Businesses large and small have been impacted by the COVID-19 pandemic and, in some cases, their entire business models have changed. Employees who now work remotely have proven they are still productive, and many of them want to continue working from a home office. This has triggered some strategic thinking about what to do with currently owned or rented office space, particularly because letting much of it go can deliver positive results to the bottom line.
Many enterprises still retain “essential workers,” those who must work on premise. Among these essential workers are the people who manage and process outgoing mail, including correspondence, transactional billing and invoicing, and regulatory compliance information. For large companies with in-house print and mail facilities, these essential workers can be dozens of employees working on millions of dollars’ worth of hardware and software equipment that must be replaced periodically with newer models, supported by additional training. With the large shift to remote working, many businesses are starting to rethink the wisdom of funding their in-house print shops and those essential employees, who might now be working fewer shifts or days out of the month, especially due to COVID-19 risks.
For print service providers (PSPs) this can be good news. With the looming labor crunches and the rising demand for new digital communication options, as well as the affordability of printing in color, outsourcing is increasingly attractive to many enterprises. Deciding to move an in-house mail operation to a third-party service provider requires companies to address certain critical issues to ensure it is the right move. PSPs need to be ready by rethinking their competitive strategy and expanding their offering to include services beyond print and mail. Hardware and software providers continue to innovate with enhanced capabilities that allow service providers to streamline production, offer color print at attractive prices, and solutions that help clients improve customer experience strategies and support digital transformation.
While no transition from an enterprise to a print, mail, and communications provider is perfect, having a solid strategy around the use of technology, efficient workflow processes, and in-depth knowledge of their industry will put these new clients at ease. The following are eight areas to examine within your operation when evaluating if your capabilities are ready to take on this new business:
1. Operational Efficiency
Today, automation is a must for quality and to meet deadlines. This means your physical workflow and equipment layout and the steps it takes to move a job through the process is important to consider. A good measure of operational efficiency is observing the number of times material is being touched or moved physically to get through the production process. For example, an efficient operation has a workflow in which the paper output is moving to the inserter with the fewest steps possible. Having the physical workflow down to as few touchpoints as possible reduces the possibility of errors. Fewer touches can also provide better tracking control. If the operation is located on multiple floors and product from the print operations needs to move via elevator or pushed down a long hall, these are all opportunities for quality errors in the documents, which may fall out of order and cause a reprint. A properly configured production floor increases productivity and quality and decreases process risk.
2. Workforce Utilization
The key measurement here is the ratio of the number of people on the floor to the amount of work they are doing. Overtime utilization is also an important factor. Mitigating overtime with part-time employees during peak periods is an option, although part-time or temporary help can pose quality issues if they are not part of the daily workflow. In-house print departments have a much smaller staff, which left them more vulnerable during the pandemic. PSPs typically have a larger workforce and, therefore, are experienced in covering for staffing shortages with cross-trained people.
Historically, in-house print services are limited on investment as printing is not the company’s core business. Often, there is a limit to the services they can offer. With color printing now a standard for statements and invoices, PSPs are investing in these new technologies and can provide a variety of services that may not be available to the restricted in-house print shop. Because of this, there is a trend to move to outsourcing, it is time for PSPs to look at what investments need to be made, not only to continue with the current course, but also to meet the digital communications needs customers demand, such as preference management and SMS billing.
4. Quality Metrics
Possibly one of the most telling quality metrics is reprint percentage. Reprints include spoilage, items caught in the inserting process, and print quality issues. Internal quality issues that are caught before mailing must be evaluated, along with end customer issues. One common yet unacceptable issue is double-stuffed envelopes. Companies lacking a closed loop monitoring system that validates every page going through the inserter leave the operation exposed to operator error. If an envelope misfeeds, Customer A may receive Customer B’s page 2, which exposes the operation to fines and negative attention. Substantial or recurring quality issues are a red flag that best practices are not being followed.
5. Work Diversity
Work diversity encompasses the type of work done within the operation. In-house operations are often relegated to limited equipment options due to the limited nature of the documents being created. If the work mix is limited to strictly black and white policies, it limits the creativity of the company to change look and feel and modernize their formats. As a PSP, it is important to offer the capabilities to expand options for future growth and upgrades of customer communications.
6. Overall Utilization
Overall utilization refers to equipment capacity versus usage, as well as the physical space of the production floor and the equipment. The sweet spot for machine capacity versus usage ranges from 70-80%. As an operation, the machines should be running near full capacity with little room for maintenance or equipment downtime. By the same token, equipment running less than 60% is considered underutilized.
7. Business Continuity Planning (BCP)
Every company should examine its business continuity plan (BCP). What is the plan for a short-term week-long interruption versus a complete loss? There are companies that provide total redundancy at a cost; however, these providers are suited to a short disaster. The question to ask is, in the event of a complete loss, is the BCP operations plan sustainable? It is important to have the relationships and facilities to meet disaster recovery challenges.
8. Multi-channel Delivery
The pandemic proved the need for multi-channel delivery, including SMS text-to-pay options. PSPs need to have the resources and the relationships to provide these services through high-end, omni-channel customer communications management (CCM) composition platforms. This includes multiple data streams and formats created and executed to deliver invoicing per the client’s request. A growing focus is on customer preference.
To be considered a leader in your industry, it is important to anticipate industry trends in order to gain a competitive advantage. There is a clear trend that, since the pandemic, outsourcing print/mail production to a reliable, knowledgeable print and communications partner makes business sense to many enterprises. Many companies no longer want to invest in the capital expenditure, but still recognize the critical need to meet customer preferences in a timely manner. For PSPs, taking on this expanding business opportunity will require more than an understanding of what clients are looking to accomplish. It will require a strong assessment of your operation to ensure your operation is firing on all cylinders and primed to capitalize on this trend with a solid strategy that ensures success.
Kemal Carr is President of Madison Advisors, an independent analyst and market research firm that addresses the needs of the electronic and print customer communications management marketplace. Visit www.MadisonAdvisors.com.
This article originally appeared in the July/August, 2022 issue of Mailing Systems Technology.