Automating the shop floor can often be the only way to maximise margins. PSPs strive for this, and in turn spend thousands of pounds buying production equipment to print, fold, cut, and pack more efficiently, but if you don’t know how much money you are making on every job you run, you could be throwing money down the sink without even realising it.
Because in a previous life I sold offset presses and folders, I am always excited to walk around the shop floor and see all the modern equipment in production. I love to hear that offset make ready times have been halved on the new presses with the introduction of new technology and that drying times could be a thing of the past with UV inking systems, and I am amazed at what is going on in the digital arena with inkjet technology, and not to mention what is going on at Landa with Nanography. But it is when we finish the tour of the shop floor and go upstairs to the admin offices that I sometimes find myself hurtling back to the mid 1980’s.
It would seem in a lot of cases, that business owners just do not see any benefit in automating the way their admin offices work or how unproductive and margin eroding these time-consuming manual jobs can be.
In the first instance we always talk about estimating. I think we would all agree that this is very important, and would also agree that this needs to be accurate in order to be competitive or to make money on a job. But I am shocked to see, in some cases, how little time is spent making sure that estimates completely reflect the potential jobs costs. Many companies use spreadsheets and price lists to estimate jobs, but the main thing that concerns me is that they do not have any mechanism to find out if the actual cost has ever met the estimated costs.
My question is always: “How do you know how much you make on every job you run,” and most of the time the answer is: “We don’t know.” Yes, it is nice to have an automated estimating system and it is also nice to have a way of producing job bags without handwriting them. And obviously a system of production scheduling that does not involve a wipe board and a million post it notes would be nice. But without an estimated to actual costing system, how do you know where your optimum margins lie? And how do you know what type of products and markets you should be getting your sales team to target?
In today’s market where margins are tight, I think a good management information system (MIS) is vital. For example, if you are estimating a 500 sheet make-ready and one and a half hours on press, then you need to be able to tell if its actually taking 500 sheets or less to make ready and if it is actually running for one and a half hours and not two or three. It may of course, only be running for an hour, whereby you can look at your estimated costs and revise them to make you more competitive.
Many printing companies, once they have implemented an MIS, are often shocked to discover that some of the work they are running is actually costing them money. This is mainly because they have either been underestimating their costs, or they have realised they just do not have the production capability to be profitable with that type of work.
Our MIS solution is the cloud based software-as-a-service system Keyline. Like most other MIS systems Keyline can produce thousands of different reports, but the one report I feel is the most important is the Estimated to Actual costs. This is a simple report that the system can e-mail to you every evening or morning that will show you how much you have made or lost on every job you have run. It breaks down every department and if you were under estimated it is shown in black and if you were overestimated it is highlighted in red. It is very simple to understand and use.
So if you know how much you make on every print job that you run you are obviously doing everything you can to manage the level of margins in your business. If you don’t know, then perhaps it might be a good time to take a closer look at how an MIS might help you to stop inadvertently losing money down the sink.