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.

Unique Information Fulfillment Opportunities
for In-Plant Printers

A number of surveys conducted in recent years by the National Association for Printing Leadership have accentuated the desire and plans among commercial printers throughout North America to expand into a variety of value-added services complimentary and supplementary to their conventional print services.

The most recent "NAPL Creating Value Survey" conducted April/May 2005 had 317 participants and showed the following results.

The fact that nearly two-thirds of respondents express plans to expand into the first four areas is a quite aggressive posture. The motivating factors for such expansion are (1) improved share of client's business leading to (2) improved client loyalty and (3) overall enhanced printer profitability.

Those new business services that have been linked to digital work flows, such as digital printing, Internet browser accessible print job ordering and wide format digital printing, have also been aggressively endorsed by the leading in-plant printers as reported in In-Plant Graphics' annual survey of services offered.

Ironically, in-plant printers rarely pursue information fulfillment warehousing services; number two on the list of most popular new anticipated services among general commercial printers with 73.5%. The two reasons are a lack of physical space and, to a secondary extent, the desire of the corporate marketing department to control the relationship with this specialty vendor on this traditionally highly seasonal service.

There is no doubt that fulfillment services require extra finished goods warehousing space. The most recent fulfillment specific survey conducted by NAPL, which was presented at the initial MFSA/NAPL joint fulfillment conference April 26, 2005, indicated that the median amount of space dedicated to fulfillment by printers was 20,000 square feet. MFSA is the 80-year-old Mailing and Fulfillment Service Association headquartered in Alexandria Virginia (mfsdanet.org).

This amount of space might be perceived as a major deterrent by in-plant printers until it is realized that the printers responding to this survey have 23 median number of fulfillment clients utilizing that space. The incremental revenues attributed to fulfillment from these few clients will typically be about 10% of the printer's total annual revenues. The in-plant printer will normally have only a single client, the marketing department, though there might well be a number of product managers concerned about the product literature for upwards of a dozen or more products. In the case of the in-plant for a college or university their single client is inevitably the admissions department.

The advantage of having a smaller, limited number of clients is that, while the service is highly seasonal with peaks and valleys of storage demand, the speculation of how much space should be needed is much easier to predict. It is interesting that smaller general commercial printers that have successfully gotten into fulfillment services most frequently rent the necessary warehousing space from a nearby industrial park. Over 60% of these printers do not have their fulfillment operation on site with the printing plant but at one of these off site locations!

The corporate marketing department's concern for their control over this service should not be underestimated. The better in-plants have worked very hard to improve their customer service reputation and their on time delivery records. The fact still remains that the unquestioned advantage that many general commercial printers have over the in-plant is multiple labor shifts versus the single shift of most in-plants. The 3PF or third party fulfillment vendor, which increasingly is becoming an expanded general commercial printer, sells their services by saying that all of our clients' fulfillment needs are seasonal which we are very accustomed to. "If need be, we simply add more people from our well-trained part time pool during seasonal peaks or move staff over from other multiple staffed operations," responds the private sector fulfillment sales representative. Whether or not this promise can become a reality is another thing.

The in-plant manager can knee jerk and claim the same capability. Unfortunately the marketing department can rarely predict when their seasonal peak periods are going to be. The reality is the in-plant manager quite often has more of an inkling of peaks and valleys of seasonal demand because they have more contact with the marketing coordinators and marketing secretaries in the processing of other work requests than most any outside vendor. While few reliable systems of predicting future fulfillment demand exist in practice, frequent communications with the client's staff have proven to be the most trust worthy predictors.

Granted, managing an ancillary service with unpredictable demand in what might dictate an offsite location whose total revenues are relatively modest at perhaps 10% of total revenues could well be more headaches than it's worth. However, one more fact should be considered.

The primary reason that printers are moving aggressively to expand into these services is the incremental profit potential. The PIA/GATF Annual Financial Ratio studies show the printing industry overall to have about 2% before tax net profit. MFSA has a similar study and shows its members and their service specialty's net profit to exceed 6%. This 3X leverage factor is appealing to printers. And in turn saving money on premium priced services should be most appealing to in-plant managers.

The largest in-plant printer on the globe, Allstate Insurance Company in Wheeling Illinois, attests to that fact. Mark Cleveland, Allstate's General Manager of Fulfillment Services, confirms that their in house fulfillment services are the fastest growing segment of their overall in-plant printing service revenues. While they have only been in the fulfillment business for a few years, they have quickly learned of the premium prices that can be saved by bringing these services in house from third party fulfillment vendors.

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.