SPECTRUM 2001 CONFERENCE NOTES

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Internet-enabled Print Production

Moderated by:

Peter Giamanco
Director of Commercial Print Management
AOL Time Warner

Marc Olin, President and CEO,of printCafe, discussed the question, "why eProcurement for Print?" According to Marc, there is an increased focus on indirect spending control and a higher use of internet-enabled procurement tools. Indirect goods and services are those that are not directly incorporated into the company's product. Steel is a direct good for automotive manufacturers, whereas office supplies or printing are indirect goods and services for an automotive manufacturer. 82.4% of large companies have already purchased indirect goods and services on the Internet versus 54.7% for direct goods and services. In order to implement E-procurement for strategic gain, there is a greater reliance on technology including:

• Integration to supplier systems
• Process efficiencies
• Increased use of collaboration technologies

63.5% of large companies have used the Internet as a collaboration tool with their suppliers. All of this is possible due to the advent of Internet technologies in the last couple of years, including the popular-ity of horizontal platforms such as Ariba's, which initially focused on catalog type applications for industries such as travel and office supplies. In commercial usages of this technology there is a lot of dissatisfaction: only 7% were found to be happy with available E-procurement technologies.

Why printing? Printing represents 10%-20% of the average Fortune 1000 company's indirect costs, and current inefficiencies in the print buying process create large savings opportunities for these For-tune 1000 companies. The complication is that the print supply chain is very diverse and complex. There are over 50,000 printers in North America alone.

In printCafe's analysis there are three types of corporate print consumers:

1. Marketing and advertising agencies (MARCOM)
2. Business printing consumers (e.g., brochures, business cards, stationary, etc.)
3. Document creators (e.g., SOPs, proposals, etc.)

Each of these types of print consumers uses different solutions. Document creators will use a combina-tion of desktop printers, department copiers, company copy shops and external shops such as Kinkos, while the marketing and advertising agencies may use a company print buyer, fulfillment sites that deliver preprinted print products, or in-house shops.

Suzanne Morgan, President, Print Buyers Online.com, Inc. presented the print buyer's perspective of Internet enabled print procurement. According to Suzanne, the technology is available but there are still some issues that are holding back print buyers from using E-procurement. Today no print buyer will work with a printer that does not have email, but a few years ago that was not the same assumed requirement that it is today. Suzanne feels that E-procurement is where email was a few years ago: not everyone is using it yet.

A major motivation for print buyers in regards to Internet enabled print procurement is reducing cycle time. It is also becoming increasingly becoming important to learn how to cut the cost of buying print. For instance, it is common for print buyers to have their budgets cut or tightened, and tradition-ally the reaction is to try to bring pricing down through bidding, but the market is tight and other cost savings opportunities related to print buying need to be cut. These other costs may include automating the reconciliation between cost estimates and invoices, automating the purchase order transaction, and eliminating or reducing courier charges. All of these are cost reduction opportunities that print buyers are looking to capitalize on through Internet enabled print production. Other areas of interest include remote or soft proofing, and online job status and tracking reporting, which can save time, in phone bills, and so forth.

One of the reasons why E-procurement hasn't yet taken off as well as it will is that there is a lack of standards. Some printers have been progressive in that they've built their own systems for delivering these services and savings; however, each of these systems has different interfaces and standards are needed. Suzanne recommends that print buyers establish what standards should be used and ask their printers to work with common protocols. One print buyer found that they spent $85,000 per year on courier charges alone and they believe that they can cut that cost considerably with Internet enabled procurement.

Jon Reynolds, Director of E-commerce of Mail-Well, took a look at what was available in the E-commerce market and identified seven "best of breed" solutions including:

• Customer quotes (printCafe)
• Business Print Center (ClickPrint.com)
• Build your own catalog (Four51.com)
• Create Contents (Sprokets)
• Manage Your Imates (Mail Well developed)
• Personalized Printing (Mail Well developed)
• Digital Proofing (Mail Well developed)

Each of these services have been integrated into their Mailwell.com corporate service site. Some the challenges that they face in putting this system together included the fact that they have very decentral-ized local control of the many companies that make up Mail Well. There was some management resis-tance, sales force resistance, and simple resistance to change. There were external challenges as well. Customers were also resistant to change. Mailwell.com project planners needed to work with custom-ers to determine customer requirements, pick an architecture that would work with Mail Well's diverse customer systems, and deal with the many technical obstacles inherent in an inter-enterprise integration project. There are many incremental costs to developing and funding the e-commerce infrastructure as well as developing and training the national sales and customer support staff. However, Mail Well found that if they didn't bring these services to their customers first, there were competitors who would quickly fill the void, so Mail Well moved ahead assertively on the program and sought to:

• Streamline the print supply process
• Reduce costs
• Create new opportunities
• Enhance the customer relationship

One customer, Clear Channel Communications, discovered that they could use the system not only to buy print from their local Mail Well Company, but could also use the system to buy nationally. As result of using the Mailwell.com service, Clear Channel Communications increased their purchases from Mail Well by $2.1 million per year.

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