Print on Demand; Inventory Reduction Strategies

It was not long ago that ordering larger quantities of most printed material was the best way to bring the per unit cost down on most print runs. It worked like this: most of the cost was in the set-up,  film, plates, tight color registration, all those set-up things that took time and a high level of skill.  Then, once you had it running, you might as well run double the amount because the press was running smoothly and that second 10,000 (or whatever the number was) would be a lot more efficient, thus leading to an overall lower price per piece. Those days were great for printers, most customers would gladly order the extra quanitity just to get the price down. There were down sides though: a lot of the time elements changed like the address, phone number or something and all that inventory was trashed, or somebody did not keep good inventory numbers and who knows what was supposed to be there. It also forced print customers to keep a fair amount of capitol wrapped up in inventory and somebody to store all this stuff.

My, how things have changed today. I’m not saying that ordering more does not still reduce the per unit cost, but our make ready costs have dropped so significantly that the game has changed. The first reality is the digital imaging revolution. Every image we print today starts as some sort of digital image. We can send that digital image to a plate setter, a digital printing press or make a PDF and distribute it with the push of a button. And beyond the overhead, the cost is fairly minimal. The second reality is the automation being built into the equipment in the last 5 years. I remember the amount of physical and mental work going into setting up a fairly complex 2/color job 10 years ago compared to what we have into it now; no comparison! A good practical example would be the customer that used to order 50,000 #10 and 9 x 12 envelopes to get a good price. We would hold them and ship 10,000 at a time until they ordered more. Their money was wrapped up in inventory and we dedicated a lot of space to keep their envelopes. Now I say, just print 10,000 of them every time they need them and give them the 50,000 price.

This looks at part of the inventory equation. There’s always going to be an exception to some part of this theory, but for the most part, just say NO to excess inventory. Another reason that I mentioned above was things changing…I’ve thrown out a lot of inventory because something changed on the printed pieces (remember the Area Code change, what a boom for printers!). Talk to your printer about just-in-time ordering stratigies, its not tough and it saves everybody time and money.

Another idea we can look at later is tailoring your message to your customer. You can’t do that with big, long runs; everybody gets the same message. With shorter runs, the introduction of variable data and some marketing common sense, it’s easier than it’s ever been to take a very targeted message to a very specific customer (1 to 1 marketing). We’ll look at that closer in a future post.