Print Management Outsourcing
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1 A Trestle Group Research Publication
2 TABLE OF CONTENTS About the Innovation Series About Trestle Group Research Introduction Marketing and Print Management Effectively Outsourcing Print Management Evaluating Opportunities - Where to Begin? Case Study Benefits Summary Conclusion About HH Disclaimer The publication of the information provided by HH Associates in this document does, in no way, represent an endorsement by Trestle Group. Information in this document is subject to change without notice and does not represent a commitment on the part of Trestle Group or HH Associates. This document is provided "as is" without warranty of any kind including without limitation, any warranty of merchantability or fitness for a particular purpose. Further, neither Trestle Group nor HH Associates warrant, guarantee, or make any representations regarding the use, or the results of the use, of the written material in terms of correctness, accuracy, reliability, or otherwise. All other brand and product names are trademarks of their respective companies. 1
3 About the Innovation Series In an effort to remain competitive, companies around the world are constantly redefining what they do best. Defining one s core vs. non-core activities can be a challenging exercise that requires commitment, imagination and buy-in from all levels of the company. When done right, the result yields a lean, focused organization. Despite the best efforts of top management and dedicated sourcing managers to identify and source non-core activities to reliable providers, there are many opportunities that are still not being realized. For the Innovation Series, Trestle Group Research cooperates with leaders in the sourcing industry to highlight innovative services being offered in the global sourcing marketplace. Each report discusses a unique sourcing service and illustrates the service s associated benefits to companies. When used in proper context, the reports can enable companies to expand their view of what is possible and maximize the benefits in their sourcing initiatives. For this issue, Trestle Group Research has teamed with HH Print Management, a prominent European print management outsourcing company to highlight the benefits of outsourcing marketing print management activities. About Trestle Group Research Trestle Group Research is committed to providing thought-provoking research and practical insights into such topics as corporate strategies, regulatory issues and global trends in sourcing. Their research enables organizations to maximize benefits from sourcing initiatives. Trestle Group Research is part of Trestle Group, an international management consultancy firm specialized in sourcing. Trestle Group works with companies to help develop sourcing strategies, locate the right location/service provider and support the implementation of the appropriate sourcing model. To learn more about Trestle Group Research and the services they provide, please visit 2
4 Introduction Marketing and Print Management Key Marketing Challenges for the Modern Organisation By nature of their role within the organisation, Chief Marketing Officers (CMOs) are charged with driving growth. Current conditions compel CMOs to justify their investments to their corporate boards, emphasizing unprecedented levels of acuity. In many cases, boards have begun asking CMOs to run marketing more like an operational facility: Given the incremental investment of X, what additional top-line growth can be delivered to sales and incremental brand value? The development of effective marketing messaging brings a focus to the delivery of attractive value propositions and is aligned to those customers and individual consumers who are most likely and able to buy the product(s) or service(s) proposed. Naturally, the better aligned a value proposition is with potential customers, the greater the return on marketing investment. A value proposition will fail to produce the required returns, however, without a synchronised approach to market communication coverage - the function of marketing communications - or Marcoms. Most current corporate Marcom processes and workflows reveal a series of critical factors, which undermine effective market coverage; one top factor is characterised by the identification of redundant manual procedures. Aligned with the procedural factors is the critical realisation that the production and the sourcing of marketing collateral materials across global markets, multiple channels and various collateral formats is very cost intensive. Corporate brand owners are as a result increasingly changing their buying focus to processes which are closer to customer acquisition, ultimately identifying activities such as brand marketing management and Marcoms (the marketing budget); the last bastions of cost efficiency realisation for procurement. As a result, an outsourcing trend with roots in the UK is rapidly becoming more commonplace within Continental European organizations; print management services. What is Print Management? Print Management, by definition, is the outsourcing of the entire printing process and includes the design, reproduction, quality control and inventory storage of printed documents. Print Management is traditionally sub-categorized into two core activity sets: operational print activities and Marcom print activities. Operational print activities are those that support an organisation s internal operations and include such materials as memos, stationary and manuals. Marcom print activities, on the other hand, assist with the organisation s brand marketing management and include such direct activities as posters, leaflets, point of sale, direct mail, promotional print and packaging. Properly executed, outsourcing one s Marcom print activities to an external provider can offer the company an end-to-end print management service, encompassing creative support, template design / 3
5 customisation, document reproduction / proofing, and post production inventory management and logistics. Through centralising Marcom management services, multiple marketing mediums (including print, point-of-sale, mail, in-store, outdoor media, etc) can be addressed. A Print Management outsourcer who handles an organisation s entire Marcom printing process provides an integrated, dedicated centre of excellence and contributes to a clearer and synchronised vision of brand identity. The following report highlights key issues related to outsourcing Marcom print activities within the Print Management industry. For the purpose of this report, Print Management activities refer solely to Marcom print management activities, as described above. Effectively Outsourcing Print Management As a result of CMOs need to maximize the return on their marketing spend, the outsourcing of either Above the Line (ATL) or Below the Line (BTL) Marcom activities is becoming an increasingly popular strategy. Above the Line marketing refers to activities focused on building an organisation s brand image and typically include mass marketing programs normally directed at a large audience. Below the Line marketing activities, on the other hand, are geared towards marketing a specific product or service and normally use a predefined profile to directly target potential customers. The pictorial below describes the ATL / BTL marketing landscape. Marketing Landscape Above the line activities Outdoor / Billboards TV Radio Marketeers Below the line activities Direct Mail Promotional Flyers Events Affinity Marketing The key drivers to any Marcom outsourcing strategy, whether BTL or ATL are: Reduction in time to market for revenue-producing Marcom activities. Maintenance and consistency of global and regional brand-marketing messages. Increase in the number of effective selling days through a synchronised Marcom campaign activity. Reduction in overall labour content redundancies and the increase in cost efficiency of marketing communications through smart process deployment. 4
6 The outsourced management of the supply chain for marketing communications emphasizes four strategic initiatives: Vendor consolidation will provide the foundation for a more competitive procurement process. Chosen vendors must invest in a more automated procurement process, or moreover be fully integrated into one. Centres of excellence (COE) are the types of vendors or suppliers to which large brandmarketing firms will have to outsource critical workflows such as BTL Print Management or packaging. Strategic sourcing describes competitive bidding among a few qualified suppliers that have integrated their operations with an interactive bidding and procurement system. For many firms, the strategic sourcing of indirect spend, notably within marketing communications, remains the last sizable bastion of operational non-transparency, a primary management concern. Value Engineering entails having all of the specific operational expertise residing on the corporate brand owners side of the Marcom value chain. The redundant, manual procedures and duplications associated with the production and sourcing of marketing collateral across global markets, multiple channels, and various collateral formats leads to missed marketing opportunities and is a common critical success factor affecting most corporate brand owners today. Evaluating Opportunities - Where to Begin? As a result of brand owners procurement efforts and the significant successes within the ATL space, there is now a clear opportunity to drive efficiencies through the organisation. By aligning brand requirements of the BTL marketing activity on a regional and global level, organisations can achieve through the line campaign transparency / management. Moreover, issues pertaining to revenue generation aligned with the hard measurable value of a client s BTL Marcom activity are now key cornerstone drivers for 2006 and beyond. To deliver these objectives, corporate focus needs to be applied to the following: 5
7 Control of the processes will drive revenue generation as efficiencies will be generated and quicker time to market will be achieved. Control of the vendor network will drive better quality standards and working collaboration through smartly deployed systems, aligned to the measurement criteria residing within key performance indicators and service level agreements. Delivering cost efficiencies will be achieved through the two objectives above and moreover will be benchmarked and measured through these systems. Increased marketing agility will drive the ability to coordinate BTL campaign activity whilst at the same time manage the vendor network and the control of cost. Total campaign synchronisation for ATL/BTL marketing activities is the ultimate goal for any corporate brand owner, which is the synchronisation of the mix of media within any marketing campaign, visibly tracking status through smarter collaboration and the application of real time project management systems. This will also develop a true tripartite working partnership, between the Brand, the Agency/Agencies and now outsourcing companies such as HH. In HH s experience, outsourcing print management activities has for most clients reduced marketing costs by 10-30%. For this to be a viable proposition, there are a number of key indicators, which will determine the suitability of print management for clients: A spend exceeding at least 2 million per annum Current processes demanding significant internal resource to manage Disparate spend and working relationships between a number of third party creative agencies, printers and other marketing functions Lack of supplier relationships Generic procurement tools do not accommodate the management of print and marketing assets The absence of knowledgeable strategic purchasing expertise For many Brand owners, marketing communications are considered to be in the Top 5 indirect spend projects and conclusive research has confirmed that as much as 3% of revenues are being spent on print within Global 2000 companies. The start for any company considering outsourcing marketing communications production is to appraise the status quo and outline desired outcomes. Assistance from print management experts is vital in order to most effectively evaluate the outsourcing potential. In HH s experience, outsourcing print management activities has for most clients reduced marketing costs by 10-30%. 6
8 Case Study The Carphone Warehouse story With over 1,300 outlets across 10 European countries and supporting over 5,000,000 consumers, The Phone House and The Carphone Warehouse (UK) constitute Europe s largest mobile phone retail network. HH has worked with Carphone Warehouse since 1998 and is responsible for managing the entire print production process including marketing and point of sale campaigns. HH also produces all of the monthly buyers guides and manages all print across Europe, under the European brand name Phone House. The Challenge As the number of stores and customers grew in the late 1990 s, The Carphone Warehouse was spending an increasing amount of time sourcing the best deals for the growing print volumes required for its point of sale (POS) material and monthly catalogue requirements. The Solution Our pan-european solution includes: Dedicated Account Management resources in 8 countries including the UK, Ireland, France, the Netherlands, Belgium, Germany, Sweden, Switzerland and Spain, with Portugal to follow shortly Print management software managing all traffic and online WIP Onsite studio facility Single portal to manage and coordinate all print/brand collateral including digital brand management, real-time and Internet proofing Automated repro processes European Production Management, Supplier Selection Logistics & Distribution Management Reporting Dedicated on and off-site account teams ensure that print schedules are co-coordinated and run effectively and offer advice at concept and design stages. By using HH s online print management system, Carphone Warehouse is able to proof material remotely and in any country, speeding up the production process dramatically. The Net Result I m delighted with our relationship. HH has shown us substantial cost savings throughout our time working with them. Initial savings in excess of 33% Reduced time to market Improved marketing capabilities Consolidated European solution 7
9 Benefits Summary The key drivers behind any outsourcing decision are usually catalysed by a number of corporate objectives. In both Trestle Group Research s and HH s experience, the most common catalysts include the requirement to reduce operational costs and internal resources, gain external specialist expertise and management of the function, reduce risk and accelerate the benefits of process improvement provided by the outsourced business partner. The strategic issues surrounding the management of a Marcom function such as print are becoming increasingly complex and the right-sourcing via an external supplier relationship is an attractive solution for companies to organise their resources. The following summary of benefits highlights the relative attractiveness of Marcom print management solutions and its true value-added nature. Hard benefits: Excellent return on investment Central control over all branding and content-related issues Dedicated campaign manager and supporting team Improvement potential via vendor leverage and expertise Ability to include both central and regional suppliers Unlock savings potential through supplier consolidation and rationalisation Introduction of technology allowing customisation and improved speed Flexibility to scale services up or down in relation to changes in service requirements and the extension of services to a broader client base Higher specification solution than previously enjoyed 8
10 Soft benefits: Full accountability for service delivery and contractual commitment to the achievement of agreed Service Levels Extensive off-site management and specialist support Exception-only management allowing increased focus on core or strategic issues Access to best practice operating processes which are constantly updated and improved Extensive off-site management and specialist support Conclusion Print management service providers are effective in helping organisations free up funds that can then be reallocated to more value-adding marketing and design projects. When executed properly, outsourcing print management enables organisations to develop greater brand value in the marketplace, while simultaneously reducing the impact new marketing initiatives have on budgets. 9
11 About HH The HH proposition put simply is real print / marketing communications management, or to be more specific, managing high profile branded communications across the growing number of marketing outputs. HH takes care of everything after the agency s big idea, from pre-press to print and fulfilment, and everything in-between. Using a presence in most European markets and growing global presence, they take their clients brand strategies and execute them through synchronised marketing communications. HH is a truly independent print management company. What this means is that HH does not own any manufacturing facilities and is thus not under any commercial pressure to fill internal capacity. For suppliers and clients, this is an assurance that the best for purpose printer will always be selected for each individual job. HH is a pure print management company seeking to engage clients on an end-to-end basis for all their print processes. As a result, they do not provide facilities management services such as scanning, photocopying, copier fleet management or mailrooms. Whereas such services may be applicable to some client sectors, HH believes that the decision makers and user base for print management prefer a purist approach. HH has become the favourite print manager to leading brands in marketing driven B2C sectors including FMCG, Travel, Hospitality and Leisure, Telecommunications, Automotive and Pharmaceuticals. To learn more about HH, please visit 10
12 Trestle Group is an international firm providing services solely focused on global sourcing. Through our diverse and complementary set of services, clients benefit from support ranging from strategy through to implementation. Whether you are interested in setting up operations in Eastern Europe, outsourcing to India or ready to make the world a better place through our Foundation ( Trestle Group is a solid partner. Experience Trestle Group today. Sourcing Lifecycle From Owner of Activities 1 Identifying sourcing potential 2 Analyzing status quo 3 Planning target state 4 Transformation to target state 5 Continuous optimization to Recipient of Activities Trestle Group Value Proposition Focus Trestle Group focuses entirely on IT and BPO sourcing. This emphasis provides clients with concentrated specialists that understand how to best design and implement sourcing strategies. Company Trestle Group s current client portfolio and past project experience establishes a solid foundation of market knowledge, expertise, methodologies, and best practice experience. Experts Trestle Group market experts bring professional personalities, first-hand market knowledge and innovative approaches to deliver solutions to complex sourcing challenges. Research Trestle Group demonstrates thought leadership through market publications and remains current by following industry trends and peer research. Contact Trestle Group For more information about the services Trestle Group provides, please contact one of our offices or visit our website. New York City, USA 245 Park Avenue New York Tel: Fax: London, United Kingdom 1 Ropemaker Street EC2Y 9HT London Tel: Fax: Frankfurt, Germany Friedrich-Ebert-Anlage Frankfurt am Main Tel: Fax: Zurich, Switzerland Limmatquai Zurich Tel: Fax: Bangalore, India Bangalore Raheja Towers Mahatma Gandhi Road Bangalore Tel: Fax:
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