It's Serious Business; Run It Like One

Communicating with upper management is crucial to your in-plant's survival, but you must also keep track of your expenses—and know your competition.

Before we talk about justifying the in-plant, let's define it. An in-plant printing operation is a small, independent business operating within a corporation or other organization.

Typically, the organization's business is not printing, nor anything related to it. The in-plant exists to provide a service to the organization only because it's less expensive than buying the printing commercially and/or the organization feels it will have more control with the printing handled internally.

As a printing manager, justifying your in-plant is your job, and how successful you are determines whether you keep your job—and the jobs of your employees. With today's downsizing trends, this is serious business. It is an ongoing task that should be considered whenever you have the opportunity to report on your in-plant to upper management. The bottom line is you must run your in-plant like a business.

To justify your in-plant, you must be able to prove that you can do the work for less money, with the same or better quality and just as fast or faster than your commercial counterparts. There are a few key steps that you must follow to successfully justify your in-plant operation:

• Communicate effectively with upper management.

• Become thoroughly familiar with your operation's expenses.

• Have a chargeback system in place.

• Know your competition.

Communication: This is the first step to take in justifying your in-plant operation. Upper management must trust that you are effectively and efficiently managing your organization, and the best way to demonstrate that is with good communication.

Keep them informed about your operation, your goals and your progress. Most importantly, provide them with the reasons why the organization is wise to keep your in-plant operating. Your goal is to have upper management understand your operation and have enough trust in you so that if there ever comes a time when the in-plant's existence is questioned, they come to you first.

Know Your Expenses: You should know exactly what expenses your in-plant incurs on a monthly basis, including those for labor, materials and overhead. This information will be the basis for a chargeback system that will enable you to perform cost comparisons. Make sure that you account for all expenses. If you do not think you are being charged for a particular expense like utilities, find out what those costs are by working with the finance department. You must know your expenses before establishing a chargeback system.

Chargeback System: A chargeback system is the link between your expenses and your production. It defines the costs that you charge to those departments within your organization for performing a service to them—in other words, how much money you bill your customers for producing their jobs.

There are numerous ways to establish a chargeback system, but all chargeback systems have cost rates that are based on the in-plants' expenses. I have known many corporations that did not allow the in-plant to charge for its services and have even managed under those conditions. Regardless of whether the organization allows the official chargeback, you must have a system in place within your organization.

Calculate cost rates, based on your expenses, for various job types and apply those rates to the jobs you produce. Your chargeback costs should equal your expenses. Keep track of those costs and report them to management. Make management aware that you are concerned about cost and this is the best way to monitor the printing costs to the organization.

These costs are the basis for comparing yourself to your competitors. Without these costs, absolutely no comparison can be made. The organization may not know whether your work is less or more expensive than commercial printing, but more importantly you will not know.

Know Your Competition: You should know who your major competitors are for each type of job you produce in your in-plant. You should also know what facilities management company is active in the area. Knowing your competition gives you the ability to perform cost comparisons to prove that you can produce jobs less expensively. Can you provide a service that your competitor's cannot? If so, make sure upper management is aware of it and what it's worth to your customers and the organization.

The in-plant exists to provide a service to the organization at a cost savings, with the added conveniences of offering better control of the work and faster turnaround time. You cannot run a business without knowing what your expenses are, what you should charge for your work, who your competitors are or how your costs compare to those of your competitors.

You should not run your in-plant that way either.

Larry Ruhlman manages the corporate printing department of Intergraph, a Huntsville, Alabama-based Fortune 1000 company that supplies interactive computer graphics systems. He has 22 years of experience in the printing industry, primarily in printing management.