Saving Money on Paper in the Internet Era
U.S. corporations can spend as much as two percent of their annual revenues on commercial printing each year, according to estimates by print-industry analysts Raine Consulting.
Cutting those costs can be a challenge, because print jobs are usually custom jobs whose specifications frequently change from project to project. And standard Internet-based e procurement systems don't necessarily help, according to Christa Degnan, a senior analyst at the Aberdeen Group.
While those systems can reduce the cost of purchasing goods such as office supplies, computer equipment, and maintenance items, they have been less successful at managing the purchase of complex business services such as business travel and print projects, Degnan says.
With the right software, however, it is possible to use the Web to save money on printing costs. That's what Black & Decker Corp., of Towson, MD, discovered, when it consolidated its purchasing of printed materials using a hosted system designed specifically for the task.
The $4 billion Black & Decker is the world's largest producer of power tools and accessories. The company also makes Dustbuster vacuum cleaners, Kwikset locks and other products. Marketing these product lines means spending a considerable amount of money on brochures, catalogs, banners, posters and other printed materials.
Two years ago, Black & Decker had no standardized business process for buying printing services, according to Pat Larkin, director of indirect purchasing at Black & Decker Power Tools. Over 20 individual product marketing employees bought printed materials, from more than 150 separate suppliers.
Looking for a way to have a quick impact on the bottom line, Black & Decker began working with IBM Global Services to re-engineer its print purchasing. Black & Decker wanted to consolidate its suppliers, and move to an electronic application, which would allow it to simplify the buying process and seek better prices from printers. The strategic goal was to achieve hard dollar savings of 15% or more.
In 2001, Black & Decker turned to Cirqit Inc, of Whippany, NJ, for a hosted, Web-based print procurement system. Cirqit's Order-It software sets up a collaborative process, with Black & Decker's suppliers providing detailed breakdowns of the costs for a particular print job, including the price of the paper, setting up the print job and shipping, as well as the printing itself.
Black & Decker, in turn, uses the Web-based system to provide printers with job specifications and place orders for print jobs. It is also gives the printers detailed feedback on which jobs they were awarded, and what bids they lost, and why, letting them know where they stand in relation to the competition.
Payback Time: Less Than Three Months
For Black & Decker, the system has had almost immediate payback. The company has cut the number of printers it works with from 115 to 18, and is seeing savings of between 16% and 44% percent on individual print jobs. The savings mean the system has paid for itself in less than three months, according to the company.
One of the keys to the program's success was getting the critical mass of projects necessary to achieve savings, by requiring that all print jobs for Black & Decker Power Tools go through the system. That also reassured suppliers that the detailed pricing information they are providing won't be used by competitors who are then going outside the system to place bids.
Black & Decker is now in the process of expanding the system to its operations in Canada and Latin America, and to other types of print jobs, like silk-screened banners.