Outsourcing OUT--In-plant Back In

The in-plant at Blue Cross Blue Shield of Colorado and Nevada used to be run by a facilities management firm. No more. The FM was kicked out, and now the in-plant is thriving.

by BOB NEUBAUER

Like most companies, Blue Cross Blue Shield of Colorado and Nevada looks for ways to cut unnecessary expenses. So when an outsourcing firm proposed taking over the insurance company's in-house printing and mailing operations in 1991—with promised efficiency increases and reduced costs—upper management took the bait.

Two years later, with print quality plunging, costs soaring and service withering, the company made a bold but ultimately wise move. It kicked the outsourcing firm out of its print shop and restarted its own company-run in-plant. The results have been remarkable.

"Our volume just about tripled and our costs came down [to] about a third of what they were charging," reports Sandy McFarland, creative services manager.

A Blue Cross Blue Shield employee for 15-1⁄2 years, McFarland was placed in charge of the in-plant in 1993, when it was restarted. She made it her mission to rebuild it into a modern, efficient, productive operation with quality output and low prices. McFarland has succeeded magnificently, providing a laudable example of the advantages of an in-plant over a facilities management-run print shop.

The company has benefited greatly from the in-plant's rebirth. Work that was previously sent outside is now being done more cost effectively by the 11-employee in-house staff. Jobs are turned around much faster, McFarland says, and customers are happier.

Blue Cross Blue Shield deserves credit for having the courage to reverse its earlier decision to outsource and do what was best for the company. Its experiences illustrate, though, how easily a company can be mislead by clever facilities management proposals.

The Push To Outsource

Back in the early '90s, after outsourcing some other departments, upper management at Blue Cross Blue Shield turned its eye on the in-plant, according to Nina Stephens, an IT contract specialist who previously supervised printing, purchasing and receiving. When a well-known facilities management (FM) firm offered to take over both printing and mailing, management gave the O.K., hoping for cost savings. What they got instead were headaches, Stephens says.

The outside firm took over the in-plant's equipment and hired some of its employees. Despite this, however, the FM soon began to limit the type of work it would produce. Eventually, says McFarland, the workload had dwindled to the point where only business cards, scratch pads and a few forms were being produced. On top of that, the FM became very strict about how quickly it would turn jobs around. Its costs went up, she says, and its volume dropped.

"People weren't pleased with the service and the quality," McFarland maintains. "The costs in general for the company were going up because you had people getting frustrated and...going out and purchasing [printing] on their own, and not getting any efficiencies."

For 22 long months this state of affairs continued, until finally Blue Cross Blue Shield had enough.

"They [the FM] really had no idea what they were doing, and the end result was we had to get them out," explains Stephens, who was in charge of making that decision. "I was convinced that we could do it for less money—and we did. I was also convinced we could run far more impressions, and we did that also."

In 1993, Blue Cross Blue Shield of Colorado and Nevada removed the FM firm from its print shop—though it retained its services in its mail operation. The insurance company then went about starting up its own in-plant again. Stephens had just the person in mind to run it: Sandy McFarland. Unfortunately, McFarland had just taken another job. Acting quickly, Stephens was able to persuade her to come back and oversee graphics, printing, print purchasing and fulfillment.

McFarland had a lot of work ahead of her. Her chief job, though, was to get customers to believe in the department again.

"They were so used to going off on their own," she recalls. "I spent a lot of my time going out to each of the departments explaining what we were doing now, telling them 'come back in and we'll prove to you that we have turned it around.' "

First McFarland began outsourcing business cards and note pads, jobs that were long on setup time and short on impressions. Instead the shop concentrated on carbonless forms, directories and legal booklets, along with some two-color offset work, such as brochures.

McFarland then pulled all the company's scattered graphic designers into her department. She set guidelines for her staff to regulate impressions and make sure customer satisfaction didn't slip. Questionnaires began going out with each job, both to gauge satisfaction and to solicit suggestions. McFarland started visiting customers personally to explain procedures to them so they would understand what their jobs involved.

After about six months of getting set up and turning things around, the in-plant held an open house to reintroduce itself to customers. This, along with the fact that many customers already knew and respected McFarland, helped the in-plant rebound.

"We had almost everyone back after six months to a year," McFarland says.

Current Technology

Unlike the facilities management firm, McFarland says she focuses on keeping technology up to date. For example, together with one of the in-plant's outside partners, she recently created an automated enrollment and membership fulfillment system.

"It is an Internet-based system that gives us online ordering, real-time inventory control and complete on-demand packets to send to our subscribers," she says.

To halt the wasteful practice of having customers send their own jobs out to printers, print purchasing was brought under McFarland's control.

"The customer just drops their job off, and it's up to us to decide where it's done, how it's done and to get the best value for them," she says. To do this, she met with several commercial printers and selected a few with the right capabilities to provide the quick turnaround the company needed. It's in the area of speed, McFarland remarks, that the in-plant is miles ahead of the previous FM operation.

"We can respond a lot quicker," she points out. "It's easy for us to juggle quantities, both at vendors and at our in-plant."

After its ill-fated experiment with facilities management, Blue Cross Blue Shield could have easily done away with all in-house printing and sent its jobs out to commercial printers. Instead, the company recognized the value of having a well-run in-plant to quickly serve its printing needs. And now customers and upper management alike are enjoying the benefits.

"They like the convenience of having somebody right here in the building," McFarland says. "They like having the control. I am an employee and so is everybody here, and there's tremendous incentive to make this work."