The True Cost of Business Communication

Transcription

1 The True Cost of Business Communication Prepared for FedEx Office by: Comments or Questions?

2 Table of Contents Introduction... 3 Determining Real Cost Considerations... 3 The Document Lifecycle... 3 The Cost of In-House Production... 4 Calculating the True Cost of Business Communications... 4 Non-Print Costs... 5 Shipping and Distribution Costs... 6 Recommendations for Reducing Costs... 6 Finding the Right Provider... 6 InfoTrends Opinion... 7 About InfoTrends... 8 About the Author... 8 List of Figures & Tables Table 1: Components of the Document Lifecycle... 3 Table 2: Document Job Specifications... 4 Figure 1: Breakdown of Print and Non-Print Cost For Quantity of Table 3: Costs Related to Non-Print Document Production... 5 Table 4: Document Fulfillment and Shipping/Distribution Costs... 6 Table 5: Cost Comparisons of Traditional vs. Online Ordering... 7 InfoTrends

3 Introduction Many organizations have little understanding about the true cost of their printed business communications beyond price per piece. Market research firm InfoTrends, which has conducted an ongoing analysis on the cost of print communication, finds that 60% of the cost of business communications is for non-print processes. Understanding the discrete costs involved in producing printed communications presents an opportunity for businesses to take action to reduce costs. Companies that understand the true cost of activities can more effectively manage their communication efforts. This article defines key cost components, highlights the real costs of common print applications, and offers recommendations for reducing costs. Determining Real Cost Considerations Producing and distributing printed materials involves many processes. Some of these have tangible, hard costs including printing, shipping, and storing materials. Meanwhile, there are less tangible, soft costs that are also significant. These include processes such as composition, design, editing, and project management most of which occur before the document is even printed. The Document Lifecycle Determining the real cost of printed materials involves examining all parts of the document lifecycle, not just the final print cost per page for ink or toner on paper. The real cost of producing materials is embodied in the time, resources, and money spent in document processing, including authoring, designing, revision control, ordering, printing, distributing, warehousing, and inventory obsolescence. In analyzing internal and external costs, key areas of focus include the components that are outlined below. Table 1: Components of the Document Lifecycle Creative Editorial Cost Project Management Printing Warehousing/ Archiving Obsolescence Shipping/ Distribution Definition Refers to design agency/advertising agency expenses; may include page layout, template creation, photography work, graphic design, and conceptualization. Includes copywriting, technical writing, proofreading, and internal document review. General internal and administrative activities related to meetings, vendor selection, order processing, project tracking, document preparation and review, approvals, press checks, and final proofing. Includes prepress, paper, printing, and finishing. This component is dependent on print run length. This component is also dependent on print run length, as well as the planned distribution strategy. For example, will a technical manual be shipped with a product or warehoused and fulfilled upon request? This cost is most significant within traditional print and fulfill/distribute models. It does still exist in more advanced print-on-demand scenarios, particularly due to supply chain issues as well as the need for frequent updating of document content. In non-print-on-demand environments, obsolescence can represent 10% to 20% of total costs. As with warehousing and distribution, this component is dependent on print run length and distribution strategy. InfoTrends

4 The Cost of In-House Production Another key consideration is the cost associated with performing work internally as opposed to outsourcing. Some believe that producing work in-house costs very little, but this is false. The total cost per page for a typical document produced in-house (at the desktop or workgroup level) can range from $0.50 to $0.70. For organizations that print more color and graphic-intensive documents, the per-page costs can be even higher because more ink and toner are required. Calculating the True Cost of Business Communications InfoTrends examined the total costs associated with producing four common printing applications: manuals, brochures, sell sheets, and PowerPoint presentations. These types of prints are quite common across a wide variety of companies and organizations. Although the content may vary by vertical industry or department, these documents are generally constructed in a similar manner. The job specifications used to evaluate costs are outlined in the table below. Table 2: Document Job Specifications Document Type Color Finishing Finished Size Paper Pages Manual 4/4 cover 1/1 text No Bleeds Spiral Binding Three Hole Drilled Auto-collated 8.5 x11 20# Bond Text 100# Uncoated Cover 200 Cut & Stack Brochure 4/4 Bleeds Trim to 11 x17 Self Cover Fold 8.5 x11 80# Gloss Text 8 Saddle-Stitch Sell sheet 4/1 Bleeds Trim to 8.5 x x11 60# Opaque 2 PowerPoint Presentation 4/4 No Bleeds Coil Bound 8.5 x11 60# Opaque 20 For those not familiar with printing terminology, 4/4 (pronounced four over four ) means that there are four ink colors applied to the front of the piece and four ink colors applied to the back. Similarly, 4/1 (four over one) means one side of the printed piece has the four colors applied to it but the other side receives only one ink color. Pricing information for these applications was collected from the public-facing websites of printing firms offering online ordering and interviews with organizations that produced these applications internally. This exercise revealed that 60% of the cost of business communications is for non-print processes. InfoTrends

5 The pie chart below shows the average component costs of all document types evaluated based on a quantity of 500. Evaluating the component costs of common print applications provides a general benchmark for assessing the true costs associated with producing printed business communications, beyond putting ink/toner on paper. Figure 1: Breakdown of Print and Non-Print Cost For Quantity of 500 Project Management 7.5% Creative (Internal) 8.1% Shipping/ Distribution 1.9% Warehousing/ Archiving 0.4% Printing & Finishing 39.3% Creative (External) 12.0% Editorial 30.8% Source: InfoTrends True Cost of Business Communications This analysis does not account for document obsolescence. Print buyers and document owners can discard anywhere between 5% and 10% of documents. This can pertain to documents that were printed in a short-run of 20 where one of the documents was not used and discarded, as well as documents that were part of a longer run of 2,000 where 200 were not used. Non-Print Costs Understanding the ancillary costs of business communications is a starting part for reducing them. To that end, InfoTrends also analyzed non-print costs. For each application, InfoTrends calculated an hourly rate that is representative of the type of salary/wage for that type of process, as well as the number of hours it takes to produce the jobs. Table 3: Costs Related to Non-Print Document Production 1 Function Manual Brochure Sell-Sheet Presentation Creative (Internal) $686 $1,257 $571 $305 Creative (External) $866 $2,447 $612 $255 Editorial $7,942 $706 $353 $1,765 Project Management $1,334 $485 $323 $485 Warehousing/Archiving $58 $30 $30 $30 Total $10,886 $4,925 $1,890 $2,840 1 Fulfillment and shipping costs, which appear in Table 4, vary depending on quantity. InfoTrends

6 Shipping and Distribution Costs Since the costs for fulfillment and shipping/distribution are non-print and not associated with internal document production processes, it is more useful to display these costs separately. These costs were determined using major shipping carriers online pricing rates. Table 4: Document Fulfillment and Shipping/Distribution Costs Quantity Manual Brochure Sell Sheet Presentation 1 $95 $65 $38 $65 25 $103 $75 $38 $75 50 $111 $81 $38 $ $150 $96 $43 $ $325 $251 $44 $251 1,000 $573 $295 $47 $295 Recommendations for Reducing Costs InfoTrends suggests that businesses take the following actions to evaluate their true costs and reduce the overall cost of printed business communications: Conduct a thorough analysis of the internal work processes that are involved for the most common documents that get produced. Quantify the internal and external expenses to create, produce, and distribute these documents on an annual basis. Determine the level of savings that could be achieved by outsourcing to the right service provider one that not only could save money on printing and related services through operational efficiency gains, but could also provide services beyond printing to reduce the costs of non-print related activities. This provider should also be able to deliver improved and consistent product quality, quicker turnaround times, better shipping and fulfillment, and improved performance for service-level agreements (SLAs). Finding the Right Provider Providers with digital printing and e-commerce/e-procurement capabilities can efficiently produce materials on demand in the exact quantities required. Organizations should seek partners that can streamline workflow from creation through distribution via online ordering systems. E-procurement (web-to-print) applications can expedite the document submission process, simplify order tracking, and may also provide online layout, design, and editorial capabilities. InfoTrends

7 There are a number of activities that go into print production, particularly as it relates to the time and cost of job ordering and approval. The table below provides a comparison of a series of tasks that can be addressed through e-commerce entering the order, proofing, communicating with the service provider, as well as the printing and post production packaging processes. InfoTrends evaluated the time spent by companies when working with an in-house print shop, a traditional brick and mortar printer, or an outsourcing service provider with an e-procurement platform. A service provider offering web-based services will typically reduce the total costs of print. Table 5: Cost Comparisons of Traditional vs. Online Ordering Activity In-House Traditional Printer Web-to-Print Min Cost Min Cost Min Cost Driving/walking time 7 $ $ $0.00 Creating new order 12 $ $ $2.70 InfoTrends Opinion Proofing 5 $ $ $1.08 Pick-up time 7 $ $ $0.00 Error rate 2% $0.20 2% $ % $0.02 Sub-total $16.95 $21.28 $3.80 Direct print $9.83 $9.83 $9.83 Total Costs $26.78 $31.11 $13.63 Many organizations consider only the cost-per-page when printing documents. Of course it is important to consider the actual price of the printed and finished output, but it is equally (if not more) important to consider service providers that offer solutions and services that can reduce the amount of time spent on document production activities such as graphic design, composition, project management, ordering and order management, and job estimating. Accurately assessing the true cost of business communications requires understanding the costs that are not related to final prints. Organizations that have total visibility on all costs are in the best position to make wise communication decisions and select providers that can produce and deliver business communications in the most efficient, reliable, and cost-effective manner. This material is prepared specifically for clients of InfoTrends, Inc. The opinions expressed represent our interpretation and analysis of information generally available to the public or released by responsible individuals in the subject companies. We believe that the sources of information on which our material is based are reliable and we have applied our best professional judgment to the data obtained. InfoTrends

8 About InfoTrends InfoTrends is the leading worldwide market research and strategic consulting firm for the digital imaging and document solutions industry. We provide research, analysis, forecasts, and advice to help clients understand market trends, identify opportunities, and develop strategies to grow their businesses. About the Author Steve Adoniou Group Director, Consulting Services Connect with me on LinkedIn Steve Adoniou is the Group Director of InfoTrends Consulting Group. He is responsible for managing custom consulting projects, providing forecast analysis, developing market sizing estimates, and creating editorial content for product and market analysis reports. He joined InfoTrends in 2004 and has industry experience dating back to Lisa Cross Associate Director, Business Development Strategies lisa.cross@infotrends.com Connect with me on LinkedIn Lisa Cross is responsible for conducting market research, managing custom business development consulting projects, and monitoring and reporting on industry trends. She also assists companies in developing multi-channel communication, marketing, and content strategies. Find out how FedEx Office can do more for you. Go to fedex.com/corporateprint or call GoFedEx InfoTrends