Money Talk: Effective Management Using The PIA Ratios (Part 2)

Last month, we revealed what profit leaders know about making money in the printing industry these days: It is imperative to use the annual Printing Industries of America Ratio Studies. These nationwide industry reports will help you track and adapt to the broader industry trends, zero in on profit-draining trouble spots in your organization, and provide significant budget and operational benchmarks as the basis for timely and cost-effective management decisions.

A comparison of some Ratio category results for profit leaders (PLs) to the industry average quickly reveals an important secret to success: profit leaders consistently squeeze more out of every dollar they spend. (See chart below.)

To identify the profit-making roadblocks in your organization, compare your numbers to the profit leaders in Ratio categories such as:

  • Financial
  • Material
  • Value Added
  • Total Labor Costs
  • Value Added per Factory Employee
  • Sales and Value Added per Employee
  • Direct and Support Labor (shows how much non-direct labor is needed to support $1 of direct labor. The current support labor efficiency is $1.14, including sales commissions).
  • Return on Investment (ROI). An ROI calculation removes financing issues and focuses on how much income your assets are producing. The current profit leader ROI is 19.09%.
  • Impressions per hour per piece of equipment
  • Average make ready time
  • Overtime per cost center
  • Waste measurement
  • Hit ratios (sales quotes vs. actual jobs)
  • Number of cold calls
  • Number of possible prospects
  • Number of plant visits
  • Number of new clients
  • Facility Cost (how much it costs to run your facility)
  • Production Costs
  • Sales

Profit leaders continue to demonstrate, it is possible to be profitable in the printing industry. Some tips:

  • Know your Ratio numbers and compare them regularly to both the industry average and to profit leaders of the same size and product type.
  • Use your Ratio comparisons as a benchmark for your own budget process and to quickly identify problem areas.
  • Monitor changes in your numbers and make timely management adjustments to improve or protect your profitability.

The Ratios are an accurate, effective, essential part of company management in the printing industry. Use them well and wisely for maximum profitability.

MargolisBecker has long been recognized as the financial expert for the graphic communications industry. The firm enables printing companies to optimize profits. Proudly, it is the purveyor of the industry’s Cash is King, and Value-Added Principles of Management, and compiles the annual Printing Industries of America Ratios, the industry’s premier financial benchmarking tool.

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