Dollars and Sense

ASK BOB Knaster about the University of Louisville's in-plant and he might tell you a story—about ham.

It goes something like this: A young girl helped her mother prepare a special family dinner. "Mommy," she asked, "why do you cut off a piece of the ham before you cook it?"

"This is how grandma taught me," her mother replied. "It's the right way to handle a ham." Later, at the table, the girl asked her grandmother the same question.

"That's how my mother made her ham, dear," the grandmother answered. "That's just what you do. It must make the ham taste better." Finally, the girl's great-grandmother spoke up.

"Hogwash," she scoffed. "I had to cut the ham because my oven was too small to hold the whole thing!"

At U of L, as the Kentucky school is affectionately known, the in-plant had been following its own time-honored traditions and long-established standard operating procedures—many of which were well meaning, but no longer well justified. The operation was, in effect, wasting an awful lot of ham.

"Every year, [the in-plant's management team] promised to do better and, when they didn't, the deficit eventually hit the seven-figure mark," reports Knaster, who now serves as director of IT printing and copier management. "The operation was productive, but spending way too much money."

Finally, in 2006, the university issued an ultimatum: Fix it or close it.

Eliminating One Shop 
to Save Another

Initially, a major long-term fix came in the form of a deliberate closure.

"We used to have an off-campus printing facility, which was equipped like a fairly substantial commercial plant, with almost 40 employees," Knaster explains. "We had big presses and finishing equipment with only enough work to run maybe three or four hours a day."

The university closed the off-site facility in January 2007, and transplanted two of the operation's small presses, some bindery equipment and the staff into the on-campus digital production center. Now, the in-plant operates a Xerox iGen3, as well as a couple of Xerox Nuveras, a Xerox 4110 and a couple of Xerox 240s. It also features wide-format capabilities.

"Everything we print in-house is digital unless it requires heat-resistant ink," Knaster notes. "So we use the offset presses for letterhead and envelopes."

In August 2007, Dr. Priscilla Hancock was hired as CIO and vice president of information technology. In January 2008, Hancock tapped Knaster, who had been leading the university's photography, graphic design and video production team, to direct printing efforts and continue the in-plant's revitalization.

At the time of Knaster's arrival, in-plant spending had been reduced considerably, but weekly expenses were still $2,000 ahead of revenue. He evaluated the print shop and wrote a brief planning document that outlined additional changes.

Knaster credits Hancock with a swift and decisive management style that empowered him to put his plan into action. "Initially, it scared me to death to be put in charge of this," he admits, "but I found that the changes were supported at the highest level of our administration and that I had the complete backing and full engagement of my boss throughout the process.

"It's great to work for someone with the will to make decisions," he continues. "[Hancock] is not afraid of anything. If it looks like the right thing to do, we do it."

Updating Unfavorable Contracts

Knaster recognized that the in-plant's vendor agreements were outdated.

"We re-bid all of our contracts—for paper, equipment and outsourcing partners," he states. He worked with current and prospective partners, leveraging their knowledge and expertise, to ensure that the in-plant was getting the best possible deals. For equipment, the in-plant's original vendor, Xerox, prevailed in a competitive RFP process that resulted in more favorable terms.

A new paper contract is projected to save the in-plant $100,000 next year, Knaster calculates. Previously, he says, the in-plant had contracted with three different paper vendors by cherry-picking the best deals from each of their bids.

"We had locked in prices, which were a good deal at the time—that is, at the height of the economy—but now the economy is down and pricing is much more a buyers' market," he explains.

"We pulled a year's worth of paper purchases, rebid it and ended up with a single winning bid [from xpedx] that will save us roughly $100,000 when compared to our previous arrangements," he reports. "And we learned that, if we're going to be bidding a fixed rather than a floating price, we must watch the paper market closely and act accordingly."

The Hardest Cuts

Knaster also had to take a hard look at personnel, and made some cuts in the best interests of the operation.

"One of the more traumatic things we had to do was to reduce staff," he admits. Currently, the department comprises 20 people.

"We used to have a full-time business-card typesetter, but were able to write a program that allowed customers to typeset their own cards via a Web page," he relates. "Using an application that took very little time to create, we were able to make ordering a no-touch process while getting our price down to 10 cents a card and offering one-day turnaround."

In one case, a job cut opened a path to advancement. When Knaster came aboard, the print shop had its own severely underutilized "just in case" programmer on staff.

"We were running a parallel IT universe in the print shop and weren't leveraging the considerable resources of our parent IT department," he remembers. "When we eliminated the position within the in-plant, the programmer joined that [parent] department where he's now a superstar. He's busy rather than staring at the wall all day, and we buy back a little of his time on an as-needed basis."

Overall, Knaster lauds the attitude and work ethic of the in-plant's employees throughout the process.

"Staff members were very receptive to changes, even the hard ones such as cuts," he declares. "They realized that they were working harder than they should have been, and we had no negative backlash."

Knaster continued to seek harmony and cooperation both inside and out. "We used to compete with our own outsourcing effort, even though we had complete control over it," he recognizes. "If a vendor planned to charge us $800 to produce a job with a 10-day turnaround, we would do it in-house in 24 hours for $800, even though it may cost us $1,000.

"We allowed customers to pair the low offset prices with digital rush service," he continues. "Being more transparent with our pricing helps our customers understand that speed and variable data printing have value.

"We're a break-even shop," Knaster stresses. "If we're pricing a job at $1,000, it costs us $1,000 to produce it. If we charge $800, we've just lost $200, along with some of our credibility." He speculates that because previous management was so passionate about printing, perhaps, "their vision was clouded by being in love with the process."

Partnering with Outside Printers

U of L's in-plant now outsources to eight pre-authorized printers, sending out approximately 25 percent of its work (by dollar volume). Knaster explains that, to buy printing with state funds in Kentucky, the facility must either produce a particular job in-house, or bid it competitively.

"Outsourcing has gone up, but that has helped us improve our bottom line," Knaster asserts.

"Our external print partners use us to keep their presses busy—to us, a 10,000-piece finished run is huge; to them, it's tiny—so we can get some staggeringly low prices," he explains. The trade-off is turnaround. "For outsourcing, it's typically a 10-working-day timeline from awareness to delivery, but if customers can wait, we'll get them absolutely great deals."

On the other hand, Knaster points out, for jobs that require same-day or next-day turnaround, or are very short runs, or need addressing or personalization, the-plant can offer in-house digital production at prices that are probably half of what customers would pay for similar services in a full-profit environment.

He sees internal capabilities and external partners as equally valuable strategic resources. "We're using two completely different business models that are now working well together," he concludes.

So well, in fact, that Knaster expects the $2 million-a-year operation to be deficit-free within one more year (approximately three years since the start of the project).

Knaster adds that, after the in-plant posted back-to-back positive fiscal years, the university decided to merge printing with the successful copier management program. The copier side had also received an overhaul prior to the merger.

"The university had copy centers all over campus that were just relics of a bygone era," Knaster asserts. "And we had reached the point at which only one of those centers was actually productive." So, the university had eliminated the remote copy centers (with the exception of a dedicated operation at the U of L Health Science Center).

Now, printing, copier management and outsourcing have formed a productive, efficient and cooperative triumvirate. Knaster praises the entire dedicated staff, gutsy administration and vendor partners for their roles in the turnaround.

Future Plans

Going forward, Knaster is ready to focus on building volume internally. "We do have some headroom and could probably add more volume—both digital and offset," he assesses. "But we couldn't begin marketing until we had processes under control."

In January 2010, the in-plant put into production automated document creation for the admissions department. Previously, when a student was admitted, the department's fulfillment center would review the application to ascertain his/her interests and priorities, photocopy relevant documents, stuff them into an envelope and send them to the student.

"The product was not pretty," Knaster states. "Now, we can pull a detailed report of a student from the PeopleSoft student administration database to create an attractive customized document.

"It's another no-touch operation that saves the admissions staff a lot of headaches and results in a much-better-looking product," he continues. "We're marketing our capability to automate data-driven jobs that require repeatable information, and we're building volume on the iGen as a result." Knaster expects to leverage variable-data capabilities in myriad ways.

In short, U of L's in-plant is moving whole hog in the right direction.

"We're paying down the debt, clients are saving money, turnaround is lightning fast and everybody is happy," Knaster declares. IPG