Forget Outsourcing GP's In-plant Succeeds Where FM Failed

Sick of poor service and price increases, Georgia-Pacific kicked its outsourcing firm out and brought its in-plant back to life.

By Bob Neubauer

The old joke goes: Price, Quality or Service: Pick any two.

A few years ago, Georgia-Pacific couldn't even get those two from its print provider.

The facilities management firm with which Georgia-Pacific had contracted—so full of promises in the beginning—had gradually revealed itself to be less than fully committed to the company's interests.

Andy McDonald puts it more bluntly:

"It really was a disaster," declares McDonald, manager of administrative services. "They did not work with the business units or departments within Georgia-Pacific to truly understand their requirements. They did not make any significant investment in people or technology."

After putting up with the situation for years, the Atlanta-based paper company finally made a bold decision: It got rid of the FM and started running the printing operation itself.

This proved to be a very wise move.

Today, instead of a lethargic, costly service provider, Georgia-Pacific boasts a fast, efficient in-plant, highly attuned to the needs of its business units and focused on providing quality printing. The main reason for this improvement, McDonald believes, is that employees have a vested interest in the company, and they're more dedicated to the quality of their work.

"You have a higher sense of ownership," agrees Amy Becham, manager of Graphics & Printing Services.

Becham and her 12 fellow employees were recently rewarded for their efforts when they earned three awards in the In-Print 2005 contest, in both the offset and non-offset categories. The awards, though, were only confirmation of what the in-plant's customers have known for years.

Well-rounded Operation

Georgia-Pacific, a leading manufacturer of tissue, packaging, paper and building products, reported 2004 sales of $20 billion. It recently reached an agreement to be acquired by Koch Forest Products.

Located in Georgia-Pacific's Atlanta headquarters building, Graphics & Printing Services has evolved into a well-rounded operation in the 13 years since the company restarted it. Offering both digital and offset printing, plus design and bindery services, the in-plant produces everything from stationery, forms and training manuals to marketing brochures and posters. It even handles variable data printing, creating templates for invoices and downloading data from the company's mainframes. CD and DVD duplicating is another service the shop has started providing.

To do all this, the in-plant relies on a pair of two-color Ryobi presses (a 512 and a 3302), two Xerox DocuTech 6180s, a DocuTech 6135, two Xerox 6060s, and a recently acquired Xerox 8160 wide-format ink-jet printer. Film is provided by a service bureau and then stripped by press operators, who burn plates on a NuArc platemaker.

Finishing is handled by an array of equipment, including a Challenge cutter, an MBO folder and GBC coil binding and laminating equipment, plus an in-line C.P. Bourg bookletmaker on the Xerox equipment.

"Our goal is to eventually offer our customers a Web interface where they can submit their jobs online," adds Becham. This is planned for 2006.

Learning the Hard Way

Graphics & Printing Services has been such a success for the company that it's almost painful for McDonald to recall the days when Georgia-Pacific suffered at the hands of its facilities management firm. Like many companies that go this route, though, it learned the hard way.

The ordeal started back in the 1980s when an executive manager at Georgia-Pacific decided to follow the trend of the time and outsource the company's in-plant. The vendor set up shop in a rent-free space in Georgia-Pacific's facility.

The FM had promised to save the company money on printing, but departments quickly learned that, while the cost per copy may have been low, paper prices were high.

"We found that bindery services costs were extremely high," says McDonald.

And even though Georgia-Pacific had signed a three-year contract stipulating price, it didn't take long for the FM to start looking for more money.

"Within six months they were asking for price increases," McDonald says. In fact, the vendor requested three or four increases within the first two years, he says.

"As you started to look at it, we found that it really was not a bargain," he says.

There was also the customer service factor...or lack thereof.

"To be successful, you have to understand what your customers' needs are, and you have to be able to deliver what you promise," he says. "They did not do that."

As a result, Georgia-Pacific's business units started sending even more work to outside printers, increasing the company's printing expenses.

McDonald was a project manager at the time, and he was asked to look into the situation.

"We actually went out and visited other major corporations to find out what they were doing," he says. "We found that companies were moving toward [DocuTech] technology, and that a lot of companies were bringing the [printing] back in-house."

He spoke with Georgia-Pacific's business units to find out about their needs and to discuss whether the DocuTech might be the best solution. It was.

So his team approached the FM with their findings.

"They just did not want to make that investment," McDonald says.

The Deciding Factor

At that point, the company's financial department started analyzing the numbers to see if it made sense to run the in-plant itself.

"The rate of return to us was so huge that we just decided that...we go ahead and bring the operation in-house and manage it ourselves," McDonald says.

He was asked to oversee the new operation and wasted no time getting a DocuTech.

"Within six months, actually, we had two DocuTechs and three DocuTech operators, and it kind of grew from there," he says.

Within a few years a Ryobi press was added to print stationery, forms and covers. Business was booming. But something was missing.

"In addition to technology, we really needed to hire people that understood the [graphics] business better than we did," he says.

That's when Amy Becham was brought on board. With her design experience and printing background, she was able to point out opportunities and move the in-plant forward. She helped the operation recognize the potential of its offset presses for printing high-quality, four-color work, McDonald says.

Becham credits the company's change in business strategy, which brought a new focus on consumers and a need for higher-quality promotional materials. She felt the in-plant was ready to satisfy this need. This led to a huge increase in color work at the in-plant. Today there remains such a clamor for color printing that the in-plant is considering adding a four-color press next year.

A Winning Decision

The quality of the shop's work—evidenced by its trio of In-Print awards—is a big enough example of its success. But when its low costs and fast turnaround times are thrown in, it's clear that Georgia-Pacific truly made a winning decision when it started running its own in-plant.

"The majority of our work, probably 70, 75 percent, is due in less than 24 hours," says Becham. "And that does include press jobs."

As for costs: "We are probably, very conservatively, between 25 and 30 percent below the market," says McDonald. "And we do benchmark that. Frequently."

The in-plant gets quarterly financial reviews, he says.

"Our top management and executive management look at us very closely," he says. "We have to pay our way and we have to show that we are value-added." There is no company mandate to use the in-plant, he adds. The shop has to prove itself every day. So far, customers are very happy with the service they're getting.

McDonald says the company's experience with the FM did teach it a few things: "The lesson that we've learned is that, number one, you've got to listen to your customers," he says. "You've really got to understand what the customer requirements are—what their needs are."

This was a lesson the facilities management company never learned, to Georgia-Pacific's regret.

"It turned out to be a real bad experience for us," McDonald says. "They just were not doing the job they promised to do."