Every print operation needs to be intensely concerned with productivity. Obvious, sure, but truer now than ever. To boost sales per employee, you can do a few things.
Use your P&L to measure what you are doing in your operation. To improve productivity you need to measure what you are doing. To do this, the most important thing to look at is your monthly P&L. In your P&L, breakout as many categories of sales as you can. At a minimum, try to isolate sales by printing, digital, prepress, bindery, mailing, and buyouts.
If you are running different presses, such as a six-color 40-inch press and an envelope inkjet press, for example, it will be useful to look at monthly, quarterly, and annual sales segregated by each of these pieces of equipment.
I talked to Russ Evans, the owner of Print Tech in Springfield, NJ. When I asked him about productivity, he simply said, “Measure everything.” That’s good advice, Russ.
By the way, any shop that is not getting accurate monthly P&L statements should just close up now. What the heck! Lock the door—go home.
Hire good people and pay them well. This may seem counter-intuitive, but I think that by paying well in each area of your operation, your overall labor cost will be lower. Try to get superstars and demand a lot of them. Well paid, good employees are much more productive than poorly paid indifferent workers.
To look at productivity, sales per employee is a good measure. I think a rough target is to produce about $200,000 in sales per year per employee. So, for example, if you have $2 million in sales, you want to have 10 employees.
Fully utilize capacity. I flew from Boston to Ft. Myers, FL, last month. I paid $212 for my ticket. The guy next to me was complaining to me that he had paid $425 because he bought his ticket at the last minute. A friend of mine told me that he flies to Ft. Myers often and usually is able to get tickets for less than $150. So airline pricing is all over the place. Why? Because when the plane leaves the ground with an empty seat, that seat produces exactly zero revenue. So the airlines try pricing tickets with the goal that every seat is full on every flight.
How does that apply to our industry? Well, for starters, throw out the cost-plus pricing model. Your press produces exactly zero revenue if you staff it for eight hours, but produce all the jobs in six hours. Adjust your pricing to fill the eight hours.
Every customer should not pay the same for every job. Don’t fly empty seats. We are better off in our industry selling press time for $60 an hour rather than the $250 you try to get. You certainly don’t want to sell all of your press time at $60 an hour, but you don’t want the press and press operator to stand idle for two hours. So try airline pricing and run every piece of equipment for every hour that it is staffed.
Don’t be afraid of overtime. I spoke to my friend George Coriaty who runs an extremely large and productive Sir Speedy in Whittier, CA. When I asked him about productivity, he mentioned overtime. Your fixed overhead—rent, marketing expense, lease expense, etc.—is the same if, for example, your digital operator works his regular eight hours and then works a couple of hours more of overtime.
Companies are running at their most efficient level when they are paying lots of overtime. With judicious use of overtime, productivity can certainly increase.
Invest in equipment. We bought a die-cutter and folder/gluer a month ago. Together, both pieces cost us around $92,000. We will produce pocket folders in house. We had hoped to produce about $30,000 a year in profit utilizing this equipment. If the first month is an indicator, we will meet those projections. So this year we’ll produce $30,000 in profit on an investment of $92,000. That’s a 32 percent return on investment. Try getting that in the stock market!
A small offset duplicator with a T-head costs about the same to run as a half size two-color press, but the half size press can produce five or 10 times the revenue. I am not advocating incurring all sorts of debt, but if you are going to be in this industry, get in the game and invest in your company and in yourself.
People vs. equipment. A few years ago we purchased a DI press. The lease payment was going to be around $5,000 a month. We agonized for weeks and weeks about encumbering the company with a $5,000 monthly lease. However, we have often hired people without anywhere near that level of introspection. But almost any employee will cost a company $5,000 a month ($60,000 a year) with benefits, Social Security, workman’s comp, vacation time, etc.
Be much more reluctant to add staff than to invest in equipment. Do you think, for example, that it is a cost savings to punch coil bound books by hand rather than investing in an automatic punch? Employ fewer, more productive workers because running more productive equipment is the way to go.
Feedback is very welcome. I have been in this industry for more years than I care to count, and think that productivity is the key to running a profitable, successful print operation. However, I would love some feedback from fellow printers because I am still trying to figure things out.
Jim Corliss, with 30 years in the printing industry, is a co-founder of Braintree Printing in Braintree, MA (www.MyPRINTResource.com/10168270). Corliss, a lifelong resident of the Boston area and a US Army veteran, has degrees from Boston College and Brown University. Contact him at email@example.com.