Procuring Print IN BIG VOLUMES
Massive printing buying organizations are increasingly integrated to clients' MIS systems.
By C. Clint Bolte -- Graphic Arts Online, November 1, 2009
Print buyer seminars have been held at PRINT and Graph Expo trade shows for several years, a logical tie-in with the leading print technology trade show. One such session at PRINT 09 was lead by retired RIT professor Frank Romano, who describes the market of mostly smaller volume buyers (including some designers) as 23,000 full-time U.S. print buyers (some of them brokers), and another 92,000 part time print buyers. But what of the really large organizations? Another PRINT 09 panel presentation, organized by Graphic Arts Monthly, addressed practices of high-volume print buyers. Three executives representing buys of nearly $1 billion in printing annually in North America alone, described the systems, procedures and policies they follow—some of which might be emulated to fit other large corporations.
GAM Editor-in-Chief Bill Esler organized and moderated the panel, comprised of the U.S. Public Printer, Bob Tapella; InnerWorkings president & CEO Eric Belcher; and the director of manufacturing and distribution manager for Reed Business Information North America, Mike Cohen. Each panelist gave an historical perspective on their organization's print procurement evolution and the current state of their art.
The U.S. Public Printer runs the Government Printing Office headquartered in Washington, DC, and with regional offices throughout the nation. In addition to running one of the nation's largest printing operations, GPO supports the 250 Executive Branch agencies in preparing contracts for fulfillment of their printing needs. GPO print procurement responsibility began in 1929 and grew to volumes in the mid 1990s of over $700 million. The Internet and alternative electronic media have steadily eroded that peak volume to $532 million last year. Of the 10,000 printers listed on the GPO's roles of qualified vendors, 2,000 of them won and produced 145,000 jobs procured by GPO's 230 buyers last fiscal year. As a matter of policy and practical politics, GPO only buys from U.S.-based print providers.
GPO has two very innovative, and well-established, policies and procedures for print buying, embracing: (1) levels of quality; and (2) a statistical quality assurance inspection program. There are five quality levels:
# 1-Best: for which a very limited and select listing of qualified printers are designated providers;
#2-Prestige: library or better quality (some of the generally acknowledged U.S. print quality leaders listed here);
# 3– Good: annual report quality (entry level process color, for example);
# 4–Basic utility: with no process color;
# 5–Lowest usable print.
Levels 3 and 4 represent 80% of the total volume, while much of level 5 has moved to internal copying.
GPO jobs are posted online, and awarded based not only on price, but on “the best value to the taxpayer,” says Tapella. GPO's buyers can factor in “most responsible bidder” as criteria in awarding work, Tapella notes. This allows for considerations relating to sustainable printing practices, location and reliability. The GPO bidding site is at http://contractorconnect.gpo.gov.
Disagreements over meeting GPO quality expectations of each level are settled by statistical sampling of the delivered job. Identified flaws exceeding a stated threshold could get the job rejected. This long-standing GPO quality assurance program has been effective at resolving disputes. The “mediator” is an inspector general judge assigned to GPO for such purposes.
InnerWorkings
Founded in 2001 by a couple of technology geeks, InnerWorkings has grown to become the largest independent buyer of print in North America. It is ranked number 154 on Delotte LLP's Technology Fast 5000 of the fastest growing technology and communications companies in North America. Eric Belcher, former COO of manroland, joined InnerWorkings a year before the company went public in 2005. With its proprietary software and systems, InnerWorkings' 650 professionals (350 print buyers) serve 150 enterprise clients—50 of them Fortune 500 firms. They bought $419 million in 2008 across 62 different printing and promotion categories.
Belcher was emphatic in stating that InnerWorkings' browser accessible PPM4 (Print Procurement Manager v.4) software is “not just an order management or e-store” facilitation. For example, each of its 8,000 registered print suppliers (4,000 of which received purchase orders last year) can log onto the system and update their own equipment and capabilities profile. They are highly motivated to do so; orders are awarded in large measure when equipment precisely matches job specifications (i.e., a four-color job is not ordinarily assigned to be run on a six-color press.) This has netted detailed specifications on 13,000 presses in InnerWorkings' database.
From these profiles, along with the InnerWorkings' buyer ratings of each of the vendors (required for each job produced), InnerWorkings can generate from the job specifications (1) the ideal equipment configuration to produce the job, (2) a listing of the most qualified potential printers in that region, and (3) the expected award price based upon recent historical purchase data captured within the system. The listing of qualified printers also takes into account factors such as potential vendors' seasonality and open capacity. It also includes the incumbent printer on any rerun or rollover contracts. Print vendors can log on and find specifications for available jobs the system did not identify them as “ideal” candidates for producing.
“InnerWorkings is the proven low-cost procurement provider,” Belcher said, “and typically saves corporate clients 10–15% off their previous procurement experience.” This savings is after InnerWorkings' markups for its services, giving it profits of 4–8%.
InnerWorkings pitches enterprise clients thusly: specifications for a sample job are entered in the InnerWorkings database, which holds 1.22 million searchable historical print job pricing records, with data from 15,000 new jobs added monthly. Historical award prices are shown so that the prospect can compare them with their own procured results. The 4,500 clients using InnerWorkings include John Deere and recent additions, InterContinental Hotels and Samsung.
In response to an audience query about how a new printer can be added to their qualified list, Belcher diplomatically remarked, “For every new enterprise client that joins InnerWorkings, all of their qualified print vendors are automatically added to the InnerWorkings vendor database.” If you convince your biggest client to let InnerWorkings buy their printing, you will automatically be in the club to bid on work for other clients. Otherwise InnerWorkings does not need more qualified printers and provides no “application process.”
Ariba and print auctions
Mike Cohen pegged Reed Business Information's North American printing procurement at $12 million annually (paper is purchased separately) in producing its 80 publications—including well-known titles like Variety, Interior Design, Publisher's Weekly, Purchasing, and, notably, Graphic Arts Monthly—along with related marketing support materials. RBI also maintains a proprietary “spend information database,” and Cohen is on the Reed Elsevier Global Procurement team, responsible for $2 billion in total procurement.
RBI has developed and expressed a good deal of confidence in using an online approach to print procurement, which includes an e-RFP (request for proposal), question and answer forum for prospective vendors, well-defined bid lots, on-line auction events lasting 30 minutes to an hour and a proficient review/validate/proceed phase.
The online auction is managed using applications by Ariba, a large specialist in automated business processes and procurement. RBI also uses a third-party auditor to audit worksites for compliance with Reed Elsevier corporate code of conduct. It was clear from the panel that IT is moving the print procurement process to the same sophisticated levels that automated digital workflows have provided the print production process.
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The article will be published in January.
Lisa Cross - 2009-9-12 14:52:26 EST -
I am looking for the article on various sources of funding that was in a recent issue. Did not find it in the online version. Please post or send an electronic copy.
Sai - 2009-8-12 18:52:06 EST
