Are you REALLY realising savings on marketing print? Part 2

We are delighted to publish the second part to this guest post from Santosh Reddy of GEP.  In the first part GEP gave some tips on how to tap into the print marketing savings potential. 

Here, we explain how to derive the benefits from and manage the baggage that comes with an outsourcing partner such as a Print Management Company.

Advantages:

  • PMCs have a pre-qualified vendor base who address all print jobs the PMC manages, some PMCs might also have their own print shops as well. The operating model is for the PMC to distribute print jobs from various clients between these pre-qualified vendors. With a secured inflow of jobs, these print vendors provide preferential prices to the PMCs which are passed on (in part or full) to the client.
  • Apart from saving on print jobs, PMCs also act as order consolidator, ensure compliance to brand and colour guidelines, usually have IT tools that support digital asset management, web shops, approval workflows for purchases, etc.

Weeding out unwanted things in the baggage:

  • Negotiate thoroughly on the remuneration model. This is always a point of contention since there is no clear justification to how the PMC is making the right profit and not more while working for you. If the PMC fees are a percentage of the spend they procure on your behalf, the PMC earns better if the cost is higher – so they might not always go for the lowest cost. If however it is as a percentage of savings achieved, what is the baseline to calculate savings, particularly when most print jobs are non-repetitive? Negotiation on this aspect is not about finding a price point and model that works for you, but is about establishing the reporting mechanism that promotes transparent monitoring of the ROI (Reported Savings/PMC fee).
  • Customers might not be the only source of revenue for the PMCs. Kickbacks in terms of rebates or retainer fees from their qualified vendors and rebates or discounted prices from the paper manufacturers are at least two other sources of revenue. Make sure your PMC is passing that benefit on to you.

All of the above is really possible if procurement is kept in the loop when requirements for print arise, which is easier said than done. Unlike many materials or services purchased, print has a dubious record of being bought and managed by a wide range of people and functions within the organisation - marketing, retail, HR and others. That makes it a challenge for procurement to manage the organisation's print spend effectively. Indeed, even getting a seat at the table is often an uphill battle since these departments see procurement’s involvement as a potential loss of control and an unnecessary additional party.

I am sure that even recommending a subset of the above will not fly well with the internal customers. Here are some benefits to the internal customers that you can use to pacify and lure them to adopt your recommendations:

  1. They deal with just one ‘vendor’ – that is the category manager or the PMC point of contact who understands them the first time and delivers exactly what they want.
  2. They don’t have to worry about their costs staying within budget, someone else is doing that for them.
  3. They have a super cool web shop to go to and choose what they want to order.
  4. Ordering from the web shop needs fewer approvals, hence less time waiting time and fewer instances of explaining why something is needed.
  5. Incentivise adoption through pain or gain – reward those who adopt early, penalise those who don’t or adopt late.

 

If all the above fail, procurement has various less friendly means they can employ while making sure impression on them does not suffer.

  1.  Use the rule book, point to the procurement policy
  2.  Rope in internal audit (here are the benefits)
  3.  Rope in AP, get their aid in controlling invoice payments to non-approved spend

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