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GreensheetBIZ Industry Insights Defining Disintermediation


BY DENNIS MASON
MASON CONSULTING

SEE YA: Prepare to be eliminated from the print production process

The print market is becoming more efficient. The Internet and inexpensive shipping means that much printing is no longer local in nature. We first saw this march toward efficiency when we witnessed massive consolidation among graphic arts dealers. Manufacturers began to sell directly to printers, and the few full-line dealers that remain are primarily owned by manufacturers.

Economists call this phenomenon disintermediation-a term denoting the removal of intermediaries in the supply chain, or cutting out the middleman. While we have adjusted to disintermediation when buying presses and even plates and chemistry, we now see it beginning to affect our core business model. Although reduced print volume can be attributed-in part, at least-to a shift in advertising, increased postage costs, and consumer behavior, another major cause of change is the elimination of the printer from the process of producing print.

A look at modern digital presses clearly indicates that we are fast moving into the age of "green button printing." Digital presses like the HP Indigo and Xerox iGen4 are virtually devoid of knobs and controls. The Landa printing press was the talk of drupa with an operator interface that's more like an iPad than a printing machine.

This kind of automation and industrial design drives disintermediation in the printing industry by effectively eliminating or reducing the influence of any number of previous functions-the print buyer, the in-plant printing department, warehousing, shipping, and receiving, among others. The next step-particularly as digital presses, being electronic devices, become ever less expensive-surely will involve printing being done not by commercial printers but by print customers themselves. Just as every consumer now prints directly from the personal computer to a local printer, nothing will prevent current corporate print customers from printing their own brochures, direct mail pieces, signage-even labels and packaging. In so doing, they can expect to reduce or eliminate shipping costs, storage, obsolescence, personnel, and time to market-a formula that is guaranteed to attract the interest of the CFO. Today, the software necessary to produce printable files is either readily available or is already loaded on computers in most major businesses producing goods and services. The IT infrastructure capable of transferring image files on a corporate LAN is also already in place in most companies, as is the ability to restrict universal access to a sophisticated printer.

CUSTOMERS AS COMPETITORS?
For commercial printers, a significant vulnerability in the future could come not from competitors or other media, but from customers. The key to success in the future may lie in the ability to consistently add more value by offering services that cannot be done by customers internally. Curiously, that may mean that the bindery becomes the most important operation in the print shops of the future.

To date, the economics of outsourcing has led many print customers eliminate the inplant printing function in favor of using commercial printing services. But the tide may be about to turn. Several manufacturers appear well positioned to take advantage of this possibility-HP, with Indigo presses and a strong IT capability; Xerox, with iGen presses, a reputation centered around copiers, and an ACS acquisition which changed the focus of its business; and Canon, with both copiers and presses, plus a reputation for good office and personal printers. The list goes on, but the concept may threaten commercial printers in the not-too-distant future. Be ready!

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2100 West Loop South, Suite 900
Houston, Texas 77027-3515
Phone: +1 713-300-0674
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