Five Tips For Lowering Costs

During my tenure at NAPL (National Association for Printing Leadership), one metric we used to define leading or world class companies was year to year increases in profitability. As most companies in the industry recognize, increasing profitability is an elusive goal. Part of the formula to increase profitability is holding or reducing costs, especially labor costs.

At Print 17, my old friend Andy Paparozzi, the chief economist from Idealliance, made a presentation entitled Capital Investment: Where Companies are Planning to Invest and Why. In the survey, he asked the participants who reported increased profitability how they achieved it.  The answers follow.

Source: Idealliance “Capital Investment: Where Companies are Planning to Invest and Why”

As you can see, maintaining or reducing costs is one of most common denominators listed. In fact, if you compare these answers to those from two years ago, you discover that the importance of almost everything listed stayed the same or declined while the percentage that reported reduced labor costs increased (26.2%-30.2%). If you are interested in striving to be a leader, here are a few best practices to consider.

How to Reduce Your Print Production Costs

1. Consider Interns

Many schools offer internships that help younger people get jobs and low-cost alternatives to full time staff. Young people like the idea of internships because it allows them to combine getting credits and making money, they get to test drive a job and a company, it improves their resume, and they know it may lead to a permanent position.

2. Create Your Own On-Call or Temp Workforce

There are many different terms for this idea. Some staffing agencies use the term flexible staffing, meaning that full time employee (FTE) staff is a rigid strategy. The most obvious advantage is the money savings. Most of the benefits are similar to those from interns such as:

• getting specialists fast (e.g. for a variable data, mailing or database person)
• identifying potential FTEs
• better matching demand and capacity
• better retention because staff don’t feel threatened
• allowing FTE to focus on the most important or value-added tasks.

3. Use Freelancers and Contract Labor

In another blog titled Why You Should Consider Freelance Staff, we talk about why companies should consider working with freelancers. Some of the points include executives saying that “they are barely able” or “unable” to find the new staff with the skills they need, and the fact that freelancing is a hot trend for younger people. The greatest advantage however, is that using freelancers keeps headcounts and labor costs low.

4. Cross Training

Cross training is defined as training that teaches employees additional skills so that they can perform more than one task. Not only can it help with sick days and vacations, but it is also one of the keys to addressing bottlenecks. Cross training creates a more flexible and efficient workforce by creating resources that can better match day to day changes in demand. There are many ways to create a cross training program and we recommend that each company creates one that best fits its own needs.

5. Optimize Physical Plant Layout

Moving equipment to increase the efficiency of your plant is not typically something companies think about, which is a mistake. Some equipment such as digital printers can be configured so that one person runs two machines. In one company we saw productivity increase 40% by moving equipment. There are many best practices for optimizing the plant layout. Here are four.

1. No consecutive workflow steps in a process should be further than 21 feet
2. Materials and tools should be within 9 feet of each step
3. Find the common paths people walk and the points at which they intersect and create workflows that minimize the amount of crossover
4. Find ways to overcome physical boundaries between consecutive steps. (i.e. if materials must be carried around a wall, try to make a pass-through slot in the wall.

Conclusion

Keeping costs low is one of the challenges of working in this industry, but it is one of the common denominators that distinguishes between leading companies and the rest. In this blog, we only focused on labor costs. There is another category of cost savings – reducing manufacturing costs – that focuses more on process control and software automation. We believe that the companies that will thrive are those that can both hold costs down and offer more value-added products and services.

Another way to cut costs is outsourcing to a trade printer. We recommend SinaLite.