Turning Finishing from a Cost Center into a Profit Center
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Turning Finishing from a Cost Center into a Profit Center

While finishers are easy to use and do a great job with timely and accurate finishing, are your estimators capable of accurately determining the true costs associated with finishing? Based on my experience, this is still more of an art than a science and most printers do not estimate finishing very well.

By Stephen P. Aranoff, Principal, Arttex Associates/The EAGLE Consulting

In previous articles, I provided information encouraging specialty graphic printers, or print service providers (PSPs), to take initiative in determining what equipment to buy.

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  • By educating themselves about the issues and the processes involved in design, print and finishing and reviewing their customers' needs, a PSP can make its own decision rather than rely on the recommendation of a single vendor. The goal of the article was to ensure that printers developed a plan for how to meet all of their customers' requirements up front.

    I also suggested purchasing a less expensive flatbed printer paired with a digital finishing system rather than purchasing a printer with the maximum speed and quality that is affordable. I provided comments from some users who said that having both a printer and a finisher was economically the best decision they ever made. With this dual capability, virtually no finishing job had to be turned down. Additionally, it significantly increased company profitability as it broadened their customer base and did more for each customer.

    In this article, I take the discussion a step further: A digital finisher is not enough in itself. While finishers are easy to use and do a great job with timely and accurate finishing, are your estimators capable of accurately determining the true costs associated with finishing? Based on my experience, this is still more of an art than a science and most printers do not estimate finishing very well.

    Presenting the Challenge
    Over the past few months, I have spoken with a number of estimating and workflow system manufacturers/sellers about how they estimate finishing. I learned that the quick answer is always: "We have an estimating component for finishing in our solution." But when pressed, the approach they take is simplistic. In fact, they often asked me: "How do you charge for finishing?"

    One problem is that you may not get accurate results from your current estimates even though you rely on estimating software. Although you know how much your hourly costs are, you may not know how to accurately estimate the time and processes involved in finishing a group of complex graphic shapes nested on a substrate while minimizing both ink and material cost.

    When I discuss finishing with PSPs, they admit that their estimate process may be off by a factor of three or more. This impacts both the profitability of finishing and the entire job. It negatively affects scheduling, causing problems with employee hours or even with meeting deadlines for other customers. If a job that was scheduled for two hours takes six or eight hours to complete, it can have a large impact. If you normally estimate $100 per hour for finishing, an extra four to six hours adds $400-600 to the costs -perhaps more than your expected profit. Also, the delay might require you to select a faster shipping method to meet the customer's delivery deadline and fast shipments may add $100-200 to the job.

    And if you usually make more on finishing than printing, this hurts your overall profitability. Welding and grommets for banners, pockets and slits for folders and other similar finishing costs are addressed accurately by estimating programs. For digital finishing, however, estimating programs use customer-defined costs per square foot regardless of materials used, thickness/hardness of the material and complexity of the required cutting. What is missing is any kind of true analysis of the job that can make the estimate more accurate.

    Recently, I spoke to a local wide-format printer to see if anything has changed. He told me that they always price finishing conservatively because they are often wrong. If the job is small, adding a "fudge factor" that increases the price may not jeopardize the job, and overall, may save their skin. When the job requires a large amount of finishing, they cannot add too much to the price, or they may lose the entire job. They need a good estimating tool for finishing and have not found one.

    I am not sure why an accurate, reliable estimating system is not available. However, there are many more parameters to deal with in finishing than in printing. Print estimating is a well-understood process, and many available solutions can accomplish this effectively and reliably. Many print estimating products are being augmented to handle wide-format printing. RIP companies have added estimating to their repertoire, giving PSPs one tool to use from design through production. So, can the same level of precision and automation be accomplished for digital finishing estimates?

    Unlike print, which is largely defined by known parameters such as image size, colors/varnish and ink density, it is difficult to "guess" the accurate cost of the finishing production work for many digital cutting/routing projects. And, it is particularly difficult when a customer asks for a project quote based on a rough pre-printing design concept. By gathering information from the rough design, putting it together with the knowledge base that can be built into a cutting estimator and using five key data points (bounding box size, contour length, degree of shape intricacy, material type and material thickness), you can produce a consistently accurate cost estimate. With additional data, you can increase the level of the estimate from precise to perfect.

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    Part of the problem in estimating digital finishing has been the lack of an organized group dedicated to it; manufacturers have not been able to put their heads together and tackle this issue. In cases where a manufacturer was interested in doing this, it was difficult to determine accurately through measuring instrumentation how the cutting device would perform on many different shapes and materials.

    Fortunately, there is a solution coming from a digital finishing service bureau that had five different kinds of X-Y finishing tables in use. Their facility included knife cutting tables such as vibrating knives, drag knives, creasing wheels and routing, routing-only tables and laser cutters. Based on six years of use and this array of equipment, comparisons between the original budgeted estimates and actual production costs were made. This information was analyzed and a set of algorithms was developed and beta tested in North America and Europe.

    The testing showed that the cutting work time for a print project finished on a digital cutting system can be estimated easily and accurately even if you know only a few important elements of the project. In most cases, you do not have the final print as a guide because the estimate is completed before you get the print job. While you cannot cut one piece and measure the results before finalizing the price, you have the information you need with the specifications and shape.

    If you had the completed prints in Figure 1 to guide you, estimating would be easier. It would be even easier with the prints in Figure 2.

    Instead, what you usually have might look like Figure 3, a hand drawn car, often on the back of an envelope, generally a very crude version of the final drawing. Even with such a simplistic drawing, we know how to gather the necessary information for finishing.

    Call for Development
    With a firm methodology in place, a developer can now work with members of the software and hardware community to embed accurate estimating into their own unique solutions. The estimating and/or workflow program or workflow software that you currently use can be updated to include this technology. And, manufacturers of flatbed cutting equipment can bundle the technology directly into their current offerings as an added value, just as wide-format printer manufacturers bundle print estimating capabilities.

    While this new technology may be the first solution, it may not be the only one. For now, it shows that PSPs, given the correct tools, can turn finishing from a cost center into a profit center that significantly improves their level of service to customers. I propose beginning an industry dialog between those interested in bringing this technology forward and discussing other new, innovative solutions.

    Stephen P. Aranoff is Founder and Principal of ARTTEX Associates. He has more than 30 years experience in the development and profitable distribution of printing/digital imaging market products, emphasizing marketplace convergence. ARTTEX provides business, marketing and sales strategy and implementation consulting to both large and small client companies, including bringing offshore products to the domestic market. steve@arttex.com

    This article appeared in the SGIA Journal, 1st Quarter 2010 Issue and is reprinted with permission. Copyright 2010 Specialty Graphic Imaging Association (www.sgia.org). All Rights Reserved.

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