CHARGABLE EXTRAS: A SIGNIFICANT REVENUE STREAM

By Mark Porter

When was the last time you produced a job without any changes ? Are you capturing the revenues for these legitimate extra charges or are they falling through the cracks ?. If not more revenue then at least avoid costs. If a job is changed during production and you did not collect the extra revenue for the change then you propably incurred more cost.

Finishers/Binderies provide quotes for customers and customers submit orders. The normal process is to ensure that the job submited and the quote provided are significantly similar that you can approve the production of the job. Once that approval has been given any customer driven changes to the order should be chargable. But how do you track these changes and bill your customer so that they feel compelled to pay but more importantly allow you to collect the charges without damaging your relationship with that customer.

You must follow a procedure to record all changes to jobs, chargable and non chargable, to ensure that that nothing falls between the cracks and is forgotten. But just recording changes will not allow you to collect your legitimate extra charges. The changes must be documented as to date, time, employee and reason the changes were made to provide the maximum support for your claims.

Documentation is not enough. The changes must be communicated to the customer at the time they are requested. The changes must be recorded as having been submited in writing to the customer, warned that they were chargable and that a price was quoted.

When the job is completed a full listing of all changes should be supplied to your employee in charge of invoicing. They can then decide which charges should be accepted, changed or deleted . The invoicing decisions are determined and the invoice is submited to your customer. If the customer questions these extra charges you can support your claims by providing the customer with the who, what where, why and costs details.

Hopefully your customer will start to provide you with better information when the jobs are first submited. Either way your company is in a better position because you are either collecting legitimate extra charges or avoiding the additional costs of providing those changes without charging for them

Video of Changes Management

ESTIMATING:VALUABLE NUMBERS TO YOUR CUSTOMERS ... AND YOU!

By Mark Porter

When your customers require a quote you take the time to calculate an estimate that they can use to make decisions regarding their company but you are also generating numbers that can be valuable to your company.

Everytime you generate an estimate you can be tracking numbers that can provide your own company with valuable information that can predict future work and predict future trends.

By reviewing and analyzing your estimates you can find desirable jobs, future business, changes in market conditions and monitor your customer base.

Every week you should review the estimates that you generated. Look for desirable jobs that you can follow-up. Whether it is a quantity level or a price level - flag these jobs and follow up these estimates to ensure you don't lose the order for a bad reason.
All companies have a won\loss ratio for the estimates they do. If you monitor the number of estimates you do each week it can be a predictor of how busy you will be in the future.

All companies specialize in and perform different types of work at different levels of success. Tracking estimates each week by job type can further strengthen your predictions of production levels in the future. If 80% of your estimates last week were for work you typically don't get - you may have a production slow down in the near future if you don't increase your sales effort now.

Won / Loss ratios should be monitored for Customers, Job Types and Sales people. Tracking your won / loss statistics can provide important information such as who are your best customers. Tracking won/loss by Job Type can indicate where your company excels. A shrinking won / loss ratio for a product you typically do well on could indicate a competitor is reducing their pricing.

Won / Loss ratios by Salesperson can indicate if the salerep is targeting their efforts on the type of work your company does well.

Tracking estimate activity can not only tell you who is giving you estimates but also who is not. This is especially true for your good customers. Monitoring information such as no recent estimates can indicate if a customer is starting to shift work to another finisher / binder and provide you time to try to correct the situation. This is especially true of your good customers. 80% of revenue comes from 20% of customers - you must stay on top of these good customers.

Finally ask questions like when will this job be awarded and then track estimates each day. Find the desirable estimates each day and stay on top of these quotes. Don't lose highly valuable jobs because the printer didn't think you had the capabilities or capacity or simply lost your quote behind his desk

80% OF REVENUES COME FROM 20% OF CUSTOMERS

By Mark Porter

In most businesses the majority of sales come from a minority of customers. It is vital that businesses service these good accounts to the best of their ability and tracks these customers so they can know immediately if the customer is becoming dissatisfied with the company or its products and services.

We often use the 80/20 rule - that 80% of revenue comes from 20% of customers but I was talking to one owner recently that stated 90% of his business came from 10% of his customers.

The loss of one of these customers can be a big blow to a company so it is vital that you do everything possible to manage these accounts.

First you must identify these accounts - which most people can do through their sales records. Once you identify these customers you must make the process of working with your company so easy that it will take a major price difference or a major mistake for them to take their business elsewhere.

This can begin with convenience. Providing information such as Was my job shipped ?, What quantity did we order last time ?, Are my samples ready ? 24/7 allows the customer to work on his timetable and saves him and you a great deal of time. The internet is excellent for this.

Building customer profiles of the exact needs of each customer ensures work is done correctly every job and saves time looking for information. Problem Histories can be pulled and discussed with the customer on a monthly, quarterly basis to build relationships and ensure future jobs are run smoothly.

Provide email updates when events happen in your plant that effects these customers, Keeping customers fully informed builds relationships and reduces problems.

Monitoring customers requests for estimates and orders can ensure that you are notified of a customers growing dissatisafaction before it is too late to salavage the relationship. If you normally get 20 estimates a month from a customer and you only received 5 last month -get on the phone and find out why.

And we always want to add more good accounts so monitor Won/Loss estimate records or Jobs per month. There may be a customer whose sales volume is not sufficient to get your attention yet but maybe their won/loss record is high, their jobs are large run and we get a decent markup on their jobs. - cultivate that account and they may become part of your 80/20 group.


BRIEF ONLINE CUSTOMER INQUIRY DEMO

IF YOU DON'T KNOW YOUR COSTS HOW DO YOU KNOW YOUR PROFITS

By Mark Porter

In a previous issue we discussed the concept that Selling and Estimating are two different functions. We outlined the idea that it is vital that all Print Finishers know their true costs so they can make more educated selling decisions. True costs have two components - the machine speeds and makeready times and the true costs of the production assets to produce the work. Most Post Press Companies have a very good idea of the speeds and Makeready times that their production assets can obtain. Where most post press companies are weak is in determing the true cost of those assests on an hourly basis.

Direct Material and Direct Labor costs are easy to identify but how much of your monthly rent and telephone bill should be applied to each job. Because the post press industry is a job oriented manufacturing business, meaning every job is different, we must have a predetermined Budgeted Hourly Rate(BHR) with the proper allocation of factory and administrative overheads that can be applied to all jobs.

You should have all the information readily available that is required to determine your BHRs. Employees wages and benefits, which equipment they operate, what you paid for equipment, the square footage the machine occupies on the factory floor your factory overheads and administrative overheads. Once you have this data your accountant or software can apply proper accounting principles and graphic arts ratios to calculate accurate hourly cost rates.

Having accurate and current BHR's is the first step to generating higher profits. These rates reflect the all-inclusive or fully absorbed costs of doing business, and should be adjusted as events unfold which may change the costs of operating the business. Buying or selling equipment, working different productivity levels, giving raises or changing shifts are afew examples of events that can affect the true cost per hour of your production assets.

Providing your clients with prices that are guaranteed to generate profits is only possible when all of your full operational costs are reflected in your pricing.

Dienamic can offer budgeted hourly rate software specifically for the post press marketplace. If you would like a basic demo please click on the link to right.

ONLY GOOD DELIVERY IS AN ON TIME DELIVERY

By Mark Porter

 

Post Press companies and Die Making companies work under tremendous time restraints and deadlines. Post Press companies are the last in the Production Processes and are ususally the final stages before delivery to the customer. Diemakers provide dies to very expensive presses that when sitting idle waiting for a die are costing the company a great deal of money and leading to potential production delays. We are all constantly racing against the clock to meet the next deadline.

Software and Systems provide many ways in keeping delivery dates on time and ensuring customers are happy.

 

 

1. Customer Profiles

 

 

Mistakes result in additional costs and missed deadlines.

Typically only the CSR or company owner knows exactly the ways a customer wants their jobs produced. By creating a company profile you make this information accessible to all employees 24/7. This ensures that jobs are produced correctly and on time.

 

 

2. Customer Logos

 

 

Anything that can save time can help you meet a deadline. If you can ship direct to the end user by-passing the shipping back to the printer you can save time. To ensure that the delivery looks like it is coming from the printer you can place the Printer's logo on your packing documents. This can save on time deliveries resulting from your mistake or the printers mistake.

 

 

3. Communications

 

 

As with most problems or situations - communications is key to keeping the situation under control. Systems can provide key employees with information updates that ensure nothing is missed or falls behind. Systems automatically generating emails when

 

A. Jobs are opened - this ensures that the customer is made aware of your understanding of the specifications and requirements of the job so we base our delivery on correct information.

 

B. Jobs are changed - Any change from the original specifications can cause possible missed deadlines. Ensure all key employees within your own organization and your customers are made aware of changes and their effect on the delivery date.

 

C. Goods are Received - To meet tight deadlines there can be no wasted time. The delivery of printed sheets or punches that are simply taken off the truck and placed on the shop floor represents the loss of valuable production time. Systems that notify key employees as soon as goods enter your company can keep jobs on track.

 

D. Goods are Shipped or are Ready to be Shipped. Notify your staff and the customers the minute a job is ready for shipment.

 

E. Display Expectations on documents. For example on your job ticket display the hours you have allowed for each process. If you estimated a 1.00 hr makeready and 4.50 hours in running time let the production employees know this so they can be aware if they are exceeding the requirements

 

 

4. 24/7 Customer Service

 

 

Using the internet you can provide customers with 24/7 access to your company. This allows customers to do many things themselves to ensure on time deliveries.

 

A. Check Job Statuses - At any time the customer can see the status of their job so that they can make decisions for themselves 24/7.

 

B. Pre Open jobs themselves. If it is 9pm and the printer is finalizing a job they coulr pre open that job so that you are made aware of that job and receiving specs to begin work immediately and this can provide valuable extra hours to meet a tight deadline.

 

C. Customers can pre enter materials bein sent to you. Even saving the 1-2 hours of time between the time the customer loads the materials on his truck and they are delivered to your door can allow you to make better production decisions to meet a customers delivery.

 

 

5. On Going Customer and Employee Educaton

 

 

Constantly educating your customers and employees as to the ways to best produce work in the fastest most economical way can help you meet more deadlines. By monitoring problems by job, customer, employee, process, vendor etc you can identify constant or potential road blocks to an on time delivery. By recording these issues you can sit down with the customer, employee, vendor or plant manager and discuss issues and how to rectify them

 

 

6. Monitoring Actual vs Estimate

 

 

It is vital that you are aware of the actual production standards that you are achieving on the shop floor and applying them to your estimating process. If you are estimating a process at 5000 per hour but are only achieving 4000 per hour on the shop floor then your schedule is off as soon as you win the job.

 

 

7. Accountability on the Shop Floor

 

 

By tracking employees time, both chargable and non chargable, and the materials they use you are demanding accountability on the shop floor. The minute a person as to be accountable whether it is the President or the Floor Sweeper they will be more productive. More productive employees will get jobs done quicker and with higher quality.

 

 

8. Monitor Success

 

 

Track on time deliveries and analyze the results daily, weekly, monthly. Use the other tools listed above to find out why deadlines were missed and take the appropriate actions.

 

 

Following these steps will help keep your company on track for a reputation of on-time deliveries.

QUALITY - YOU ARE ONLY AS GOOD AS YOUR LAST JOB

By Mark Porter

Quality is a key component to your company's corporate image, a large part of your mission statement and vital to your continued success.

Equipment manufacturers are continuing to incorporate quality control features into their machines.

There are certification programs such as ISO that can install procedures and policies that maintain high quality standards.

Software can also help in maintaining high quality control levels that will ensure you continue winning jobs and maintain an excellent reputation.

1. Customer Profiles

Typically only the CSR or company owner knows exactly the ways a customer wants their jobs produced. By creating a company profile you make this information accessible to all employees 24/7. This ensures that jobs are produced correctly and on time.

What overs are acceptable. Is a PO required to start. Won't accept deliveries after 5pm. Must use their truck. 5 Samples must be supplied. The demands go on and on.

Whenever there is a question about a job the answer is at every employees' finger tip.

2. Electronic Orders

Electronic Job Tickets vs Paper Job Tickets provide immediate delivery of job information to the plant. Think of the process you must go through when there is a change to a paper ticket. The change is received in the office and made on the ticket. The ticket is the printed 3-4 times and a CSR must distribute these revised tickets through out the plant and find the old tickets to ensure no mis-information is present. This represents a time delay in production working with accurate information. The result is potential extra costs and incorrectly produced product.

With an electronic order the revised production information is distributed to plant employees the second it is received from the customer. The changes are highlighted and in fact can change right before your employee's eyes. No delays - Greater Quality Fewer Costly mistakes.

3. Automatic Email Job Confirmations

Automatically confirming the specifications of the Order you just opened with the customer ensures that the job is started properly and it shifts the responsibility back to the customer. If there is a mistake in the information used to open the job it can be caught immediately.

Also if a confirmation is automatically generated for each change made to the order then you have a complete history and approval of each change or lack of change. If the customer knows he will get a change order for each change conveyed to your company and makes a change and does not receive a change order he knows to check up.

4. Problem History / Non Conformance

Tracking problems and solutions associated with jobs, customers, vendors, employees, departments and even processes can maintain a high level of quality.

First you are creating a knowledge base that can be used by all employees to solve future problems. Flagging problems that result in waste that exceeds allowable tolerances ensures Management is made aware of issues that may result in short counts.

Video can be attached to non conformance issues to help substantiate claims of problem with materials provided by the customer or demonstrate proper procedures to maximize quality.

Lastly a Non Conformance program can be used as a teaching/training tool to educate customers on the ways to prepare jobs to ensure maximum quality. Not only does it help quality but strengthens essential customer partnership relationships.

5. Job Inquiry

A strong Job Inquiry program puts information on all aspects of a job at your finger tips.

- This ensures information is not lost

- It encourages employees to look up information because it is easy to do. This avoids employees relying on their memories and making mistakes.

- Information is made accessible to all employees as soon as it is received improving quality and reducing errors and extra costs

Quality is a vital portion of any successful company's strategic approach to business. A combination of good equipment, certification programs and software can maximize your quality assurances.

ARE SAMPLES DRAINING YOUR COMPANY?

By Mark Porter

Samples are a necesary evil in the businesses of Print Finishing, Trade Binding and Die Making. Due to the three dimensional nature of the products these industries produce and peoples general inability to visualize the need for samples is large.

But do you collect revenue for these samples or do you know how much the production of Samples can cost you in any given year. It is vital that a business either collects revenues for all the goods and services it produces or at least is aware of costs that it should build into the overheads to ensure they are captured indirectly.

Our experience with members of these industries is that are neither collecting revenues for this service either directly by rebilling or indirectly by building these costs into overhead. Therefore samples is a direct drain on your profits.

You should open a job for each sample this will allow you to do several things.

1. You can have a unique numbering system for Sample Jobs as opposed to regular jobs so employees no they are working on a non rebillable job and will be more aware.

2. You can have information on the Job Ticket that is specific to a Sample. The information is not mixed in with other "regular" job information. Employees do not have to risk confussion or waste time hunting for sample information.

3. The information on the Job Ticket is specific to Samples and therefore jobs can be found and managed based on on that information. You can for example is how many times the file was resubmitted etc.

4. Track costs associated with the sample. Even if you are not going to rebill the customer it is important that you know how much each sample cost you to produce and more importantly how much sample making as a whole costs you each month and each year.

5. If you do rebill sample costs you can then track this through profitability because you have your costs from Job Costing and your Sales from Invoicing. Profit = Sales - Cost.

6. Track costs by customers. Track progress of Sample through Production.

7. Based on costs either work with customers that are incurring large portions of the expense or build your sample costs into your overheads to ensure you are recovering Sample making costs and not just watching your money go down the drain.

 

 

As we look for more and more ways to watch expenses and capture more sources of revenues - Samples can be an excellent place to start.