What is the impact to your organization if an average transactional document, such as a bill, gets damaged during the inserting operation in your print and mail facility? How much could such an event actually cost?
The answer will depend on who you ask:
• An equipment operator will focus on the cost of paper, envelopes, or ink. They may throw in some dollars to account for the extra labor to reprint and insert the material.
• An operations manager probably recognizes the cost of lost productivity caused by stopping an inserting machine while an operator clears a jam.
• Someone in Finance might point out the cost of money. A delayed mailing date results in correspondingly delayed payments.
• Customer Service would assign a cost to fielding a call from a customer that didn’t get the bill soon enough to pay on time because of the production problems. They incurred a late fee the CSR must reverse.
Those are all valid measures of loss. But even adding them all together won’t accurately represent the true potential cost of a mangled document. It is higher than most would expect.
Let’s Start with Mail Center Costs
When a jam occurs, an inserting machine stops — eventually. Until then, pieces can slam into the back of the jammed document, creating a train wreck of torn and wrinkled credit card statements. What inserter operator has never extracted pages subjected to the “accordion fold”? Fast inserting systems can damage quite a few pieces before jam detectors put on the brakes.
The time it takes for an inserter operator to remove the jammed pages and get the machine running again depends on the severity and location of the jam, the equipment, the materials used in the mail piece, and the skill of the operator. The cost of this jam-clearing time includes the employee labor cost plus the value of work unprocessed while the machine is stopped. If the machine is idle for five minutes and it normally runs at 15,000 pieces per hour, productivity has taken a hit in the neighborhood of 1,250 pieces. Four jams a day means 5,000 mail pieces might not make the daily cutoff for sending mail to the presort house. They must wait until the next mailing day.
If a junior operator has to ask a co-worker for help to determine the cause of the jam, we have to add in the labor and productivity costs associated with the helper. The senior employee’s equipment isn’t running while he’s providing assistance.
Since the mail center manager doesn’t want those inserters sitting still any longer than necessary, the shop probably has a quick way for the operator to get back to work once he resolves the problem. In most mail centers I’ve visited, this efficiency tool is a cardboard box. The operator tosses all the material extracted from his machine into the box. The material sits in the box until the end of the day, guaranteeing the damaged statements won’t be mailed until the next day at the earliest. If the jam occurred on a Friday preceding a Monday holiday, it could be four calendar days before those documents get reprinted and mailed.
Every organization has its own calculation for the cost of money, but bills that sit in a box for four days influence cash flow and investable assets of the company. Individually, the cost is negligible, but all the jammed bills an organization creates over the course of a year add up. The financial impact includes undamaged bills mailed late because of production delays incurred while dealing with jams.
Documents that aren’t distributed on schedule also impact business units and customer service. These departments could deal with angry or confused customers who don’t receive their bills on time. Customer service gets calls to register complaints or ask questions. “Where’s my bill?” questions typically spawn inquiries from customer service asking the in-plant or outsource mail center to track down individual documents, extending the costs back to the document center.
Next, let’s consider what happens to those mangled documents after they are removed from the mail stream. How are they re-created and sent to the recipients?
Most of the print and mail facilities I’ve toured use a manual process to reprint and re-mail damaged documents. As we will see, reprints are not the most efficient workflow in the operation. Reprints also include risks that will add to our calculation for the cost of damaged statements.
Back to the Mail Center for a Moment…
Big surprise! Not all damaged statements are reprinted! Some shops allow inserter operators to smooth out pages that “aren’t too wrinkled.” I have observed operators fold and insert pages by hand or manually place pages back on the inserter “track,” which is easily accessible on many swing arm inserters still in use in thousands of mail centers. I cringe when I see this happening. The operators are doing their best to get the mail out on time, but a policy that encourages them to assemble documents after a jam is risky.
On complex applications such as variable page-count documents, operators may neglect to notice a page is missing or inadvertently mix pages from two different accounts as they attempt to reassemble the mail pieces by hand. We all know about the fallout from mailing mixed documents in applications such as finance, insurance, or healthcare. Manual intervention errors can cause regulatory infractions, damage customer relationships, and spur customer service calls.
For this reason, some mail centers have a “touch and toss” policy. The company allows no pages removed from an inserting machine to re-enter the mail stream. To ensure integrity, these accounts are reprinted and mailed separately or as part of a future production run. Sometimes the automated document factory (ADF) system automatically orders the reprints. In other cases, the reprint process still starts with that cardboard box in the mail center, but it’s out of the hands of inserter operators.
Now for the Print Center
At the end of the day, someone collects the contents of the jam boxes and sends the pages (or page parts) to print operations. If the operation is running three shifts, reprints are frequently the responsibility of a graveyard print operator. They find time between production runs to search through the print archive, find the accounts matching the statements in the box, and reprint them – one at a time. If jammed pages came out of the inserter in small pieces, the print operator’s first task is assembling enough of each page to allow him to read the account number or other data necessary to identify the document.
I have watched this painful process, dismayed at the length of time necessary to reprint a single account. In some systems, the operator must load all the pages from the archived print job back into the print queue before hunting for the desired pages. On large print runs, this takes a great deal of time. Sometimes a search box helps operators find the right account number. Other establishments may rely on the operator’s knowledge of the print sequence. They manually scan forward and backward through the print queue until they locate the desired pages.
Cut-sheet printing environments frequently use pre-printed paper stock customized for each type of document. Here, the operator must locate and load paper stock before reprinting a few pages.
If operators accidently print on the wrong paper, will the error be caught? Maybe yes, maybe no. When I was in the service bureau business, we ran statements for over 40 different credit unions. Because many of our customers used the same statement-generation software packages, print from one credit union would line up perfectly on forms for another. It would take a sharp eye to notice anything was wrong.
What is the cost of this enormously inefficient printing exercise? It’s tough to calculate. Different organizations have diverse reprint processes. The size of an organization or the amount of mail they produce does not necessarily mean the company has a more automated process. A good-size regional health insurance provider used the procedure I’ve described here about restoring the print queue. The cost of labor alone pushed reprint costs to several dollars per page, but I doubt anyone ever accounted for the expense of this activity.
Instead of firing up production printers to generate a few pages for reprints, some organizations reprint documents on smaller print devices. This simplifies things and reduces the cost, but may circumvent tracking and logging processes tied to the production equipment.
We’ve revealed some mail center costs associated with damaged transactional documents, and later as the print center reprints the items. We’ve run up quite a bill and the statements aren’t even the mail yet!
So far, time and money has been spent clearing jams, restarting the inserting equipment, and then re-printing the documents. What happens next can be expensive too, though the impact isn’t always so obvious.
Mailing Reprinted Documents
Mailing procedures for reprinted documents differ among organizations. In quite a few companies, final distribution is yet another manual and unmanaged process. I’ve seen print operators take responsibility for folding documents by hand, inserting them into envelopes, and dropping them in an outgoing mail basket. An internal courier picks up the outgoing mail during their route in the morning. They deliver reprinted bills to the mail center along with the rest of the correspondence and department-generated mail collected on the morning route.
Throughout the day, the mail center runs this office mail through a manual postage meter and sends it to the presort bureau late in the afternoon. Or they meter at full postage rates and drop the mail at the post office at the end of the day. The reprinted documents finally make it to the mail stream, but it may be several days from the originally scheduled mailing date.
Several areas of risk are connected with this manual approach:
An employee can select the wrong outbound envelope. This is an easy error to make for service providers who may inventory dozens of similar-looking envelopes for various clients. If the Postal Service can’t deliver the piece, they will return it to the wrong company, whose return address appears on the envelope. This creates a possible privacy breach, perhaps even revealing customer and pricing data to the biller’s competitors. At best, the Postal Service delivers the piece, but it appears to have come from a source unfamiliar to the bill recipient. It’s an embarrassing mistake that affects two of the service provider’s clients.
During manual insertion, an employee can neglect to insert a return envelope. There are several consequences to this mistake. Bill recipients may mail their payments using their own envelopes, causing an exception in the remittance processing operation. If the bill recipients address their payment envelopes incorrectly, payments will be processed late, possibly triggering a late fee that must be reversed later.
If the print/mail center employee inserts an incorrect return envelope, the remittance address on the payment stub may not line up with the return envelope window. The Postal Service will return the payment to the payer. For closed-face return envelopes, the Postal Service will deliver the response or payment to the wrong company. What a mess!
Other problems with a manual mailing process for reprinted documents can pop into the workflow. Employees attempting to include inserts must locate the correct enclosures and determine which ones each addressee was supposed to receive. In today’s world of targeted messaging, this is a tall order. In my observations, organizations frequently mail reprinted documents with no inserts, creating a possible regulatory infraction if the mailer fails to provide required notices to the recipients.
Impact of Mailing Mistakes
The costs associated with these simple mistakes could be extremely high. A print/mail service provider could lose a customer by mixing up outbound envelopes, inserts, or return envelopes. If there have been integrity or quality problems in the past, manual reprint errors could be the last straw. The price tag for errors related to reprinted documents processed outside the normal quality controls could be thousands of dollars in lost revenue to the print/mail service provider.
Regulatory infractions are expensive too. Regulatory bodies can sue or fine the mailer for non-compliance. Companies may also be subject to audits and be forced to upgrade documentation and training.
Now What Do You Think?
Going back to our original question, how much do you think damaged documents cost your organization? After adding in all the largely undocumented costs we’ve discussed here, the real impact from damaged documents may be significantly higher than your original estimate. Sometimes we see only our part of the process and we don’t think about how customer communications affect other parts of the business.
Would a single print/mail operation endure all the negative experiences highlighted here from a single damaged document event? Not likely. However, the costs can trickle down depending on the applications the print/mail centers are running, the procedures in place, and the equipment in use.
If you suspect your company lacks processes to deal efficiently with damaged paper documents, take the same steps I do when a client asks for a document production workflow assessment. Watch the process as it happens. Talk to the people doing the work. Get a feel for how long it takes to complete the necessary steps and what those actions might cost in terms of lost productivity, revenue, or cash flow. Look downstream from the mail center to see what happens (or doesn’t happen) when the inserter mashes another document. Judge the risks inherent in manual, uncontrolled processes.
Only after a thorough analysis can you decide on a course of action to change processes or justify investing in new hardware or software to prevent jams or automate the reprints.
Mike Porter at Print/Mail Consultants helps document operations build and implement strategies for future growth and competitiveness. Learn more about his services at www.printmailconsultants.com and www.pmccontentservices.com. Follow @PMCmike on Twitter, or send him a connection request on LinkedIn.
This article originally appeared in the September/October, 2019 issue of Mailing Systems Technology.