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As appearing in The Seybold Report - April 06, 2005

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.

NAPL's Top Management Conference 2005

Leadership & Innovation Create Sustainable Growth

This premier conclave of the National Association for Printing Leadership saw a number of firsts: (1) its largest crowd ever at 264 attendees to a West coast venue, (2) sixty "first timers", (3) 119 companies represented (89 Presidents or CEOs) and (4) the most in-plants ever at seven with six of those being higher education printing operations. Despite Arizona ending its three year drought with ample rain during the February 16-20 conference, there were stimulating keynote speakers, lively breakout sessions, and numerous networking opportunities at the Scottsdale JW Marriott Desert Ridge Resort.

Andrew Paparozzi, NAPL's Chief Economist, delivered his annual State of the Industry Report. Following nine of eleven quarters of sales declines; Paparozzi indicated that the four hundred member Printer Panel has reported four consecutive quarters of positive, increasing sales. "After a year of extending (production) hours," Paparozzi reported, "We're (the printing industry is) finally hiring again." The expected 4.5 - 5.5% growth for 2005 will only get us back to the pre-recession sales levels of $86.6 billion in commercial print revenues recorded in 2000. He summarized, "Printers not experiencing increasing sales, improving profitability, and firming prices should be asking themselves why!"

The greatest threat represented by this good news is "complacency and assuming, as too many printers are, that a favorable turn in the business cycle is going to make everything right again." The reality of print is that our jobs, service mix and workflow are getting more complex. Therefore, Paparozzi concludes, "We (printers) must make better decisions over a broader range of issues, excel at more tasks and think integration of systems, not stand-alones."

His chart showed the nondurable manufacturing productivity since 1990 has doubled that of the printing industry (77.1% versus 36.9%). Paparozzi remarked, "Technology is an essential part of productivity maximization, but only a part. We have to get more per employee … while not over-hiring." He suggested that the industry is competing for eighteen specific skills that are in demand across the entire economy. And ten of those are IT-oriented.

Several of the Printers' Panel, whom Paparozzi queries quarterly, reflect a series of best practices: (1) CEO-to-CEO selling as a key part of getting to know the client's total business, (2) a Board of "Advisors" with no legal authority but opine on increasingly complex business issues, (3) Employee Performance Appraisal Systems that score precise, embrace interpersonal skills as well as job-specific technical skills, define clearly performance standards and encourage extensive on-going dialogue with employees, (4) a dynamic performance indicator report with at least a dozen metrics traced frequently.

Paparozzi showed the sales results of 173 members of the Printers Panel during the past decade. Fifteen percent of the firms experienced above average growth in at least seven of the ten years. The remaining 85% of the industry are up one year and down the next. And there is no conventional method of classifying these printing companies in terms of size, equipment configuration or product specialty. He concluded, "The gap between the enduringly successful minority and the up-and-down majority will widen as our industry gets more competitive and complex."

Featured keynoter Dr. Martha Rogers spoke on "Customer-Focused Marketing and Strategy" taken from her series of popular business books and consulting practice (www.1to1.com). Building "share of customer" and "return on customer" depend upon "applying more resources to keeping valuable customers than acquiring new ones of unknown value." She advocates "treating different customers differently." Facts have shown that a greater share of client's business results in incrementally lower costs to service and clients becoming more locked in. The exception is WalMart as many vendors lose money on goods and services sold to this behemoth or make much less than from their more loyal clients.

In differentiating among clients, Dr. Rogers illustrated that the top 10% of jewelry buyers buy 66% of all jewelry sold, the top 0.2% of clients rent 25% of all car rentals, the top 5% accounted for 50% of all LEGO sales and the top 5% consume 60% of all long-distance services. Rogers admonished, "Identify, understand and connect with these most valuable clients."

She advocates "tiering" your clients into those you want to retain as being the most valuable, those you want to "grow" as having additional potential and those you should consider firing. She illustrated this by a business equipment firm whose top 3,000 clients represented 50% of sales and should be receiving more 1-to- 1 marketing efforts. The bottom 7,000 bought little from the firm over the recent two years. This later group should receive periodic postcard blasts.

She emphasized the tasks of "identify, differentiate, interact and customize" as the key to implementing this strategy. She offered numerous successful case study examples of process and retail businesses. If she had learned a little bit about the printing industry and chosen her illustrations around job shop applications, there is no telling how many printer clients she might have attracted as a consultant much less be invited back to speak to this and other printer groups in the future.

In presenting the latest digital technologies important to printers, NAPL's Senior Consultant Howie Fenton mentioned that wireless fidelity (WI-FI) transmissions would become increasingly important as more printers adopt computer-integrated-manufacturing. Chemistry free plates will be increasingly attractive to printers as chemistry accounts for 30% of the costs of printing plates. Typical printers spend $40,000 to $100,000 a year on plate chemistry. He emphasized that while the large format (8-up) inkjet digital proofs have become the industry de facto standard it is important to run a daily test and recalibrate when necessary as inkjet is inherently quite variable.

In discussing the keys to success in Fulfillment Services consultant Tom Quinn stated that the number one reason for a corporate divorce is "inventory inaccuracies." While Internet accessibility is important for a management information system, he further emphasized, "Order entry is for show. Warehouse management is for dough." Another tip for success is "pricing items must be backed up by your system documentation."

In a related topic Bob Shaunnessey, Executive Director of the Warehousing Education and Research Council (WERC) offered ideas on how to make a buck in warehousing based upon his industry practices. For example, pallet storage for the month should be billed when the skid arrives, not at the end of the month. Therefore, if a skid comes and goes within the same month it will be assured of being charged a storage fee. In addition to storage the warehouse industry charges for moving pallets in and out. For specialized storage, such as refrigeration and security, there are multiple handling fees due to the staging required. He offered warehouse industry typical costs of $5.55 per pallet per month for 6-8 skid high warehouses and moving pallets of $2.70 in each direction for high volume operations. The printer attendees commented that their fulfillment cost studies reflected prices at least twice those levels due to lower volumes and higher relative fixed costs.

Consultant Joe Becker and Mead Westvaco Production Services Manager Jamie Wilson led a breakout session on managing change. Among the constructive ideas shared were: (1) leadership - more important than management, (2) top management involvement, (3) a clear and simple vision, (4) choosing good leaders for the implementation team that are enthusiastic supporters of the change, (5) be flexible with regard to rules amidst the chaos, (6) maintain an issues log book but keep reporting requirements informal and to a minimum and (7) keep communications wide open.

McNaughton & Gunn operations executive and frequent Top Management Conference presenter on advanced manufacturing issues, Jim Clark, led a panel presentation on Critical Trends in Print Manufacturing Excellence. Manufacturing Manager of newspaper insert and direct mail printer Vertis' Atlanta plant, Kenneth Moring described his firm's successful spin on the Deming philosophy as being their "Vertis Improvement Process." This VIP effort has six critical intertwined elements: (1) based on core values, (2) objective to increase cylinder rotating time, (3) includes press op codes, (4) involves goals, VIP process checks, steering committee and liaison, (5) emphasizes best practices and process improvement teams and (6) includes crew feedback via postings. Results of this program have seen web press spoilage drop from 10% to less than 7% and net productive impressions have increased from 22,000 to over 26,000 per hour. In response to an audience query about "special rewards" Moring responded that this is such an ingrained process at Vertis that "the successful employees get to keep their jobs."

Former Quality, Technology & Systems Senior Vice President for American Color and American Color Graphics, Dal Patterson, emphasized that successful quality management is "a business process not a program or a technical activity." Thorough and on-going training at every level to include change management are essential to assure an ingrained culture change of acceptance and adoption. By its very nature a successful quality process will include elements of lean manufacturing and show results in "standardization, value stream mapping, organized waste reduction, total productive maintenance, and make ready reductions." For lasting results Patterson advised, "Keep objectives and specific efforts customer and business focused and … make this part of the merit and incentive compensation program."

David Pitts, Co-founder and President of Charlotte's Classic Graphics attributed his firm's extraordinary growth over the past decade in no small part to its ISO process and resulting discipline. He said, "Document what you are now doing. And then improve it." This program resulted in overall spoilage reduction of 66%. Their firm is now at 2% waste and has a goal of less than 1%.

Former Hall of Fame winner and current President of Indianapolis' SPG Graphics, David Harding offered his thoughts on Employee Performance Management. The employee review process should be at least annually and should include both peer review and 360-degree review. His firm interviews prospective employees 365 days a year. Because it is difficult to get candid, constructive comments from a prospect's references Harding recommended getting credit reports and driver's reports in addition to formal Omni Testing. Clearly a student as well as teacher, Harding sited numerous pertinent books in his corporate library on the subject.

Managing Direct of NAPL's Consulting Services, John Hyde discussed Issues in Considering New Equipment. He advised the audience to "understand your bank's position, e.g., ratio of loans and leases to the net liquidation value of assets."

Keynoter Morgan McCall, author and professor at USC's Marshall School of Business, offered his incites on Developing the Next Generation of Leaders. He advocates that leadership skills come from new and expanding learning experiences. While he admonished print owners to hold their managers responsible for the development of their people, he warned "Watch and protect against derailment." You need an escape plan for good employees, as some experiences are doomed for failure.

Consultant Mike Brown with IMPAX Corporation offered key sales techniques in making formal presentations to new prospects. Thorough research on the prospect's business and objectives allow the initial part of the presentation to show how you "have a fair understanding of their business." The second part in 1-2 slides succinctly discusses your business. The brief third part highlights the "business fit" between your two firms. The remaining two thirds of the allotted time is used in discussing the action steps and timetable.

The highlight of every NAPL Top Management Conference is the Management Plus Awards banquet. For the past twenty-five years this program has acknowledged the best managed printing companies on the continent based upon an exhaustive application form submitted the prior fall. While there is a degree of competitive incentive in receiving a prestigious award publicly, the longer lasting value is clearly the elevation of the professional management of the applying printing company as the criteria is quite thorough. While the time investment is significant, in fact the effort and context are the same as a well-constructed strategic and operational corporate plan. Do the later and the former is almost click and paste.

Over this past quarter of a century only 169 companies have received either the merit, silver or gold awards with several firms being acknowledged over numerous years. To win anything is quite an accomplishment considering there are tens of thousands of printers eligible!

Consultant William A. Marrinan for whom the Hall of Fame or Best Managed Printing Company of the Year is named originally designed the rigorous specifications. This year's Hall of Fame recipient is the first Canadian winner, the Friesens Corporation from Altona, Manitoba. This third generation book printer is the largest employer in little Altona. CEO David G. Friesen accepted the award on behalf of all of the company's employees.

While this TMC gathering had 89 CEOs present, there were nearly a half dozen former Hall of Fame CEOs attending the conference as well. With there being a total of 25 Hall of Fame winners and another couple of dozen printers who have won at least six Management Plus Awards, this is certainly a strong contingent of the best of the best of our dynamic industry.

Currently the Hall of Fame members are sent out to pasture. NAPL is the facilitator and instigator of programs, resources and services to help good printers become the very best they can become. To take the more successful participants in the Management Plus program, particularly the Hall of Fame members, to the next level would seem to be a stimulating challenge and opportunity?

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.