Customers, in-plants & other competitors

Apr 1, 2008 12:00 PM, By Dick Gorelick

Competition isn't necessarily confined to other commercial printers. This is a complicated subject. It's impossible to do justice to this scenario in this column. The objective here is to call attention to two competitive factors that are underappreciated: customers and in-plant print shops.

The following comment undoubtedly will elicit strong disagreement in some quarters, but I believe it's folly to adhere to some manufacturers' claims that their long-term objective is to support the traditional printing community. That might be a short-term objective, but to believe it is a long-term objective is to believe in Santa Claus. In the long term, the economics of publicly held companies lie in revenues — and that eventually means becoming ubiquitous, reaching users. We're suggesting inevitability, not duplicity, in this discussion of industry suppliers.

Customers are the chief competitors — albeit unwitting competitors — of commercial printers. All good technology eventually gravitates to the user. It's the story of the typewriter, the personal computer and the microwave oven. The graphic arts industry is not immune. Customers have taken over prepress functions. The office copier and its refinements have replaced some commercial offset printing.

Sizing up the competition

Customers already have become competitors to commercial printers. To the extent that there is historical inevitability, this trend will continue.

That shouldn't necessarily be considered as looming disaster for the commercial print company. History suggests it's impossible for a company to sustain a long-term competitive advantage based exclusively on product and/or price. Information about effective, optimal use of technology is the basis for sustaining a long-term competitive advantage. Technology almost always runs ahead of the ability to use it wisely.

The subject of in-plant print shops reflexively triggers toxin on the part of many commercial printers, especially in-plant shops operated by government agencies. Although in-plant shops are competitors to commercial printers, those printers are wrong to consider all in-plant shops poorly run and unnecessary.

In the late 1970s, Printing Industries of Illinois published a monograph condemning in-plant print shops. The logic and allegations stopped just short of calling them a Communist plot. Subsequent management of the regional trade association took the position, “We didn't really mean that.” But many of the observations and allegations made 30 years ago continue to be made.

In-plant shops are accused of being out touch with reality, tending not to appreciate buyer needs. They are said to be slow and lacking a general understanding of the need for “service” (whatever that means). Most often, in-plant shops are said to be inefficient, assured of a stream of business from their respective owners for which they don't have to compete. To believe all this, however, is to be seriously misguided. Yes, an in-plant shop is assured of some work, but depending on the source of the information, up to half of the organizations do not require their staff to send work to the in-house print shop.

Perception vs. reality

The primary issue little understood by the commercial print community involves customer service. Hell hath no fury like a dissatisfied internal customer who is a senior manager or who is in a position to affect the future and funding of in-plant operations. The manager of an in-plant shop often must be a master politician. And internal customers must be sold on an ongoing basis lest they believe superior pricing and service can be obtained from an outside resource. In many cases, security and confidentiality is the rationale for existence of in-plant print shops. I am appalled at the cavalier attitude of many commercial printers producing coupons and certificates or handling mail lists for customers in the healthcare and financial service industries. The number of regulations governing the handling of both printed materials and customers' intellectual property have grown in recent years, and liability has become an important issue. These developments have led many organizations to keep these projects in-house whenever possible.

Step up

The challenge to commercial printers is magnified by the increasing accessibility of technology. The cost of equipment is no longer beyond many in-plant shops' reach. Also, much of the equipment is user-friendly and doesn't require a highly-trained operator.

The point of this column is to urge commercial printers to temper their industrial cannibalism. The enemy isn't always the overt competitor down the street with lower prices; there's a bigger picture. As technology gravitates to customers, commercial printers need to create customer value through ideas for more profitable, effective use of printed materials and to think less like manufacturers.

The in-plant factor shouldn't be ignored — these shops aren't going away. Many are well run and worthy competitors.

Dick Gorelick is president of Gorelick & Associates and the Graphic Arts Sales Foundation. He can be reached at dickgorelick@gorelickandassociates.com.