Graphic Industry News with a Piquant Point of View

26 January, 2001

Industry News

A Motto for our Times

Homer Simpson's Marketing Rule # 1, D'oh!

"When it comes to the printing business though, there is no sign of complacency about the Net at Donnelley, which was founded in Chicago in 1864 and has grown into a $5.5 billion International Corporation. In the U.S., it ranks either first or second in the printing of magazines, catalogs, advertising inserts, books, telephone directories, and mailings by mutual funds and other financial services companies. Davis knows that the Web is threatening every one of those media, along with Donnelley's 55 printing plants.

(Davis is) pushing his 34,000 employee company into digital publishing, e-commerce, and Web page design, with such clients as clothes retailer Limited Too. Including the company's logistics business-sorting and shipping printed products for customers -- Donnelley now derives nearly 25% of sales from nonprint operations. Davis wants to see that portion top 50% in five years."

If there are any printers left who still believe that they can ignore the impact of these remarkable goals at one of the world's largest printers we can only exclaim with Homer -- D'oh!

And in fact, at virtually all Gallery of Superb Printing competitions conducted by the IAPHC and its member affiliates, firms who were formerly known as printers are also entering websites for the consideration of judges. A goal of 50% of six billion dollars in gross sales being derived from non-print related operations? Shazzam!

So, supposing you wanted to get Business Week, the 22 January edition, to read the interview with Mr. Davis? Save your money. It ain't in the magazine. Fittingly, the only place you can find the interview is online. If you want us to get you there, drop us a note.

We share with you some survey conclusions of Canadian printers who responded to a survey for PrintAction e-News, Issue 6 dated January 10, 2001:

• 92 percent of the responding printing or prepress companies have web sites
• The most common function provided to clients (74% of responding printers) was online file submission
• Only 18% allowed clients to track jobs via the web and only 8% allowed customers to pay their printing bills online

However, some 75% of the tiny group who accepted online payments had sales of more than $100 million."

In Homerspeak, the two lessons we glean are quite simple --

1. Broaden your product line
2. Make it easy for people to buy from you.

D'oh!

Longing for Latitude: The Credo of Content

He offered this snappy little nugget of the marketing/operational manifesto for Donnelley:

Build your content vertically.
Build your delivery system horizontally.

He stated: "Now let me say something about the reciprocal nature of those two statements. If you narrow your content without broadening your delivery system, it's hard to make more money. But if your delivery system expands as your content becomes more focused, you can make a lot of money. The key to the expansion of the delivery system, is the digitization of content."

Egalitarian E-Commerce: Digital Dialectic for All

"The advent of desktop publishing fundamentally changed the manufacturing processes of our industry. Print manufacturing now begins with document creation, and printers need to engage their customers earlier in the process to enable their customers to make informed purchasing and production decisions. A printer needs ... to include the document creator as an integral part of the manufacturing process - a true supply chain process demanded by the adoption of electronic publishing and enabled by the Internet.

For the printer, even after 16 years of electronic publishing in commercial printing, over 50% of the files submitted to a print manufacturing process do not conform to manufacturing requirements because document creators do not have adequate information to make informed purchasing and production decisions."

It was after IPEX in Birmingham, England in 1998 that industry pundit William Lamparter concluded that control of the printing process had migrated upstream away from the printer and into the hands of the content creator. If he was correct, and we think he was, then the strategy to involve said content creator (a.k.a., print buying customer) in the entire process from concept thru completion certainly seems a wise move to try to partner in the mutual control of the electronic files. For as another wise man said at an Electronic Data Processing firm in Milwaukee two years ago -- control the electronic files, and you control the client.

On 17 January, the GATF announced a new report written by Terry Nagi, president of Digital Print Resource. Mr. Nagi writes: "Like it or not, e-commerce for printers, introduced only in 2000, will have significant and long range impacts on printers large and small. Assuming that the next few years will be business as usual will be dangerous. All printers should have an e-commerce strategy now."

The bottomline reason that e-commerce must be adopted by all printers is tied to the very mundane aspects of productivity improvements.

Consider this commentary from Lloyd Hill, chairman of Applebee's International in the February issue of Worth magazine: "In the 1980's, conventional wisdom was that you couldn't franchise a business that was cook-to-order because you couldn't maintain the consistency of the food and the dining experience. Now we have 1,280 restaurants out there facing a fluctuating demand twice a day."

The solution according to Mr. Hill is systems.

"Mrs. Fields cookies had a computer program that did its forecasting. When the manager opened up in the morning, he'd plug in the day of the year, the temperature outside, and a few other pieces of information. And because it was the last Saturday before school started and it was hot outside, the program could tell him he'd sell 20 per cent more cookies than normal that day."

Clearly printing is a manufacturing industry, and one which manufactures 'cooked-to-order,' customized and now even personalized goods.

Robert Hu is a true believer in the necessity of systems as indeed are most all the e-commerce purveyors in the printing space.

Does it matter? Martin Baily, chairman of former President Clinton's Council of Economic Advisors thinks it does.

In a new and highly detailed report, Baily found that the bulk of productivity gains in the overall economy was tied to industries outside of information technology --in other words, users rather than producers of computers and software (and systems.) Baily wrote:

"A small contribution came directly from computer production, a larger contribution came from the productive use of information technology capital by the industries that invested in information technology capital."

In other words: the biggest productivity gains were reaped by those firms that invested in modernizing operations such as order processing, manufacturing and delivery. And the way to modernize is through systems.

We have said it before, and we will keep saying it. Printers need IT staff. Information Technology gurus on staff will make some printers more productive and ultimately more profitable.

Of course progress moves in fits and starts. One of our readers who has been engaged in selling e-commerce systems to printers as well as content creators, passed along this gem:

"I have discovered that many, many companies are trying to reinvent their print management strategy, process, etc, before they even start thinking e-commerce. I talked to 5 companies this week alone, BIG companies, that are working on building a Forms Management Department. FORMS MANAGEMENT! Can you believe it? That's a 1970's term!"

On Arrogance and Alzheimer's: Did our memory fail, or did we just fail to remember?

From the 22 December 2000 business pages of The Roanoke Times in Virginia: "When the parent company of Transkrit tackled reorganization under Chapter 11 bankruptcy provisions, company officials decided the Roanoke based manufacturer of business forms had to go.

From Heidelberg Germany on 16 January: "We are not interested in acquiring Xerox. Xerox doesn't have anything that interests us," commented Casper Hamel a spokesman for Heidelberger Drucksmachinen. Hamel further noted that the partnership with Eastman Kodak was a strong one, that has allowed Heidelberg to place over 1000 Digimaster digital printers.

The proverb sayeth: "May you live in interesting times."

Oh Boy, do we ever!

Our era is witness to the lamentable reality of well known firms like Transkrit dissolving in no small part because the advent of desktop publishing and the continued evolution of digital copier printers sold by Kodak or Xerox or Heidelberg caused the demise of entire formerly discrete market segments. Meanwhile from Consolidated Graphics to Mail-Well, the mega printers are finding the challenges of blending multiple company cultures not to mention several IT systems can be daunting and deleterious to profits especially in the aftermath of what the minstrel Paul Simon called a deep and dark December.

And everyone feels that cold chill. Many trade binderies and print shops on the West Coast were eerily quiet in recent weeks, and as the latest reports from International Paper and Georgia Pacific attest, paper sales are slo-o-o-o-w in many segments.

There is another business maxim that needs some dusting off if indeed business is slowing in your part of the world. That maxim says the time to increase advertising fastest, is the time when business is slowing most rapidly.

Similarly, the perceived slowdown may offer a small respite that allows printers great and small to establish that e-commerce strategy Terry Nagi insists you need, to interview IT candidates, to build your delivery system horizontally.

Hard stuff. And necessary.

Industry Blurbs

Neenah Paper announced last month that its quality control processes have been awarded ISO 9002 registration by the Quality Management Institute. Neenah is a soon-to-be four time sponsor of the International Gallery of Superb Printing and also provides the paper for the IAPHC Communicator. We applaud all the fine folks at Neenah. On our daily commute, we also see the ISO 9002 banner displayed on the building housing General Litho Services, and extend our salutations to Gary Garner and the good souls like IAPHC member Beth Swedberg at GLS, who work so hard and whose quality shines in each International Gallery entry that firm submits.

X-Rite announced on 16 January that it had inked an $18 million dollar contract that stands as the largest in the firm's history. X-Rite, which makes colour measurement devices, said the contract was with an undisclosed Fortune 500 customer who will use it for a global color quality control program.

The year 2001 marks the 45th anniversary year for Xerox Business Services. Next week, Xerox will report its latest quarter's financial results. While it remains anyone's guess as to the ultimate outcome for the Big Red Digital X, somehow it seems foolish to underestimate a behemoth that obtains more than $3 billion in document outsourcing service revenues from XBS alone.

Gilbert Paper has an intriguing response to the emerging trends in the graphic arts of shorter run lengths and ever more personalization. Since many paper merchants are choosing not to accept small (less than carton) quantity orders, Gilbert has elected to make envelopes, cut sizes, digital papers and even full size sheets for larger presses available on a same day shipment basis to anywhere in Canada and the U.S. The website is www.gilbertdelivers.com and customers pay via credit card.

PrintXpo reminder: The Columbus Club is again sponsoring PrintXpo which has become a very successful regional trade show and educational event in Ohio. Our good friend Dave Fellman is among the presenters during the educational conference and he will speak on Seven Common Denominators for Digital (printing) Success. Show dates are February 21-22, 2001 at the Greater Columbus Convention Center. Contact Show Manager Kevin Thompson for more info at kthompson@offinger.com

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