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The information challenge

Sep 1, 2005 12:00 AM


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Gorelick’s Management

In this high-tech age, it’s almost an article of faith in American business that the genius and capabilities of information technology are far ahead of a company’s ability to take advantage of that potential. There might be an exception: the graphic arts industry.

This column might result in vehement denials from many management software companies, but it is our experience that small and midsize print companies suffer from information deprivation. Few companies use software of any kind to its full potential; in most cases, the company doesn’t even realize or understand that potential.

Having said that, I believe the current situation is attributable to an unfortunate combination:

  • Many software companies bet the e-commerce boom was permanent and acquiesced to their worst instincts, selling out to a venture that had difficulty servicing existing installations.
  • Poor program design. In many cases, programs were designed and championed by those with limited knowledge about real life in the graphic arts industry.
  • Fundamental industry changes due to commoditization of the industry. Software companies treated custom programming like a disease. These companies made their product rigidly uniform at a time when customers discovered that customized products and services were the only antidote to commoditization.
Today, the rapidly changing information needs of many mainstream print companies cannot be satisfied by most manufacturers of industry-specific management software systems.

Perhaps I am being overly cynical and pessimistic. Prior to implementation of the last postal rate increase, however, a request was made to delay that implementation in order to write and test software.

Old habits die hard
In many companies, the “tail wagging the dog” is the software system. When I’ve voiced this opinion, representatives of software companies have been quick to point out that the problem is program usage and internal politics and policies, not the wisdom and potential of the software system. To the extent that individuals are not quick to embrace change, there is a great deal of truth in this contention.

I believe that the role of industry-specific management software in the majority of print companies is a serious issue that, unfortunately, has largely been ignored in the hype about variable-data, computer-integrated manufacturing, JDF and other developments. The latter developments are important but shouldn’t be touted at the expense of ignoring the gathering of basic information about daily operations. As an industry, we are deprived of the efficient means to gather important, if not critical, operating information at the company level. Macro metrics—such as industry ratio studies—are, at best, misleading. What meaning can be derived from data that groups together one-, two- and four-color sheetfed operations? Does anyone believe that the cost of customer service operations should be classified as “general factory overhead?”

In an environment in which the majority of print companies provide customized distribution services for important customers, does it make sense when some industry economists and researchers refer to revenue per employee as an important indicator of profitability? Consider the fact that, in most cases, most distribution activities involve minimal material costs and result in decreased revenues—but increased margins—per dollar of labor costs.

Choosing the lesser of two evils
Manufacturers of industry-specific management software have told me that there’s no demand or economic justification for a program that records missing information before a job is released downstream into the manufacturing cycle. Any software developer with the most basic understanding of real-life industry workflow, however, would find that the most common root cause of manufacturing spoilage is no longer equipment, materials or operator competence. Rather, it is information and communication. It is not unusual for a print company to “pull out all the stops” to rush a job through production only to find that the shipping destination is unknown.

The notion of a truly “closed loop” management system is challenged by customized distribution services and sole source agreements. It might not be possible or expeditious to have an estimate on every job at the time of order entry. The run quantity might not be known until a day or two after order entry if design services are involved or if the precise size of the mailing list hasn’t been determined.

The bottom line is that small and midsize companies often are faced with two choices, neither of which is acceptable. They can adopt and implement a closed-loop software program that does not adequately generate important information from the sale of services traditionally regarded as ancillary, or they can invest in a customized computer program.

The fragmentation and segmentation of our industry presents a difficult economic reality to software companies. Customization and proliferation of products and services adds up to the improbability of an imminent solution. The message: God helps those who help themselves.


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


To read more of Dick Gorelick’s Management columns, visit our Management Archives.