Where or what could the cow protector use as an alternate crutch for channeling their passion?

Grinding Cows

We’ve always done it, our customers expect it and so we should continue to do it. This is an area that can be overcome by numbers, metrics or measurements. It is difficult for a person or department to defend something that can be proven to no longer be performing.

The “not invented here” attitude can be a challenge when offering alternatives to the cow you want to grind. Leading the cow protectors to their own discovery of a replacement generally works well. The price that you, the cow grinder, must be willing to pay is to relinquish an ego boost and the credit for being the cow grinder.

For most things there is a season. Even sacred cows that are only approaching their sunset must be examined closely. The challenge is in letting too many old cows run the pasture. If in your organization there are a number of cows that are nearing their end of usefulness, all your organizations resources are being allotted to refreshing and keeping alive old cows rather than allowing innovation and discovery of new and profitable, non-commodity products and services to take their place. You can swim with the sharks in highly competitive regions or head for the open waters of innovation and creativity.

So what’s a reasonable person to do? If you are a cow protector, be certain it is worth protecting. If you are a cow grinder, be sure that cow’s sunset has arrived. Grinding cows simply for pleasure or self-adulation is not an acceptable reason to flick the switch and start the grinder. The magic for your organization is for the leaders to have the wisdom in understanding and recognizing the difference.

As a nationally recognized speaker on partnering, Ed Rigsbee has helped organizations of all sizes to build successful internal and external collaborative relationships. He has authored three books and over 1,500 articles helping organizations to take full advantage of their potential. Contact Rigsbee, find additional (no charge) resources and sign up for his complimentary weekly Effective Executive eLetter at www.Rigsbee.com. Copyright © 2010 Ed Rigsbee

Directions for New Leadership

February 1, 2011

by Richard G. Ensman, Jr.

Many centuries ago, leadership positions often demanded the right family connections. Later, an ability to read and compute became a requisite for leadership. Later still, demands on leaders included an understanding of production systems and today, leaders are expected to possess superb people skills.

The skills demanded of leaders will continue to become more diverse and complex, whatever the size or nature of the organization. Ask yourself: do you possess the skills necessary to effectively lead your organization?

Be “relationship managers.”

Leaders won’t simply supervise traditional “9 to 5” employees. They’ll manage constantly shifting groups of workers – including full- and part-timers, people working flex time, independent contractors, temps and even vendors “on loan.”

Become “learning listeners.”

Today, leaders practice the art of “active listening” – communicating with their whole bodies and sharing information. Tomorrow, leaders will use their communication skills to glean insights and information from the vast quantity of knowledge possessed by the people around them.

Broker resources.

Yes, tomorrow’s leaders will have to manage tight budgets – same as now. But the leaders of the future also will have to quickly shift resources from person to person as changing needs dictate. And these leaders will have to formally account for commodities such as morale, customer satisfaction and image, just as they account for money today.

Communicate electronically.

Skype™ Twitter™ Texts™ Tomorrow’s leaders may not see many of their employees and contractors on a regular basis. These leaders will need to learn how to manage people electronically, and to communicate effectively through audio, video and social media communication channels. And these leaders will need to learn how to motivate customers and find new prospects using these electronic tools, as well.

Creatively use technology.

Tomorrow’s leaders won’t have to be technical wizards, but they will have to understand the myriad of ways technology can be used to manage and market – and will need the “hands-on” skills to select the right technical tools and use them appropriately.

Influence behavior through motivation.

Next generation leaders will become masters of motivation. They’ll glean sophisticated motivational skills from the latest human relations and psychological findings, and use those skills to motivate employees. And they’ll rely on sophisticated consumer behavior models to influence buying behavior more frequently than traditional advertising.

Possess emotional stamina.

Today’s leaders feel stressed when events aren’t predictable or when demands come at them fast and furiously. Tomorrow’s leaders will embrace change, conflict and pressure as exciting professional challenges.

Possess tolerance for ambiguity.

Change, in the form of shifting customer demands, governmental regulations and technological innovation, is constant. True leaders will need the stability to remain calm in the midst of so much change – and to poise the organization to function effectively in a sometimes-frantic business environment.

Possess “translation” skills.

Leaders will develop an acute understanding of the business environment and translate complex technological, marketing and management requirements to simple, easily understandable principles for customers and employees.

Possess vision.

Don’t confuse vision with goals. While long-term goals may be based upon a business vision, an authentic vision is an easy-to-articulate principle cutting across goals and rallying everyone in the organization. A traditional goal: “we’ll achieve 5 percent sales growth next year.” A new leadership vision: “Sale or no sale, we’ll position ourselves as a state-of-the-art company in the mind of every prospect.”

Practice role adaptation.

In years gone by, leaders often were encouraged to identify their leadership “style” and practice it consistently. No more. In the years ahead, leaders will be expected to shift their style, depending on the needs of the moment. At one point, for instance, a leader may serve as a coach, at another moment a facilitator, and at still another moment, a strategist.

Provide self-leadership.

Before the leader of tomorrow can lead others, he’ll have to learn to lead himself. Tomorrow’s leaders will develop lifelong personal education programs, obtain their own mentors or coaches to guide them, and find ways to constantly renew their confidence.

Serve as knowledge brokers.

Next generation leaders will spend time studying and training. They’ll often maintain computerized “knowledge bases” of information, and constantly replenish them with up-to-date data. They’ll be quick to retrieve knowledge from the people around them, and repackage it for others.

Subscribe to personal ethics principles.

Bureaucracy has frustrated people the world over and has generated widespread distrust of institutions. Customers and employees will gravitate toward businesses led by principled leaders who base their actions on strong personal values and commitments.

Understand and manage diversity.

The workplace will consist of people of a wide variety of ethnic and social backgrounds. Customer backgrounds will become more varied as well, and even small firms will be doing business internationally. Tomorrow’s leader will understand the traditions and cultures of the people he’s serving and working with – and promote an appreciation for diversity throughout the workplace.

A Supplier’s Take: Meeting the Needs of Binders

August 21, 2010

by Renée Varella

When it comes to the bookbinding industry, Rob Mauritz, vice president of sales at LBS, Des Moines, Iowa, does it all. Not only does the supplier work with equipment manufacturers such as Kolbus, Muller Martini, ODM and GP2 to learn what materials its customers need to operate its equipment, the company offers a variety of cover and reinforcing materials, more than 20 styles of ready-to-use end sheets, and a large selection of binders board, stamping foil, and headbands. Customers include book manufacturers, hand binders, library binders, on demand printers and binders, photo book manufacturers, and edition binders.

“We’re still able to meet the needs of the small traditional binder, enabling such companies to buy in small quantities with quick turnaround of materials,” added Mauritz, who worked in the paper industry for a decade before spending the last 19 years at LBS. “We’re also able to be a resource for folks who call about a piece of equipment or unique material. We’ll try to help them; if we can’t do it, we partner with equipment suppliers that can.” Often Mauritz taps the knowledge of LBS CEO Fritz James and Lang Wightman, company president, both of whom are former bookbinders, as well as long-time binding experts Professor Werner Rebsamen, RIT Professor Emeritus, and Peter Martini of the German material supplier Dr. Günther Kast Co.

“We provide materials to everyone – from the largest library binder that also restores old bibles to the truly small binder that’s still doing work mostly by hand using a traditional bookbinding hammer,” Mauritz said. He noted that all traditional binders need end sheets, cover materials (typically cloth), cover board, and some kind of material to reinforce the spine. “Small binders will buy large sheets of cotton cloth, cut it down to a 3″×10″ strip, and hand-apply it to the book block. Other binders will have a roll and use machinery to produce hundreds or thousands of books a day. LBS offers spine reinforcing material that ranges from 100 percent cotton to nylon to high- elongation stretch paper and even some grades that have the cotton and paper laminated together. We can recommend the proper material for each job,” he said.

A Customer Evolution

According to Mauritz, LBS has approximately 150 U.S. binders in its database that do at least some of their work by hand and employ from one to five employees. “We certainly have seen changes in our customer mix over the years,” he added. “While we do find binders strictly doing traditional work, even these smaller binderies have added some sort of edition or on demand capabilities.”

Mauritz noted that advancements in equipment have allowed binders to automate or semi-automate. This has been especially helpful as binders face greater demands from customers that require shorter turn times. “Technology is turning the industry around,” he said. “In some respects, technology like the Kindle can hinder the bookbinder as more and more books move to electronic formats. But if they follow the example of some of our customers that are embracing technology by using the latest software to produce photo books or even ‘partnering with the enemy’ by manufacturing protective cases for e-readers, you can make lemonade out of lemons. It is not easy, but by combining the talent of a skilled bookbinder and the vision of a successful business person, binders of all sizes can not only survive, but excel in today’s ever-changing business climate.”

Job Costing: Know Your Costs, Know Your Profits

August 21, 2010

by: Mark Porter, Diemanic MIS

There is a simple equation in business that must be followed:

PROFIT = SALES – COSTS

If a business doesn’t know its costs, then how can it know its profits? In good economic times, companies must know their costs to maximize profitability. In tough economic times, they must know their costs to survive.

These days, understanding true costs is more important than ever. As competitors constantly lower prices to keep work in their plant, they put downward pressure on your prices. It can be difficult to know when to say, “No” and walk away from a job.

The simple truth is that if a business is not using job costing to determine the true costs for each job, then it will never know when a job doesn’t make sense from a cost standpoint. This affects overall profit. If the profit made from each of last year’s jobs was graphed, we would likely see a graph similar to the one below. Because the true costs of each job were not understood, the business simply took each job that was won. As a result, these jobs fall above and below the profitability line.

If the costs had been understood at the time of estimating the jobs, the orders that had no chance of being produced profitably could have been walked away from and more of the jobs would have fallen above the profit line. Job costing can help identify the type of work that can be done profitably, so the sales and production efforts can be focused on that type of work.

Job costing needs to encompass three areas:
1. Calculating the true costs.
2. Applying costs to the estimating process.
3. Monitoring and analyzing the costs on a continuous basis.

Calculating the True Costs

Costs associated with any job-oriented manufacturing business, of which the binding and finishing industries are members, require the monitoring of direct labor, direct materials, and the application of overhead costs (both factory and administrative). The direct labor and material are easy to calculate, but the overheads must be applied based on accounting principles associated with the direct labor hours or Activity Based Costing. Without accurate hourly rates that ensure all overhead costs have been encompassed, then job costing will be useless. Hourly rates can be calculated using either budgeted hourly rate software or an accountant. These hourly rates are not static. Adding or deleting a piece of equipment, adding a new shift, or changing the employee benefit package all can require a recalculation of hourly rates.

The job costing system also needs accurate production standards. Information such as run speeds and makeready times must reflect the times required to perform specific tasks. Most operators of bindery and finishing companies have a good handle on this information. With accurate cost rates for machines and speeds and times for processes, the costing system is ready for use (see Table 1).

Applying Costs to the Estimating Process

Estimating and selling are two different processes. This is probably the most misunderstood concept in the binding and finishing industries. Most companies use “sell” rates to produce estimates, rather than using costs and then marking up the estimate to reflect selling conditions. The advantage of using true costs in an estimate is that the business knows at the estimate stage if the job will make or lose money.

If the estimate states that it will cost $100 to produce this job, but also wants a 20 percent markup, the sell price is $120. This puts a business in a position to make a more educated selling decision if the customer says another company will do the job for $95. The business does not have to walk away from the job, but at least it knows it is paying $5 for the privilege of doing the work and that there’s no profit on the horizon (see Table 2).

Monitoring and Analyzing Costs on a Continuous Basis

Cost and production standards must be monitored and analyzed on a continuous basis. It is vital that businesses ensure that standards used for estimating accurately reflect the standards being achieved on the shop floor. It is of no value to estimate a machine as producing 5,000 pieces per hour if it is actually only achieving 4,000/hr – that loses money before the job comes through the door. Conversely, if a business is estimating at 4,000/hr and actually obtaining 5,000/hr on the shop floor, jobs are being lost that could be produced profitably.

To continually monitor costs, staff must record the time and materials used in the production of each job. This has several advantages. At the end of each job, an actual v. estimate comparison can be run that will show any differences in cost or production between the way the job was estimated and the way it actually ran. Any variances should be investigated and analyzed to determine if it is a change that needs to be accounted for or a one-time occurrence.

Time can be collected via time sheets or shop floor data collection devices. The shop floor data collection devices have many benefits over the time sheets, but either method will work. Businesses must track every minute of each employee’s day – both chargeable and non- chargeable time.

There are many other benefits of collecting data for job costing, especially in the current economic conditions. Monitoring the time and material usage of all employees brings an increased level of accountability to the shop floor. Accountability leads to increased profitability and decreased waste. If a business has $2 million dollars in labor and material being processed in its plant each year, even a cost reduction of 5 percent can result in $100,000 savings.

The information collected can be used in other formats as well. Productivity can be analyzed to determine average speeds and makereadies. Average speeds being obtained by individual employees can be tracked, as can chargeable and non-chargeable times. If an employee has only 60 percent chargeable time, his role may need to be evaluated. A solid job costing system is critical in good times and essential in tough economic times.

Mark Porter is president of Dienamic MIS Software, Inc. Dienamic offers a wide variety of software products and services designed specifically for trade binderies and print finishers. Dienamic can offer full systems, including estimating/management information/e- commerce and individual software tools such as delivery management, die management, foil management, and budgeted hourly rates. For more information, call (800) 461-8114 or visit www.dienamicmis.com.

Troubled Times Demand Dynamic Supplier Relationships

May 1, 2010

by Renée A. Varella

In a challenging economy, strong supplier relationships are more crucial than ever. According to Tom Stein in an article at AllBusiness.com, a recent study showed that more than 90 percent of small- and medium-sized businesses reported that solid supplier ties saved them time and money and helped them in this difficult business environment. Here, three sources in the trade bindery industry explain how they make the most of their supplier-bindery relationships.

Think Partnership

The most effective relationships start with the idea that suppliers and binders can form mutually beneficial collaborations. “We consider ourselves partners with our customers,” said Mark Hunt, director of marketing at Standard Finishing Systems, based in Andover, Mass. “Our philosophy is to create a value proposition in which we help trade binders increase efficiency, boost profits, and lower costs. If we can do that, our customers will be successful and so will we, because they’ll come back to us for more post press solutions.”

“We think of our vendor relationships as partnerships,” agreed Mike Seidl, sales manager at Seidl’s Bindery, Inc. in Houston, Texas. “Finding a company to put your trust in when you’re in trouble and need help out isn’t always easy to come by, so we commit our loyalty to a high-quality and dependable supplier.”

Understand Expectations

According to Hunt Nichols, executive vice president and co-owner of BindTech, Inc. of Nashville, Tenn., having clear expectations of your supplier-bindery relationships can facilitate rapport and minimize misunderstandings. “We look to our vendors to provide quality products at a competitive price with on-time deliveries,” he said. “We work with vendors who stand behind their product when issues arise and respect confidentiality with regard to special products and shared client information. We look to partner with companies that can respond quickly to all requests and help us to better service our customers.”

Seidl understands that suppliers long for binderies to demonstrate purchasing loyalty. “Our suppliers want us to lift up their product by using it regularly and exclusively because we believe in its performance,” he said, “and they want us to convey that to our customers so that their name is known outside of the bindery.” In turn, he added, binderies expect suppliers to work with them in every way possible to meet customers’ expectations. “Suppliers should expect to be called on to answer performance and technical questions about their product and stand behind their product with explanation and financial liability should it fail to work as advertised.”

Nichols added that suppliers deserve to be paid promptly, to be treated fairly when problems arise, and to have an opportunity to compete on all projects that fit. “If a supplier provides superior service in all regards, it can expect that the bindery will be more likely to showcase and recommend their products to other companies and to gain market share,” he said.

Tap into Vendor Expertise

In addition to providing high-quality products and services, the best suppliers help customers solve problems and compete effectively. For example, Hunt noted that Standard Finishing’s key advantages include applications expertise and a comprehensive product line.

“We have 10 field sales managers and a support team of subject-matter experts who each have more than 20 years of experience,” he said. “Our field team is made up of veterans of the finishing space who understand the emerging technologies and know the cost pressures and tight turn times that trade binders are under.” He noted that the team takes pride in helping customers to identify the most appropriate solutions, adding, “If another company has a better way to do something, we’ll be the first ones to tell you.”

As for products, Standard Finishing sells a broad line of bindery and paper handling equipment from such suppliers as Horizon of Japan and Hunkeler of Switzerland. “Our integrated feeding and finishing solutions fill a real vacuum in the marketplace right now,” Hunt said. “We’ve worked hard to position ourselves as a source for application-appropriate solutions – whether you need hardware, integration, software, or inspection systems that do verification and tracking.”

Pay Attention to Pressures

Inevitably, there will be times when a binder wishes his suppliers better understood his challenges. “Unfortunately our industry has become very much an on-demand, ‘fast-food’ type of industry, in which speed is just as important as quality,” Seidl said, adding that binders now get days to produce projects that used to take weeks. Vendors with a basic knowledge of the machines on the bindery floor can predict what the demands for supplies will be – and expedite material to the binder, if necessary: “The biggest help from our suppliers is for their products to be on our floor the moment we need it.”

Nichols agreed that a supplier’s promptness and accuracy of information can be as important as the product provided. “The industry moves faster every day, and it takes the bindery’s plus supplier’s best joint efforts to meet customer demands,” he said. “If BindTech’s needs are met, our suppliers can count on a long-term relationship. We recognize and appreciate superior performance by both old and new suppliers.”

Seidl noted that binderies face the additional challenge of higher shipping costs now that many suppliers have reduced their number of storage facilities. “With the market today, we battle big shipping costs on material for ever-faster-moving projects that we rarely get advanced notice of on arrival,” Seidl said.

Hunt noted that top suppliers can be an asset, especially in uncertain times. “Ultimately, every binder has a different problem to solve – it might be to knock down labor costs or increase productivity,” he said. “We’re in the problem-solving business, so we’ll work with you, try to understand your needs and your pain point, and help you to succeed.”

Consider the Competition

Suppliers able to provide strategic information on the marketplace can be an invaluable resource. “Trade binderies are in a tough spot right now,” Hunt said. “There’s significant downward price pressure and runs lengths are dropping, so binders need to find their profitable niche.”

Hunt acknowledged that it can be easy for a trade bindery to look at a vendor as someone who’s just trying to sell equipment. “Some trade binders are deeply wedded to their post press equipment and sometimes ask, ‘Why should I invest in a new saddlestitcher when what I’m using has worked fine for 30 years?’ The alternative view is that the guy up the street or across town – who has highly automated systems and is able to do ultra-short runs – will creep into your market and steal business away.”

If binders don’t invest in new technologies they’re destined to be left behind: “The reality is that some binders today aren’t able to be as competitive on short-run work,” Hunt said. “Our niche is highly automated, quick-changeover equipment geared to more extreme turn times, because that is what the market demands.”

Keep Communicating

Strong bindery-supplier relationships require frank communication about needs, goals, timelines, and quality improvements. “We thrive on an open dialogue,” Hunt said, adding that some of Standard Finishing’s best solutions have come from its best customers. “We’re always looking for clever ways to help customers be more productive and competitive. That’s why we like to stay in touch, keep an open mind, and be receptive to input.”

Those same qualities also work for BindTech’s vendor relationships. “We want our suppliers to be flexible, creative, and open to ideas,” Nichols said. “Our preferred vendors can help us succeed by being able to provide products and solutions, when and where needed, to help us satisfy customer demands.”

To ride out the recession, spend some time thinking of ways to get the most from your bindery/supplier relationships. By maximize every advantage, you can survive the rough spots, embrace competitive challenges, and plan for growth.

Disaster Recovery Solutions for Business Continuity

February 1, 2010

by Dawn Warner

The first step to understanding disaster recovery (DR) and business continuity (BC) solutions is to understand the scope and definition of the word “disaster.” When defining the word disaster, people inevitably take into account only natural disasters such as hurricanes, earthquakes, or tornadoes. However, the term disaster, in regards to business continuity, is defined on a much grander scale and can involve a variety of different occurrences, natural or unnatural, internal or external, and commonly not thought of or considered as devastating to a business.

According to recent statistics, the number one source of disruption to a business, causing significant downtime and revenue loss, is a power outage. Second is a problem with computer hardware, with third and fourth listed as telecommunications and software problems, respectively.

Figure 1 shows the major causes for disaster recovery services. (1)

Disaster may be caused by carelessness, negligence, bad judgment, hurricanes, earthquakes, floods, or tornadoes. As seen in Figure 1, 72 percent of U.S. organizations have experienced significant interruption and loss of revenue caused by power outages, with 52 percent experiencing computer hardware problems. The size and scope of these events have caused business executives to rethink their business continuance strategies and consider increases in capital expenditures for disaster recovery services. If any of these events occurred and business was affected, how long would the business be able to remain out of production without suffering damaging revenue loss or causing the business to close down permanently?

Disaster planning is imperative precisely because a business likely will die if a workable disaster plan is not in place when a disaster strikes. A study of companies that suffered a catastrophic data loss found that 43 percent never reopened, 51 percent closed within two years, and only 6 percent survived. In the 1993 World Trade Center bombing, 50 percent of the businesses without a disaster recovery plan were out of business within two years. (2)

In any disaster, there are various losses to consider:

Physical facilities (destroyed buildings, work spaces, machinery, computers, inventory)
Access to facilities (condemned buildings)
Information (corrupt disk drives, damaged computers)
Access to information (no remote database access)
People (production, support, managers)

There should be two major segments to a DR plan, with one segment covering the daily “back office” business operations and the other being the “supply chain” facility operations. The plan overall should address all components needed to support the business when a disaster occurs. All areas need to be analyzed. Every physical, software, hardware, and human resource element, as well as every business process must be studied and addressed to ensure continuation in an event of a disaster.

A “supply chain” analysis is the second segment, which assists in addressing the recovery of the actual physical assets of the company. This part of the plan addresses issues such as how to handle unavailable manufacturing and storage facilities, order entry systems, shipping, and accounts payable/receivable. Businesses also must look at manufacturing operations and informational databases. The informational database should house all pertinent information relating to every aspect of business, from updated employee, customer, and supplier lists to detailed equipment and product specifications. It should cover anything and everything that pertains to the continuity of the business in case the facility is unable to be occupied.

Once the DR plan has been developed, it is extremely important to continuously review and evaluate the plan. An out-of-date plan is almost as dangerous as not having a plan at all. Today, many customers demand that their business partners have a continuity plan as part of the contract between them and that it be reviewed continuously. Any major changes, such as large employee shifts, increases in network infrastructure, or the addition of sub-units/departments, should trigger a plan review.

A DR/BC plan should encompass all aspects of a business, including supplier and customer networks. It should provide a solution that will account for and ensure the recovery of all business processes, provide an alternate workspace environment for employees, and facilitate ongoing operations within a timeframe that is consistent with the needs of the business. The monies invested now in a DR/BC plan could literally be the difference between sinking or swimming in the days and weeks after a disaster.

Footnotes
1 Rough Notes, July 2005 – Business Interruption Insurance – Death Protection for a Business.

2 Business Continuity Planning for IT Systems, University of Texas.

Disaster Recovery Checklist

Select a coordinator to develop plan objectives, a methodology and an overview.
Identify critical business processes and systems.
Formulate hardware system and end-user recovery objectives and identify critical network operations.
Assess threats such as fire, environmental contamination, physical security and software security.
Create a records-retention procedure.
Implement a back-up and storage strategy.
Define and test storage, back-up, and application systems.
Identify an alternate site for end users to work out of and contract with provisioning vendors.
Develop network recovery and relocation strategies, as well as replacement options for hardware and service.
Implement an alternate site that is engineered to deliver the recovery time and recovery point objectives.
Define recovery teams and develop a communication plan.
Publish the disaster recovery plan to include the recovery procedures.
Annually test the disaster recovery plan.

Delivery Management: Increase Productivity, Customer Service, and Profitability

November 21, 2009

by Mark Porter, Dienamic MIS Software, Inc.

The past year has proven two things to those of us in binding and print finishing. One, we must be more productive. Our existing staff must be more efficient and perform more tasks with fewer resources. Two, we must provide extraordinary service, especially to our good customers. It is generally accepted that 80 percent of revenue comes from 20 percent of our customers, so we need to lock those customers in to ensure it takes a bigger price difference or bigger mistake for them to take their business elsewhere.

Productivity and service are objectives that can be achieved in many ways, but one way is through delivery management. The binding and finishing companies – the post press industry by definition – cannot begin a job until goods are received from the printer. The efficient management of these goods, combined with the timely receipt of goods from suppliers, can greatly contribute to the profitability of a job.

Nobody has to tell you how competitive it is in the marketplace. Printers are continually being pushed toward smaller production runs, lower prices, and quicker turnarounds. Binders and finishers, as the last step in the production process, bear the brunt of this pressure. Even if the end customer provides an allowance for extra time in the production schedule, in all probability it will be sucked out by the design, prepress, and printing processes long before the job gets to the post press stage.

It is a constant challenge for binders and finishers to meet the production needs of their printing customers profitably. But there are procedures, policies, and tools that can be implemented to help manage jobs and increase customer loyalty.

Controlling the Flow of Jobs into Post Press

By managing the delivery of both printing from customers and purchases from suppliers, you can maximize the time available to produce jobs, thereby limiting the risk of incurring overtime costs, disrupting other jobs, or missing deadlines.

The key to this problem, like many problems, is communication. Knowing what you are expecting, when you have received it, or when it is late can greatly increase your ability to manage jobs. These jobs are then produced on time and more efficiently for your customers and more profitably for your business.

Communication starts with knowing what job is coming in and when to expect it. Too often jobs just appear in the shipping/receiving area, causing production disruptions. Not controlling the receipt of jobs exposes your company to customer claims that goods were received earlier than they actually were, forcing interruptions in the production schedule. Sometimes your customer honestly believes that the job arrived early in the morning – he doesn’t realize his driver diverted his route. Providing a notification of received goods not only can provide your company with the evidence it needs to support the actual delivery, but also can provide the customer with information to manage his delivery resources.

Maximizing Production Time

Giving customers the ability to pre-book jobs and/or shipments via a computerized goods management system provides your business with notice of what jobs are coming in and allows you to plan for their arrival. Offering incentives, such as providing first priority status, supplying notification to the printer when goods are received, or advising the customer when his goods are not received by the required time are all motivation for the printer to pre-book his jobs.

Once the jobs are received in-house, it is critical that not a minute of valuable production time is lost. As soon as goods are received, people both within your organization and at the printer should be notified of receipt. The quantity and the condition of the goods can be verified against the information entered by the printer. If the counts are short or the material was damaged in transit, these issues can be dealt with immediately. Placement of the goods within your plant can be documented and a skid tag can be generated and attached to the skids or containers for easy identification.

Often, jobs are not just waiting for printed matter from your customer but also spine material, dies, or other items from suppliers. A quick look-up of all receipts for that specific job will quickly provide the information required to coordinate production.

Building Customer Loyalty

The additional benefit of a delivery management process is that customer loyalty is built through the addition of convenience and value to the printer. The ability to enter print job information 24/7 provides a printer with unparalleled access to your services. If it is 8 p.m. and a printer needs a job done tomorrow, is he going to enter it into your system – thereby gaining a priority place in your workflow – or wait until the morning to start calling binders/finishers?

Back in the ’80s, just as the printing industry was getting into desktop publishing, files were being generated on disks and couriered to printers. One of my clients had invested in providing his best customers with modems. These customers then had the choice of generating disks, filling out courier slips, experience delays in delivery of the disks and – if there were mistakes in the file – repeating the procedure – or they could simply click a button and electronically send the file to our printing client. It was an easy choice and I am sure this customer service won jobs for his company. Automatic electronic notification when shipments are received or are late provides peace of mind and eliminates the time required for the printer’s staff to follow up with you. This provides the printer’s staff with more time to do their jobs.

Automatic electronic notification of short counts and damaged goods provides the printer maximum time to correct these issues and ensures the printer can meet the customer’s deadline. Obviously, the use of a manual delivery management system makes this process very time-consuming and difficult to maintain, but the Internet provides the perfect communication system for the receiving process. Through your website, customers can have the ability to enter data, such as sheets to be delivered. An automated delivery management system can email the customer and your internal staff automatically when events happen, such as shipments received, short counts, damaged goods, or late shipments. This ensures that everyone involved is provided the maximum time to produce the order or correct the situation.

A solid management process for receiving goods will increase customer loyalty, save time on both your end and the customer’s, and improve your chances of producing jobs profitably.

Mark Porter is the president of Dienamic MIS Software, Inc. Dienamic offers a wide variety of software products and services designed specifically for trade binderies and print finishers. Dienamic can offer full systems, including estimating/management information/e commerce, and individual software tools such as delivery management, die management, foil management, and budgeted hourly rates. Contact Mark Porter at (800) 461-8114 or visit www.dienamicmis.com.

Five Strategies for Guaranteeing Customer Loyalty

May 1, 2009

by Robert W. Lucas, Creative Presentation Resources

Customer retention has always been one of the most cost-effective ways to increase business revenue. According to the international consulting firm Bain & Company, you can increase profits by as much as 95 percent through increasing retention by as little as 5 percent. If organizations fail to focus their efforts on servicing current customers while spending excessive amounts on acquiring new ones, they are wasting their efforts and much of their revenue.

Most customers are looking for good value for their money, especially in hard economic times. They also are attuned to product and service pricing. Even so, many customers are likely to pay a bit more to organizations that demonstrate a true concern for customer needs and a willingness to go out of their way to provide quality service levels. Certainly, providing service that differentiates your organization from others requires effort, training, and staffing, but the return on investment is well worth it long term. You cannot expect to approach service with a “fix it and move on” mentality. Service is a process, not an event. It requires dedication of time, money, and resources and a commitment to provide whatever it takes to satisfy your customers.

Here are five strategies that you can use to enhance your organization’s customer retention:

1. Create brand recognition. The most successful companies and those that stay in business for decades or longer are the ones that spend time and effort planning and executing strategies to acquire and sustain brand recognition. This means creating a market presence where customers know who they are and what they provide. Think about organizations such as Sears, JC Penney’s, AARP, Firestone, Ford, AAA, Maytag and Macy’s. When you hear those names, you know what they do and what to expect from them.

To establish your brand recognition, you must first identify what it is that you want to be known for, to whom you will market it, how you will market it, and ways to offer quality products and services at a competitive price. Once you establish these criteria, you can set out to spread the word through advertising, product and service sampling, strategic partnerships, customer acquisition, and effective service.

2. Get regular feedback from your customers. You cannot address customer needs if you do not know what your customers want. A big mistake that many service providers make is that they look at articles and other sources that say “Customers want…” and go on to list what all customers want. While such resources can be a good indicator, unless you ask your customers what they expect and want regularly, you likely are spending time and money providing the wrong thing to your customers.

For example, in good economic times competitive pricing may not get people in your door or to your website. However, when money gets tight, cost may become more important to your customers. Additionally, depending on the type of products or services that you provide, customer needs may be different. For instance, for customers looking to buy construction equipment, safety might be an important concern. For someone buying women’s clothing, that is not likely a big issue. Take your customer’s service pulse regularly in order to keep up with their changing and specific needs. (For sample questions to ask customers, see this article in its entirety at www.thebindingedge.com.)

3. Make it easy for customers to provide feedback. Do not forget to ask for feedback following a sale or service encounter – that is a big mistake. If you do not ask, most customers will not tell you. Some studies show that if customers are disappointed, they will not tell you. They will simply go away and then tell others about their negative experience. This can lead to the loss of that disgruntled customer while missing the opportunity to serve those who heard their story. You need to hear the good, the bad, and the ugly related to how well customers perceive your service efforts.

Many organizations say that they welcome customer feedback, but they hide behind technology and make providing feedback difficult. Make it easy for people to give you feedback or voice concerns. On your website, have a link that says “Customer Feedback.” When customers click the tab, they should get a form to complete and see your organization name, address, phone number, and email address at the bottom, in case they want that information. On your automated phone system, offer an extension in your outgoing message that says, “To leave feedback for us, punch extension #___.” Ensure that someone checks these sources daily and responds in less than 24 hours. Contact the customers to let them know that you received their feedback and to thank them. (For more ways to collect customer feedback, see this article in its entirety at www.thebindingedge.com.)

4. Listen to your customers. It does no good to gather input from your customers if you ignore it. This will only lead to frustrated customers and lost business. If nothing else, thank your customers for taking the time to share their opinions with you.

No matter whether the feedback that you receive is positive or negative, you should receive it enthusiastically and give it immediate attention. Instead of looking at negative feedback or complaints as a bad thing, recognize that the customer took the time to share it with you and ask yourself the following questions:

Why would this customer feel this way?
What did we do/say that created this impression with the customer?
Is the customer’s reaction reasonable? Why or why not?
Have we heard similar things from other customers?
If necessary, what can we do to prevent similar reactions by other customers?
Gather all customer feedback and examine it periodically. Look to see if there are trends or patterns that you need to address – for example, if a number of customers have complained about long wait times on the telephone or that they failed to receive a product or service when promised.

5. Act on feedback immediately. Do not file away customer feedback for discussion later or to have a committee review it; act on it right away. If you fail to examine the cause of customers’ dissatisfaction or to acknowledge feedback received from them, they will likely stop giving it. If customers are complaining, they also will likely escalate the issue higher in the organization or take their business elsewhere.

If someone is unhappy with your organization because of a policy, procedure, or the way he or she was treated, you should deal with that issue immediately. Examine and change the process that created the problem or counsel or discipline any employee, as appropriate. Failure to act can lead to additional complaints by other customers.

The key in guaranteeing customer loyalty is to treat customers not as you would like to be treated but as they would like to be treated. Strive to provide exceptional service in every service encounter, and the name of your organization will potentially become a household word.

Robert Lucas is president of Creative Presentation Resources and managing partner of Global Performance Strategies. He has over three decades of experience in the customer service, human resources, training, and management fields. He has written hundreds of articles and contributed to 28 books, including Customer Service: Building Successful Skills for the Twenty-First Century. You can reach him at www.globalperformancestrategies.com or email him at blucas@globalperformancestrategies.com.

« Previous Page