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Printing in the Far East A Cost Benefit Analysis

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Responsible for global production strategy. Books, journals and electronic products ... 8 years in a small holiday guide publisher. 3 years in sales (printing company) ... – PowerPoint PPT presentation

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Title: Printing in the Far East A Cost Benefit Analysis


1
Printing in the Far EastA Cost Benefit Analysis
  • John Strange
  • Group Production Director
  • 12th July 2006

2
Overview of Presentation
  • My experience
  • Who are Blackwell Publishing Ltd?
  • Outsourcing
  • The reasons for moving Journal manufacturing east
  • Benefits
  • Risks
  • Success criteria
  • The evaluation process
  • What did we learn (i.e. why China may not always
    be the best option)?
  • Strategies for success
  • Conclusions

3
My experience.!
  • Blackwell Publishing (1993 - ) Academic,
    Scientific and Medical Publishing
  • Responsible for global production strategy
  • Books, journals and electronic products
  • Outsourced composition, manufacturing and
    distribution
  • Pearson Longman (1978 1992) Educational
    Publishing
  • Responsible for Schools Division production
    strategy
  • Administration and systems for Group as a whole
  • Special focus on composition and pre-press
  • Books
  • Outsourced composition, reproduction and
    manufacturing
  • Prior to 1978
  • 8 years in a small holiday guide publisher
  • 3 years in sales (printing company)
  • 3 years in works/factory management (printing
    company)

4
Who are Blackwell Publishing?
  • The worlds leading society publisher and is over
    75 years old.
  • Publish over 805 journals and 650 new books each
    year
  • Academic, Medical and Professional subjects
  • Partner with 665 academic and professional
    societies
  • 990 staff with offices in US, UK, Australia,
    China, Denmark, Germany, Singapore and Japan
  • Production facilities in US, UK, Australia and
    Japan
  • Outsource 100 composition and manufacturing
  • Overall sales revenue in excess of 200 million
    per annum

5
Outsourcing
  • What does it mean?
  • The delegation of one or more business functions
    (or processes) to a third party, who in turn
    delivers services to agreed criteria
  • Some other associated terminology
  • Offshoring the utilisation of a third party
    that is offshore (i.e. not domestic), normally
    to a region where labour costs are lower
  • Why is it important?
  • As domestic costs rise (especially labour costs),
    one is forced to try and locate parts of the
    world where you can buy services at a lower cost
    and, sometimes better quality with reduced lead
    times.

6
Outsourcing (contd)
  • Identify what is really core business and, thus
    core competence then focus internal resources
    on this which can then deliver-
  • Cost savings
  • Reduced lead times
  • Similar (or better quality)
  • Consistency
  • Scaleability
  • Areas that can be outsourced
  • Copy editing
  • Composition
  • Manufacturing
  • Distribution
  • Customer Services
  • Technology (support and development)
  • Some aspects of Finance (e.g. Purchase Ledger)
  • Rights and permissions
  • 24 x 7 help desks
  • Etc

7
Trends in outsourcing
  • Offshore outsourcing becoming very common (? the
    norm)
  • Europe far more experienced than US!!
  • Concerns about loss of jobs domestically but.?
  • Increasing breadth of outsourcing offerings
  • Vendors beginning to offer end-to-end solutions

8
Reasons for moving Journal manufacturing east?
  • Not just about manufacturing
  • Must consider distribution
  • Costs
  • Lead times to client subscriber
  • Looking to identify-
  • Existing cost savings within increasingly
    automated processes
  • Maintain (at worst) - quality
  • Within acceptable overall lead times
  • Ensure appropriate levels of communication etc

9
Evaluation process
  • Process initiated in 2002 with cost comparisons
    between UK, China (mainland), Malaysia, Singapore
  • Created RFP (request for prices)
  • Sent to several suppliers (I had known most for
    around 30 years and visited all of them)
  • Key here is to try and identify appropriate
    suppliers (not too large, family owned etc)
  • Prepare cost comparisons (currency?)
  • Evaluate the short list of suppliers carefully
  • Visit them
  • Ask tough questions
  • What is their management team (and experience)?
  • What are their human resource policies?
  • Ask them to complete human resources practices
    profile
  • Is there likely synergy between us?

10
Evaluation process (contd)
  • Do they have the appropriate technology
    environment/expertise
  • Take up references
  • Do they work for any of your competitors (if yes,
    who?)
  • What is their turnover/revenue
  • What is the value of their largest account (not
    who, but how much)
  • Do they make a profit (and, will they from your
    work)?

11
Evaluation process (contd)
  • Paper
  • We wished to buy centrally
  • Supply to printers
  • Hold stock locally
  • Why?
  • Better control
  • Easier to move suppliers (if necessary)
  • Can change paper grades more simply
  • 100 added value at printers
  • Lower costs
  • But - cash flow implications
  • - some overhead

12
Evaluation process (contd)
  • Manufacturing
  • We to supply print PDFs (from any/all of 6
    vendors in India/China)
  • Very thorough process for training suppliers and,
    checking
  • Receipt of files
  • Cover proofs
  • Print quality
  • Inspection copies (initially to UK by courier
    2-3 days)
  • Finished printed journals delivered to
    distributor
  • SLA

local
13
The results..!
14
Distribution
  • Similar exercise/process more complex
  • Supplier(s) must
  • Receive subscriber electronic files
  • Output carrier sheets (with addresses on)
  • Receive printed journals
  • Include inserts
  • Collate and polywrap the journals
  • Despatch globally
  • Thorough web based tracking systems
  • Monitor lead times to end subscribers etc etc
  • Did not test this process in China (because
    manufacturing costs did not warrant it)

15
Why was China not competitive?
  • Approached suppliers in the Dongguan region (in
    the middle part of Guangdong Province in South
    China)
  • Mainly suppliers from Hong Kong set up prior to
    1997
  • Their mindset (2001/02) was mainly geared to long
    run 4 colour work and, books
  • Not 128pp mainly mono (although increasing
    colour) limp bound (notch) STM/HSS Journals
  • No experience of journals
  • ? Associated overheads would be too high?

16
Why was China not competitive (contd)
  • No doubt quality and lead times would be fine
  • Importing of paper would be OK
  • Distribution may have been a challenge!
  • So all about specification related purchasing
  • Almost exclusively 4 colour (or more) presses
  • square pegs round holes

17
Strategies for success?
  • Manage the expectations carefully
  • Need support from Senior Management (CEO
    downwards)
  • Will not be a smooth ride (things will/do go
    wrong)
  • Not pain free
  • All about risk management to optimise benefits
  • Choose carefully what you decide to outsource
  • Dont be too optimistic/aggressive
  • Identify some small/safe wins (then use these
    successes as ambassadors within your organisation
    for further expansion)
  • Manage change (or workflows, culture etc) very
    carefully
  • Measure performance agreed KPIs
  • If you cant measure it, you cant expect to
    improve it

18
Strategies for success (contd)
  • Dont allow yourself to be rushed (whatever the
    CEO says!)
  • Will need additional overhead costs (travel,
    training etc)
  • From the savings!
  • Visits go and see for yourself
  • Once satisfied, share with colleagues
  • Ensure you have a clear idea of HR policies for
    all your vendors (proactively share with internal
    customers)
  • Documents that you want (Service Level Criteria)
  • Ensure crystal clear instructions
  • Holy Grail true electronic workflows (work
    aggressively towards this)
  • Dont make FedEx/DHL even richer!
  • Share your strategies
  • Regular supplier meetings
  • You are all in this together

19
Strategies for success (contd)
  • But there are huge benefits
  • Improved process
  • Increased productivity
  • Lower cost-of-sale
  • Excellent innovation
  • Scaleability
  • Can also get
  • Reduced lead times (on average)
  • Improved service levels (which are sustained)

20
Conclusions
  • Our choice of Singapore has been a spectacular
    success, however you measure it
  • After a pilot project (40 titles), we scaled up
    to over 430 UK titles, 40 US and 80 Australia
    titles in 2 years
  • Strategically Singapore is in an excellent
    geographical location
  • Malaysia up the road
  • Vietnam, Korea, Indonesia all nearby
  • China also in the region
  • We continue to evaluate alternatives which will
    include China
  • They have the capacity, the resources (people,
    equipment etc) but do they have the desire
    (i.e. have they identified this market etc etc
    as one they wish to attack?)
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