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Cost Cutting

Printing with less red ink.
Alix Stuart, CFO Magazine
November 1, 2002

Despite the promise of a paperless society, companies are spending more on printed materials than ever before — up to 3 percent of revenues at most large companies. And while many companies don't realize how much they spend on printing, those that do can find it difficult to trim.

"Print is overlooked, because it is not a core product and it is fragmented throughout the organization," says Ron Seavey, managing partner of The Open Approach Consulting Group. High shipping and distribution costs, fluctuating paper prices, rapidly changing orders, and the short shelf life of printed materials add to the difficulty of cutting costs.

While centralizing the print function might not make sense, since each department has different needs, Seavey maintains that sharing information about print spending across the corporation does. Aggregating ordering and price information can eliminate 20 to 40 percent of the red ink, particularly now that online procurement tools are readily available.

In the past year, for example, Concord Communications Inc. saved nearly 20 percent of its print spend, mainly by setting up an intranet that lets global sales reps order brochures and data sheets as needed. Previously, reps ordered from a central printer in advance, only to find that the materials quickly became outdated. "The level of waste was tremendous," says CFO Melissa Cruz.

Many national print vendors have begun to offer their larger customers similar online ordering tools. Consolidated Graphics Inc., for example, says some 200 of its customers are now using its online ordering system and reporting capabilities. And at least one company, Cirqit Inc., has begun selling software independently that helps companies maintain relationships with multiple vendors. The tools, which cost from $150,000 to $500,000 annually, bid out a project automatically. "Buyers are able to see in real time, across all of their printers, which can produce the project the cheapest," says Cirqit CEO Mark Hausser.

With spending data in hand, companies have more leverage to negotiate with vendors. Even so, Seavey urges companies signing long-term contracts to make sure suppliers keep up with fluctuating variables, like paper prices. "The products and quantities of orders change so much, it's easy to miss it when prices are out of line."




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