The Insourcing Opportunity

INSOURCING PRINTING from outside organizations has become a common practice at in-plants. More than half do it, and that’s been the case for four or five years now, according to our surveys.

Our latest research reveals that those who insource get an average of 13 percent of their work this way. A few of the more zealous insourcers say it makes up 75-80 percent of their business, while a handful of dabblers estimate that less than 1 percent of their work comes from insourcing. Most are in the 5-10 percent range.

The half that doesn’t insource has its reasons. They’re worried customers will view them as commercial printers rather than internal service providers. They don’t want to compete with the tax-paying print shops in their communities. They enjoy excessive downtime, antique equipment and the constant threat of closure.

O.K., that last one wasn’t a reason, but it could be a reality. Especially when you consider that 75 percent of those who insource say it has strengthened their in-plants, 53 percent say it has allowed them to return revenue to their parent organizations and 25 percent say insourcing revenue has gotten them new equipment.

“I think that the benefits of insourcing are self-evident,” declares Keith St. Clair, print shop production manager at Grocery Supply Co., in Sulphur Springs, Texas. “We are bringing in extra income for our parent company while giving a cost savings for our outside customers.”

“Our in-plant is a profit center for the company,” adds Wes Morgan, who heads Design & Print Services at Progressive Group Alliance, in Richmond, Va. “We are able to bring in added profits to our parent organization.”

And if that doesn’t justify an in-plant’s existence, nothing will. But insourcing helps in-plants in many other ways. It keeps them busy during slow times, for example.

“The goal is to find accounts that are not driven by a school year calendar to ideally have work during our traditional slower periods,” explains Rich Bundsgaard, director of PMC Solutions at the University of Arkansas, in Fayetteville.

“The work. . .is particularly appreciated when we are having a slow period between quarters,” agrees Dianne Harbolt, coordinator of Graphics & Printing at Bellevue Community College, in Bellevue, Wash. “It keeps the numbers up and keeps employees busy and machines running.”

As for those local printers who might get upset that you’re stealing their business, insourcing can actually help you send them more business.

“From this insourced work, we receive projects that may be beyond our internal capabilities,” points out Ray Konecsni, director of Customer Support Services at the University of Regina, in Saskatchewan, Canada. “We will then outsource this to our partner vendors and strengthen existing alliances.”

We talked with six in-plant managers to get their perspectives on insourcing. Here’s what they had to say.

Insourcing clients:

St. Clair: “Our main insourcing clients are non-profits and schools. We do work for the local Boys and Girls Club, United Way, local churches, the local school district, the local Baseball Association, and the local Soccer Association, just to name a few.”

LeValley: “We are an organization that supports K-State Research and Extension, and as such, all the counties of Kansas. Many of the counties are in rural areas and do not have access to a local printer, or they have to drive to a bigger city to find one. Because of a good working relationship with our counties, they have promoted us to their clients.”

Bundsgaard: “We can obtain jobs from any tax-supported entity in the state of Arkansas. We can’t go to private business and seek work from them. So, we can insource from other public schools in our state. In addition, we can do city and county government work along with any state agency work.”

Konecsni: “Our clients consist largely of non-profits, including churches, camps, sporting teams and other small community colleges. We do projects for ethnic groups, invitations for staff/faculty, family genealogy books, and we even provide invoice/form design and printing services for some of our vendors.”

Harbolt: “We have a variety of insourcing clients. A lot of them are other colleges that don’t have in-plants and that enjoy our quality of work and our quick turnaround. And they don’t have to pay Washington State sales tax on their jobs because they are within the community college system. Other clients are independent designers who find our digital pricing significantly lower than a Kinko’s, for instance. Some clients are former employees. We also do work for several non-profits in the area. We publish catalogs for the Bellevue School District and do wide-format printing for Christian Science Reading Room.”

Morgan: “We do work for the state, surrounding counties and local businesses. We look to increase [revenue] over the next few years by adding equipment, and possibly moving to a ‘storefront’ location nearby.”

Tips for those starting to insource:

St. Clair: “I think the main pitfall to avoid is to not take on more business than you can handle. It can be easy to tell potential customers that you can get their job out ‘pronto,’ but the main thing is that you have to keep your parent company happy. Their jobs cannot be put off to do some outside work. Most of our outside work comes from word of mouth. You always have to...turn out the best job possible. A happy customer is your best advertisement.”

LeValley: “You should look to create new business that is on the ‘fringe,’ so to speak, of what you do, and develop your own niche. The only way to calm in-house fears is to prove that insourcing will not affect your primary clientele. We have not had a problem with that. If there is a choice to be made, I believe there is always a way to work it out with both sides. But always choose your own group first.”

Bundsgaard: “Find out what the ‘pinch points’ are for your superiors. Determine the sensitive issues, what to avoid, what legal limitations there might be—in other words, what the ‘rules’ or boundaries are. An absolute must is to form a team of stakeholders and concerned parties from the university to [take] part in developing the plan once approval is obtained.”

Konecsni: “Some startup suggestions are:

• Target market and limit your marketing to university- [or company-] related activities.

• Clearly state your priorities and your focus...to these [outside] customers. It may be to your advantage to negotiate service level agreements with larger accounts to ensure expectations and commitments are clearly documented and agreed to.

• Same applies for existing internal clients. The value of a service level agreement can not be overstated.

• Most of our insourced work originates from alumni or faculty/staff. News travels fast, and we find that our base of external customers has remained very steady or even grown over the past 10 years.

• Understanding your plant’s capabilities and strengths (as well as weaknesses) is key in choosing your external customers and in maximizing your margin from these jobs.”

Harbolt: “We are not allowed to advertise our services, but if someone inquires, we can certainly accommodate. Once we have an established off-campus client, then we can keep them updated, let them know of new equipment purchases and new capabilities we can offer. We calm any in-house client fears by assuring them that their work takes priority over our outside clients. There is seldom a problem because our prices are so competitive that usually a small delay in delivery is worth the cost savings.”

Morgan: “We promote by mailings, calling, networking—all the traditional methods of selling. You need to know the local market for pricing, and you need to know what to sell. Obviously, you don’t want to sell unprofitable work. We know our bread and butter is our in-house clients, so we make sure they are taken care of.”

St. Clair: “I don’t think that we are really competing with the local commercial printer. We mainly do outside work for the non-profit organizations. These organizations can put the money they save to better use by serving the community.”

LeValley: “I always make a point to tell folks that local economies are very important and that we do not wish to compete with, or take money away from, that. We do not actively go out and try and take existing jobs from other printers. Most of our insourcing [is from] clients on the ‘fringe’ of our regular customer base. We also do promotional brochures and newsletters for various student and faculty groups who are not funded and therefore an ‘external customer.’ We do not advertise or go out and recruit those types of jobs; they come to us. We prefer to create new business that is a good fit for our personnel and equipment.”

Bundsgaard: “We have to be very careful concerning this issue. We have been a source for the university’s printing needs for such a long time that we are ‘accepted’ by the printers in the state as long as we are not too overt about our presence. Our location in the state has been an advantage. Until the interstate road was built through the mountains, we were rather isolated. This issue takes a large amount of sensitivity on our part to the needs and business conditions so as to not inflame the issue.”

Konecsni: “We partner with external printers rather than compete. We do not solicit external business. Those external organizations that complain the loudest are usually those that have had ‘sour grapes’ experiences in not winning previous print jobs from campus. Our current vendor network realizes the value and the potential future business they can expect from us because of the strong commitments alumni have towards their alma mater.”

Morgan: “We have to survive just like them. In fact, we still send out a substantial amount of work that we can’t do in-house. We also do work for some of these vendors. So we have what I think is a good relationship with the printers in the area.”

St. Clair: “We are far from a commercial printer. We still have large quantities of work coming in from our company along with the companies that we own. Insourcing is sort of a ‘side job,’ if you will.”

LeValley: “We do not receive any funding. We pay our own salaries, buy our own equipment, etc. So technically we are a small business. We are not a commercial printer, however. Commercial printers can, and do, pursue ‘our’ jobs. We can’t, and don’t, pursue ‘their’ jobs. That is the difference.”

Bundsgaard: “In reality, we are because we need to be. To most effectively serve the campus and the printing/imaging needs of the campus, we have to become a commercial printer. Here at the University of Arkansas, we are an auxiliary, so that makes us even more of an organization that emulates a private commercial printer, as we need to pay for everything we spend.”

Konecsni: “One of the key strategies for survival of an in-plant is to be competitive. If you don’t think like a commercial printer, you are probably complacent and not being responsive/proactive to your organization’s needs. Our customer base demands customer service. They have been serviced by the ‘outside’ and they know that on-site sales calls, personal deliveries, consultations, recommendations, perks and other value-add products/services are all part of the customer service package from external vendors.”

Harbolt: “Because we are a self-supported department within an institution of higher education, we consider ourselves a small commercial printer. Our experienced staff members have been in the printing/graphics business for many years, here at the college as well as in the private sector. Whether we are doing work for our colleagues, or an outside customer, we want to be competitive and take great pride in our work.”

Morgan: “We have really busy periods followed by slow. We need to stay busy and show profits. . .every month. In this day and age you need to show the parent organization your value, or your in-plant will be outsourced. It’s all driven by dollars.” IPG

Insourcing Advocates

Keith St. Clair
Print Shop Production Manager
Grocery Supply Co.
Sulphur Springs, Texas
Insourcing Revenue: $15,000 to $25,000 per year

Greg LeValley
Print Shop Supervisor
Kansas State University Research and Extension
Department of Communications
Manhattan, Kan.
Insourcing Revenue: $50,000 per year

Rich Bundsgaard
Director, PMC Solutions
University of Arkansas
Fayetteville, Ark.
Insourcing Revenue: About $1,250,000

Ray Konecsni
Director, Customer Support Services, Information Services
University of Regina
Regina, Saskatchewan, Canada
Insourcing Revenue: About 20% of annual print revenue

Dianne Harbolt
Coordinator, Graphics & Printing
Printing Services
Bellevue Community College
Bellevue, Wash.
Insourcing Revenue: About 15% of gross, or $165,000 per year

Wes Morgan
Design & Print Services
Progressive Group Alliance
Richmond, Va.
Insourcing Revenue: About 15%