The Wal-Mart Way

The largest, most successful company in the country also maintains one of the most sizable in-plants, with a staff that's willing to bend over backwards to keep Wal-Mart on top.

By Carol Brzozowski

ASK DANNY Funkhouser, the general manager of Wal-Mart's Print and Mail Distribution Center (PMDC), what role his in-plant plays in the success of the country's leading retailer, and he replies: "benchmarking." By being competitive in pricing and speed, Funkhouser explains, the in-plant keeps its competition in line.

"We typically get bids that are not inflated since most printing firms are aware that Wal-Mart has an in-plant operation," he says. "PMDC's value to the company isn't just what we print, it's also the fact we inherently drive down the total cost of work printed for Wal-Mart because we have a better understanding of what that cost should be."

By cutting printing costs, the 300-plus-employee in-plant boosts the Bentonville, Ark., company's profits and plays a key role in its success. And since Wal-Mart is repeatedly ranked number one on Fortune magazine's annual Fortune 500 list, that success is considerable.

Serving more than 138 million customers per week in more than 5,200 stores around the world, the company has become one of the most well-known names in the retail business in the 44 years since Sam Walton founded it. Despite its size, though, the company has never overlooked the contributions of its employees, which it affectionately calls "associates." They, in turn, seem more than willing to put forth extra effort to help Wal-Mart shine. This is especially true at PMDC, where employees pride themselves on the quality of their work and the fast response times they provide.

"The ability to give a very quick turnaround time on anything time-sensitive is a very big benefit to have in an in-plant," Funkhouser says. "We can reprioritize all work and turn on a dime."

Protecting the confidentiality of printed work is another reason Wal-Mart values its in-plant. While outside vendors don't necessarily violate confidentiality, Funkhouser says, "it's always a risk you assume. For us, it's our profit sharing and stock, and we're going to do everything we can to get the job turned around and keep it under hat until the information needs to be revealed."

Demands of the Retail Business

Working in the retail business can be challenging, Funkhouser says, particularly when it comes to matching merchandise with the customer mix.

"This creates some interesting obstacles for a retail-based in-plant operation in that it requires us to print a larger mix of signs relevant to individual stores," he says. Some printed material differs from state to state and country to country, based on merchandise and language.

"As large as we are, there is a lot of opportunity for different variations within the job, so it's imperative everyone remains very focused on the job at hand, and the correct sign needed by the customer gets shipped to the location it needs to be at on time, especially if there's any type of state law attached to it," Funkhouser says.

Printing signs for Wal-Mart's many stores makes up a big chunk of PMDC's business. Other jobs include training manuals, labels, guides, forms and spiral numbers (black and white numbers that display an item's cost). The in-plant also prints many lawn and garden department coroplast signs. Seventy percent of PMDC's printing is four-color process work.

New iGen3

Though the in-plant handles large volumes of work on its four- and six-color offset presses, the influx of short-run color work prompted it to add a Xerox iGen3 digital color printer last year. It is used to output posters, calendars, business cards and colored guides, Funkhouser says.

"It's efficient since the files can be easily stored for reprint work," he adds.

The in-plant recently took on four-color silk screening after the leadership team challenged employees to skillfully compete with other printers on silk screening. Label printing using flexo presses is another relatively new service the operation provides. This was added at the suggestion of one of PMDC's veteran managers.

"We looked at total dollars being exhausted from our company for label printing needs," Funkhouser says. It quickly became apparent PMDC could throw its hat in the ring. Now PMDC is looking to add more flexo technology, he says.

To further increase revenues, the in-plant has started insourcing jobs like business cards, posters, booklets and signs from outside customersFunkhouser hopes the iGen3 will bring in additional insourcing work.

PMDC Sets Productivity Record

In December 2005, after the company rolled out a new corporate look, PMDC printed the largest signing promotion in its history.

"We developed a solid plan and executed it precisely," Funkhouser says, adding that the job took about five weeks. "We not only outperformed our previous sales record by 45 percent, but accomplished this while shipping all additional 963 customer jobs on or before the requested ship date."

The total impressions printed for that month, not including spiral numbers and labels on flexo equipment, was 12,037,800.

The printing and mailing areas within PMDC work closely together to benefit Wal-Mart, Funkhouser notes. An average job time frame from start to finish is 15 days.

"Our team, as any other print provider, works hard to provide a superiorly printed product and ensure it arrives on time," he says. "Unlike our competition, however, we do not inflate work costs. Our goal is to break even and only charge enough sales to compensate for our operating expenses."

The PMDC team comprises more than 300 employees, up from the 293 reported on IPG's 2004 Top 50 list. That includes graphic artists, though most work arrives already designed.

"Our approach to maintaining a successful in-plant hinges on controlling expenses," Funkhouser says, noting that PMDC entered a phase last year to see how efficient it could be with fewer associates by combining management responsibilities, cross-training and using temporary staffing.

In evaluating that move—especially temporary staffing costs—PMDC added some positions.

"Total sales are up this year. The workload has increased, as well," Funkhouser says. "We want to make sure our production standards are fair and realistic, and marry that information to the workload to determine ongoing staffing needs."

Safety is one way the in-plant promotes its reputation at Wal-Mart. Twice in five years the PMDC team achieved more than 1.5 million safe hours.

Additionally, the team created a heightened focus on job quality, auditing jobs daily to flag errors for quick correction and eliminating repetitive errors.

Looking ahead, Funkhouser hopes to continue to maintain a positive work environment for employees, including the provision of competitive wages.

"Operationally, our goal is to become the printer of choice," he says. "Through quality of work and dependability, we will continue to increase our percentage of Wal-Mart's printing business."

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Environmental Efforts Pay Off

PMDC prides itself on its environmental efforts. The in-plant recycles 85 percent of its waste.

"We challenged our leadership team to take any item we were throwing in the trash that could be recycled and put it all on a table," Funkhouser says. Recyclers were asked for input on how each item could be recycled.

"Our goal is, at some point, to become a zero waste facility," he says. In the meantime, PMDC monitors its ink types and use of recycled paper.

"Recycling initiatives is definitely one of our top priorities," Funkhouser says. "It's not just something we should do as a corporate community citizen, but it's also profitable if done right."

Through recycling efforts, PMDC expects to generate $145,000 in revenues.