Understanding the New Value Chain

As we approach 2006, this is an opportune time to assess how well your in-plant is serving its constituencies, and to lay out strategies for helping your enterprise achieve its objectives.

By Frank Steenburgh

Across the board, the printing industry has experienced tough times over the past several years. This has largely been driven by the impact of the Internet and the availability of an array of alternatives to print as a business communications medium.

As would be expected in a period of tumultuous change, the industry continues to experience significant consolidation. In the commercial printing segment alone, according to PIA, the number of U.S. printing establishments declined by 1,538 in 2004 as compared to 2003. In-plants have not been immune to this trend either, as evidenced by the number of operations that have been outsourced. Still, there are lessons to be learned that will help with strategic planning.

Value-added Services Are Key

If you open up any trade publication, including this one, the words "value-added services" are sure to be liberally sprinkled throughout the pages. Anytime a trend is covered as heavily as this one, the tendency can be to tune it out by thinking, "I have heard all of this before." But the truth is that value-added services are the key to your future success.

The printing operations that are jumping on the value-added services bandwagon are positioned for continued growth and outstanding success. These are the leaders—the operations that have learned how to listen to the needs of their customers and translate those needs into innovative products and services.

I spend a lot of my time visiting both commercial and in-plant printers, and our topics of conversation frequently revolve around how the printer can help reduce costs, improve productivity and decrease turnaround time, as well as help in growing revenues. One undeniable truth always emerges: The successful print shop of the future is not selling print. This may seem counterintuitive, but consider this:

According to InfoTrends/CAP Ventures, for every $1 spent on printing and finishing, another $6 is spent on the creation, management, fulfillment/distribution, storage and inventory obsolescence of those printed materials. Content alone is a $1 trillion market.

An in-plant that can insert itself into the processes that occur before and after printing and finishing will deliver significantly more value to its constituencies. These processes—known as the "New Value Chain"—include processing data, designing, composing, RIPing, printing, finishing, fulfilling, distribution and tracking responses.

It Starts With the Customer

The key to your future success lies in your ability to examine the content value chain and identify the areas where you can add value. Spend time with your key customers to understand what keeps them awake at night. Then map the services you currently offer against the New Value Chain and the unmet needs you have uncovered, looking for gaps you can close with new services. In the process, you will increase your value to the organization and position yourself as a strategic partner.

Meanwhile, don't forget about those groups in your organization that are not your customers—like marketing, which accounts for 72 percent of the $1 trillion content market. Why aren't they using your services? How can you turn that around?

In research conducted this year by Gartner and the University of Connecticut under the auspices of Electronic Document Systems Foundation (EDSF, www.edsf.org), researchers examined the attitudes of business managers and how they viewed printing as part of their business processes.

"The biggest takeaway is that business managers in charge of running the business and generating revenue for the business feel that print is extremely important to the way they run their business processes," says Gartner's Andrew Johnson. "[They] have indicated that they see great opportunities for improvement. And they don't know how to fix it. In fact, most organizations are unclear on who wakes up in the morning with [responsibility for] this task."

The study also found that while many business managers are engaged in business process management/ improvement (BPM) projects, they are not evaluating and changing print processes as part of these projects, even though 65 percent of managers believe print is highly important to those business processes.

Building Your Future

So what does this mean for you? The good news is that it is all good news. It is clear that there are significant opportunities for companies to further improve their business processes, many of which are supported by print. Your challenge is to establish yourself as the expert and strategic partner in this regard. And that challenge includes the ability to expand your area of expertise beyond simply delivering ink and toner on paper, to a set of services that incorporates as much of the New Value Chain as makes sense for your customer base. You should be:

• Meeting regularly with senior management to ensure that you have a good grasp of their strategic objectives, like revenue growth.

• Meeting with the heads of the departments that have responsibility for accomplishing these objectives, such as marketing.

• Restructuring your offerings to support those strategic business objectives, capturing as much of the New Value Chain as possible.

• Inserting yourself into the BPM initiatives in your organization as the print expert to ensure that print processes are modified to gain maximum returns in cost reduction, productivity improvements and revenue growth.

• Developing the ability to measure the results of reengineered processes against a set of metrics you establish in collaboration with senior management.

• Staying current with technology, which enables you to offer innovative products and services aligned with your organization's objectives.

If you don't take these steps, you can be assured that your commercial print competitors will, thus increasing your risk of being outsourced. If you do take these steps, you will ensure your future success.

Based on the returns you can demonstrate through this approach, you will better position yourself to obtain the funding to continue building a benchmark operation far into the future. You will also ensure that you are a valued member of your company's senior management team.

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Frank D. Steenburgh was appointed a corporate officer of Xerox in May 1998 and has been senior vice president of Business Growth since July 2003, responsible for expanding Xerox's $4.5+ billion production business. He was responsible for bringing to market the largest research and development investment ($1 billion) in Xerox history, the DocuColor iGen3. He also led the 1990 introduction of the Xerox DocuTech. Mr. Steenburgh has been honored with the Association of Graphic Communications' "Power of Communications" award and the "Print-On-Demand Pioneer" award from Cygnus Business Media. He also received the Rochester Institute of Technology "CARY" Award for distinguishing himself in the development and application of digital technology. He can be reached at fsteenbu@adelphia.net