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Walking into the unknown

Jun 1, 2005 12:00 AM


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Gorelick’s Management

Size, routine, consistency and efficiency have become points of worship for many experts in the business community. There’s a great deal to be said for these principles, but they are not immutable.

If you sit through seminars at Graph Expo and regional trade shows, you’ll likely hear many speakers willing to share their secrets—all-purpose solutions to fame and riches. In the graphic arts industry, however, there are only examples, ideas and inspiration. This is an industry in which production routine and common product carry little perceived value to customers.

Attendees at these seminars should reflect upon their four or five largest and most profitable customers. The odds are that graphic arts companies have taken extraordinary steps, perhaps violating industry norms and even prior internal procedures and processes to satisfy individual customers’ needs. Bigger is not always better or even more profitable.

Better margins for distribution services
Our research into print companies’ characteristics and experiences during the economic slump beginning late in 2000 found nearly all firms that did well provided some distribution services to their customers. Today, about half of all print companies offer those post-bindery services.

Distribution services such as storage, vendor-managed inventory, mail list services, mailing, call center operation and bulk fulfillment are nothing new. The capital investment required to perform these services typically is more modest than the purchase of a press. The margins are good if the price is right.

All of this begs the question: What’s going on at the 40 or 50 percent of print companies that don’t offer distribution services?

I hear many explanations, few of them persuasive. I’m incredulous upon hearing, "None of our customers have ever asked for it." Another common explanation: "We’re printers. What do we know about mailing and distribution?" My glib rebuttal: Look at all the mailhouses that have bought presses and are learning how to print.

I sense that the most common reason why some companies eschew participation in the distribution revolution involves challenging the notion that bigger is better—doing "our kind of work" on three shifts, seven days a week is best of all. Selling print involves seeking work that fits the finite dimensions of press and bindery equipment.

Invest in success
Selling and providing distribution services is a 180° turn from selling and producing print. Virtually everything is customized, a process that requires a thorough understanding of a customer’s business needs. That, along with customizing the services themselves, takes time.

This level of time and trouble is not palatable for companies that have a very short-term orientation, reward salespeople for short-term results and generally equate profitability with routine and simple work. Constructing a tailored post-bindery process takes time and the involvement of several staff members. There is considerable front-end investment.

The bottom line, however, is that many companies slavishly adhering to the philosophy, "We shouldn’t get into this unless we can do it better than everybody else," have a product—rather than a customer—orientation that is not serving them well.

Where there’s a will there’s a way
Call it fear. Call it lack of will. Call it extraordinary resistance to change. The fact remains that not every company can bring itself to act on the evidence that the marketplace rewards suppliers willing to do the difficult and extraordinary.

Many owners and senior managers find it easier to spend a considerable amount of money for equipment than to manage change. There is less risk perceived in tangible hardware that doesn’t talk back.

Print is a commodity. Distribution services represent an opportunity to provide perceived value to customers through customization. The latest technology might reduce unit costs and ensure consistency, but technology is a solution and a challenge.

On one hand, technology can help reduce spoilage and meet customer expectations. On the other hand, effective technology becomes commonly available, magnifying the importance of distribution and other customized services in the mix offered to customers.

It takes will and courage to sell and implement a bundle of distribution services with which there has been no prior experience. There are few—if any—guidelines for pricing. Having said that, even a brain surgeon needs to have a first patient. There’s an adage: "The way to learn to fight a war is to fight a war."



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.