“External print services will usually be categorised as indirect spend, unless your organisation itself is in print or publishing, in which case, it would fall into the direct spend category”, Gary Davies, Managing Director of Print Outsource International (POINT), told SmartProcurement.
In these times of increased specialty procurement, indirect spend commodities are the ones which are often considered for outsourcing. These will usually include:
- Advertising / marketing (above-, below- and through-the-line) and packaging;
- External print;
- Facilities and property management;
- HR and skills resourcing;
- IT equipment and software;
- Logistics and warehousing; and
- Telecommunications (including data, internal and external communications, and mobile and wireless applications).
Some outsourced service providers in the print environment have lately been referred to as Managed Print Providers. These service providers will assume responsibility for the total management of the print commodity to include all areas of sourcing – from the use of new technology, right through to delivery and quality control.
From procurement’s point of view, outsourcing will only be seriously considered and contracted where there are obvious and substantial cost reduction advantages. Early termination of outsourcing contracts invariably occur because the desired cost reductions do not materialise within the agreed time frames.
Recent Aberdeen Research emphasises that, according to their survey:
- Print procurement and management processes refelect the following:
25 % of print is manually sourced / procured by local procurement person / department.
27% manually sourced / procured by whoever has the need.
27% manually sourced / procured by a centralised procurement group.
5% automated process using generic e-procurement / e-sourcing solution.
16% automated process using a specific print procurement / management solution.
- Regardless of the above, there is, nevertheless, significant interest in outsourcing or using a managed service provider for the print category; and
- Best-in-Class organisations (using automated processes), on average, source and procure a higher percentage of their print needs online.
The Aberdeen Report continues by stating that 78% of Best-in-Class organisations demonstrated standardised and well-aligned processes whether at enterprise-wide or at business unit / regional level. This allows for more efficient and cost-effective methods of purchasing and managing print expenses.
In terms of functional and operations responsibility, the Aberdeen Report indicates that in 32% of cases procurement was responsible for buying printed material and services, whilst 20% attributed this responsibility to the marketing / design function. In the case of Best-in-Class organisations, 68% mentioned that this responsibility falls, as it should, under procurement.
Davies concludes that the procurement discipline dictates that the prudent course of action with regard to the Print Spend Category is, at the very least to:
- Identify and analyse the category spend enterprise-wide.
- Implement control measures to manage the total commodity spend within the procurement department of the organisation by applying a uniform policy across all user groups.
- Apply standardised sourcing procedures which are aligned to the commodity manager’s sphere of responsibility.
- Do the maths and evaluate the options of implementing e-procurement processes vs. the solutions offered by outsourced Managed Print Providers.
- Lastly, adopt the option which offers the most consistent and sustainable savings, year on year.
For more information, Gary Davies can be contacted on the details below:
Telephone: +27 11 783 0295
Cell: +27 76 859 1304