Many companies outsource non-core competencies such as print fulfillment management in order to improve business focus, gain access to world-class capabilities, accelerate the re-engineering process, share risks and redirect resources to more strategic activities such as marketing and product development.
On the tactical side, outsourcing can reduce or control operating costs, make capital funds available, generate a cash infusion, secure resources unavailable internally and help you gain control of an unwieldy function. Outsourcing can make a company’s fulfillment problems those of another organization, one with the expertise to solve them.
Perhaps the most important factor in deciding whether to outsource print and promotions fulfillment is whether your technology, systems, cost structure and performance are at a level that another company would hire your organization to manage its fulfillment program. If not, consider outsourcing.
Outsourcing and the cash conversion cycle. The outsourcing of non-core competencies, such as print and promotions fulfillment, can be a way to improve the cash conversion cycle, an important measure of a firm’s performance because companies run on cash, not on accounting profits. A company’s cash conversion cycle is the number of days it takes to convert one dollar of raw material into one dollar of cash. Outsourcing partners with expertise can deliver greater supply-chain efficiencies, which will accelerate the production cycle, lower administrative costs and help convert an organization’s investment into cash faster.
Obsolescence: the hidden cost and the models that reduce it. Many organizations struggle to measure the costs of their print and promotion fulfillment programs. A good place to start is by measuring obsolescence costs: Companies often are startled to discover that their obsolescence rates for marketing literature and promotions fall into an unacceptably high range of 15 percent to 25 percent.
Obsolescence control begins with forecasting accuracy. Inaccurate forecasts mean that marketing organizations absorb the high costs of obsolescence for over-ordered items while perhaps also paying rush charges to restock materials with higher-than-expected demand.
A “push” fulfillment model is frequently the culprit in these instances. Push models try to anticipate demand, create print and promotions based on that forecast and then “push” the materials to the end users. The weakness lies in the almost universal difficulty of developing accurate forecasts. Push models tend to create unnecessary inventory and costs.
There are fulfillment model alternatives, most of which incorporate a “pull,” or demand-based, approach. In a pull model, field demand creates orders, and orders in turn drive inventory replenishment. While push systems create inventory, pull models deplete inventory and trigger timely replenishment. A hybrid approach that works like a pull model, but includes the production and fulfillment of printed materials in one streamlined process, brings an additional advantage to marketing organizations with print components that are price and time sensitive.
Demand comes from Internet-based communications with user groups such as agents, dealers, distributors or retail outlets, which are notified of an upcoming order cycle and asked to place orders based upon individualized use. Forecasts are more accurate because they are made at the point of use. To discourage over-ordering without risking shortages and ensuing long stock outs, digital print is incorporated into the production equation to fill supply gaps quickly and at a lower total cost than creating excess inventories.
Adopting an on-demand philosophy. Many marketers think of “on-demand” as employing digital print technology in a print fulfillment program, but on-demand is really more an issue of philosophy and culture. It means having an organizational commitment to maintaining low inventory levels, which creates more inventory turns and greater savings.
Also, digital print’s variable data capabilities allow more customization, which can lead to higher response rates for direct marketing materials. Personalized DM campaigns that use variable data printing have proven extremely effective, particularly as the level of customization leads to increased relevance. Sellers can expect a five- to tenfold rise in response rates for well-designed personalized direct marketing materials versus traditional static pieces.
Though the cost per page for variable printing historically has been an obstacle, the price is dropping as the user adoption rate increases. But even with a higher unit production cost, the ROI for producing highly personalized offers can be dramatically greater.
Automating order entry. Efficient coordination of complex, multi-component print fulfillment programs often depends on high-level order entry and processing expertise. Internet-based tools, such as Banta’s Sync Fulfill, provide centralized access to all aspects of a print fulfillment program and offer superior control, communication and collaborative capabilities. Companies with large-scale fulfillment programs increasingly incorporate online technologies that allow around-the-clock system input including:
· 1-800 ordering services.
· Expedited 24-hour order turnaround options.
· Links directly to inventory and distribution.
· Versatile payment collection and planning.
Further contributing to a program’s order processing efficiency is the ability to offer one-day order completion and same-day shipping. Barcoding, along with full computer integration with order entry and inventory management systems, can enhance a provider’s ability to accomplish fast turnaround on each order as well as provide greater accuracy and fast facts for performance monitoring. And if returned goods processing occurs, the ability to gain instant information access contributes to fast resolution and a more satisfying customer experience.
Also, an automated order processing system should let a marketing organization measure key statistics such as fill rates, on-time delivery, order activity and usage by unit. Detailed data collection can be used to support operational and marketing goals. Up-to-the-minute information also provides a critical decision-making tool, giving marketers the latest account information, inventory levels and other vital information.
With superior ability to place, modify, cancel and track orders, organizations gain more control over the entire print fulfillment process. Accurate reports on inventory quantity and production location also result in superior print planning and use, which reduces waste and increases savings.
Beyond the basics. Internet-based print management solutions can extend your marketing reach beyond traditional order entry tools.
Integrating fulfillment and customer care. With the growing emphasis on ensuring the quality of the customer experience from the initial stages of a relationship through warranty servicing and future sales, companies strive to use tools such as Sync to better integrate both online and offline content creation and fulfillment with customer care. The objective is to take an end-to-end approach while applying specialized skills to give a company’s customers better access to information and service. This results in those customers being able to make more informed and easier decisions to buy, upgrade and get help.
By integrating CRM with the fulfillment process, companies can create a comprehensive approach to communications and customer care. Because these capabilities often exceed internal systems, marketing organizations may choose to find an outsourcing partner that can immediately provide a high-level, integrated solution. Benefits from a qualified single-source provider include:
· Reduced operational costs achieved by an outsourcing partner that continually looks for better ways to integrate processes.
· Creating sales opportunities by making it easier to initiate dialogue with prospects and customers.
· Grow intelligently by gaining the outsourcing partner’s ability to quickly scale operations to meet shifts in demand, respond to seasonal effects or otherwise adapt to changes in market conditions.
· Strengthen brand equity by creating and fulfilling the latest versions of products and information while removing outdated material from circulation.
· Improve the customer experience by ensuring that information about products, accounts and service is consistent and accurate across all communications channels.