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As appearing in The Seybold Report - Jan. 11, 2006

Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.

Diversifying with Mailing & Fulfillment Services

Diversifying with Mailing & Fulfillment Services: Unlocking Hidden Profit Potential written by Pete Basiliere is published by NAPL as one of its Executive Management Series. Many printers are considering these two postpress value-added services as possible expansionary product development initiatives. From an analog workflow perspective these two services may have little to do with one another as most fulfillment orders are distributed via one of the classic courier services, i.e., UPS, FedEx, DHL or Priority Mail. As digital workflow, and specifically variable data printing becomes increasingly mainstream for printers, these two services become inextricably intertwined.

Whether printers make the leap into either service or both or simply want to do a more affective job of outsourcing these services on behalf of their clients, Basiliere's treatise is certainly worth adding to any printer's strategic planning library. Likewise publishers, corporate marketing coordinators and print buyers, who simply want a broader perspective so that they can do a more effective job of "buying" and managing their vendors, will find this book a quick read and a good reference source.

Mailing Services

Despite the dynamics being reported on federal postal reform in leading trade press publications in the recent couple of years, it is essential to understand the basics in doing business with the United States Postal Service. This publication does a good job of this in describing the USPS mail classes and levels of presorting, mail piece design criteria according to the Domestic Mail Manual (DMM), the variety of mail production equipment available, various software considerations to keep in mind and database & mailing list sources and ordering procedures.

To avoid commoditization, leading mailing service vendors offer all five steps in the mail program development cycle and try to develop distinctive competence in each. These five are (1) become involved in the planning process as soon as the customer decides to produce a campaign, (2) be a technical consultant for the mail piece design to assure effectiveness of purpose and compliance with DMM guidelines, (3) maintain database of mailing list vendors in order to help client acquire new prospect names as well as assure "hygiene" and compliance of the entire sorted list, (4) develop production expertise as one or several connected processes may have varying degrees of automation potential and (5) delivery efficiency and effectiveness might include the USPS "Confirm" service as well as follow up to concerns expressed by "MERLIN" inspections.

Reputable industry suppliers are cited for envelopes, inkjet, postage meters, specialty feeders, specialty inserters, strapping & packing equipment and tray tags.

An entry level investment configuration including postal software, addressing equipment, an inserter and a folder/tabber/strapper could range from $50,000 to $150,000 depending upon new or used and level of sophistication required.

In describing the classes of mail, i.e., first-class, express, priority, standard, periodicals and package services the book lists the various USPS publications which define the specifications for regulating each.

The four-postage payment methods are described, i.e., metered postage, permit imprint, pre-cancelled stamps and PC postage along with the specific applications that might be most appropriate. The three means and levels of maximizing postal discounts; presorting, drop shipping and commingling are discussed in some detail. For example, the USPS has the following eight sort classifications; (1) three digit common ZIP code, (2) five digit common ZIP code, (3) AADC (Automated Area Distribution Center, (4) Mixed AADC, (5) carrier route, (6) basic carrier route, (7) high density and (8) saturation.

Standard mail drop shipping can result in varying distribution discounts depending upon how close the drop is made to the ultimate recipient. These locations are (1) the mailers local post office, (2) local Section Center Facility (SCF), (3) destination Bulk Mail Center (BMC), (4) destination Auxiliary Service Facility (AXF), (5) destination SCF and (6) destination post office.

Tracking and confirmation via the Postal Service's CONFIRM service is described as a relatively inexpensive Internet means of asserting delivery date expectation for larger volume projects or on-going mail needs. This has proven effective in tracking financial transactions (checks-in-the-mail) as well as coordinating the timing of multi-media projects. For example, direct mail postcard should arrive at prospect's address no more than 36 hours from reinforcing e-mail blast going out.

Eighteen proven mail piece design tips are offered that could be invaluable to avoid production problems, mail regulation noncompliance or surprising higher classification rates.

Inserting capability will be critical to the flexibilities and efficiencies every mailer wants to offer. The discussion of mail production equipment includes five basic sections: (1) basic inserter designs, (2) short-run inserting equipment, (3) intelligent inserting, (4) desirable features to be considered for all inserters and (5) the automated document facility (ADF) concept.

As a start up operation there are four inserter feature decisions to be made: (1) how many insert stations with most manufacturers making either four or six station modules, (2) whether or not to handle continuous forms, (3) whether to meter inline and, if so, how many meters which are essential if the job contain pieces of varying weights and therefore postage due and finally (4) the size of the take away conveyor which might impact the ultimate speed of the overall system.

A subject broached briefly but which could well be a full chapter or even a book to some mailers or to many in the near future is that of security. Protecting customer financial information is critical for every transactional printer/mailer. Additionally HIPPA regulations are increasingly uncompromising when it comes to people's personal medical and health information. These concerns and resulting systems and procedures would impact fulfillment as well as mailing operations.

A human resource section appropriately addresses skill requirements for critical positions and details a thorough employee-training program borrowed from Gunther International. Though job descriptions are not provided, these will be essential and can be purchased from the Mailing & Fulfillment Service Association (mfsanet.org).

For the small to medium size printer, who is entering the mailing services arena, an area of distinctive service that has relatively low investment but high perceived value to small to medium size corporate clients is data processing. Numerous packaged softwares are available at relatively modest investment to perform nearly a dozen different data manipulation and cleansing tasks. In many cases after the fact "potential" mailing list error reports (errors that were corrected) can be generated to quantify that postage savings accrued by following the discipline offered by these tasks if performed repetitively for each periodic mailing.

Fulfillment Services

NAPL through their Chief Economist Andrew Paparozzi and his staff have documented the changing and increasing fulfillment services scene being offered and projected to be offered by the general commercial printing industry. This was accomplished by the first extensive printing industry wide survey conducted in 2004 and then again in 2005. Reports concerning these surveys of practices and activities can be purchased directly from NAPL but the book does a good job of capsulation the trends of the various and often dynamic issues.

Warehouse space planning wrinkles a lot of brows for the newcomers to fulfillment services. Unfortunately the book comes up short in dealing with this issue.

It shows the square footage results of the two industry wide surveys as well as an excellent survey conducted in conjunction with MFSA in preparation for this past April's first joint Fulfillment Conference organized by both MFSA and NAPL. For the new-guys-on-the-block the amount of space being occupied by these printers and mailing/fulfillment specialists participating in the survey can be a little overwhelming since they rarely need this much space to start.

The reality is that virtually all of the survey participants had been offering fulfillment services for quite some time and were therefore considered to be among the mature vendors. Similarly the average annual sales size of the survey printers exceeded $25 million and the mailing/fulfillment specialists were greater than $5 million. Both of these figures show that the largest practitioners supported the survey. Evidence is clear that much smaller vendors can be very successful and profitable at offering these services and they do not need the 36,000 to 69,000+ square feet indicated. Ten percent of that range should be more than enough initially. Acknowledging dynamic space needs are a given.

Vendor Managed Inventory (VMI) is a supply-chain trend that is a double-edged sword. It increases the risk to the supplier who now owns the stock but should lead to a tighter contract. Successful VMI arrangements result from the supplier being knowledgeable of the customer's product planning and scheduling.

The sales process is becoming increasingly IT visual. For example, your software should be so flexible and easily templated as to be able to prepare a demo website "that illustrates your understanding of the fulfillment process." At least one page of the website should be dedicated to item selection, order entry/shopping cart, internal order processing, customization (if applicable), kitting, pick & pack, shipment tracking, handling returns and reports.

The key to profitable costing and pricing of fulfillment services is to use a classical Industrial Engineering workflow diagram illustrating the various steps in the process.

Selective outsourcing may be appropriate when the vendor partner is more experienced with comprehensive and specialized offering and software. However, be sure that the contract between you does not limit their liability while you are exposed. Also stipulate the period of time during and after performance of services that the partner may not solicit your customer(s).

Specific websites are listed for nearly 90 publications, associations, specialty hardware & software vendors and sources of expendable supplies.

The appendix contains three valuable reference tools:

1. Mailing Trade Customs developed and updated by the Mailing and Fulfillment Service Association. An electronic version may also be downloaded from mfsanet.org.
2. Graphic illustrations and discussion of envelope styles borrowed with permission from the Worcester Envelop Company (worcester-envelope.com/resources_envelope_basics.asp).
3. Acronyms are a way of life with this Federal Government Agency. An essential glossary of mailing terms that all print sales personnel should become adept at as they strive to serve as the "door opener" for expansion of sales from existing print clients as well as needs assessments for other full service graphic communications buyers.

Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.