The Price of Fulfillment

Whether they know it or not, every printer is already involved in executing some type of fulfillment services. They may not call it fulfillment, may not promote the service, may not charge for it, but every piece of printed material has to be packed and shipped somewhere.

Fulfillment services are often disguised, not readily recognized. When variable printing is thrown into the mix, when you personalize and customize print to each person the piece is delivered to, that’s also a fulfillment service, says Tom Quinn, president, Q Fulfillment Solutions. “All variable printing machines, even color machines, are fulfillment devices,” he explains. “They are not printing machines. For a long time, the problem printers were having is that they didn’t know how to sell it; they were selling variable print as a short-run option. It’s a fulfillment service.”

One of the biggest issues within the fulfillment arena is setting pricing parameters, notes Quinn, a renowned consultant who also holds Mailing & Fulfillment Service Association (MFSA) seminars. In fact, his most popular seminar—recently held at Graph Expo—covers just that that subject.

“We use time motion studies to establish how to bill out those rates,” says Quinn. “How long does it take to build this activity? I like to use numbers divisible by 60; we round everything up to minutes. Then use time motion after that. You have to price out those labor rates, measure how much time it takes to do a specific activity and then bill accordingly.”

The challenge—a fulfillment company could have as many as 60 different pricing parameters, with each application is a little bit different from the others.

“We want you to store and ship sales collateral to our sales force; that’s one application,” notes Quinn. “Now the company is getting leads; they want you to send those lead packages out, and also capture where they are and send a notification to the sale rep that they were sent out. That’s another application. We are going to Graph Expo, we want you to send this big shipment over there; with everything clearly marked; when we are done; after GE, and we just throw stuff haphazardly back in boxes and put a UPS tag on it to ship back to fulfillment we want you to open and inspect every box and put back the unused material back in inventory—that’s a third application.”

It just continues to build.

That’s not even considering a whole other part of fulfillment—packing and shipping premium products printed with companies’ logos, such as golf balls, baseball caps, and t-shirts.

The Price is Right?

One company that took Quinn’s lessons to heart is CCG Marketing Solutions.

“Quinn helped me understand that you have to cover your overhead—your fixed costs, persons processing orders, web hosting, inventory control, and reporting, and have the fees for variables in place as well,” explains Jeff Pinkin, EVP Sales and Business Development, CCG Marketing Solutions. “These are all costs that have to be covered. “

Ten years ago, the industry operated on a fixed price model, says Pinkin. “It didn’t matter what was in the carton, it would cost $7 dollars a carton. That would include everything-gate entry, storage, inventory control, data entry, packing, sending and shipping.”

But downward pressure within the industry forced fulfillment companies to move to an a la carte model. “There is no going market rate; we could be bidding a job $4 per order going out, and our competitor could be bidding $7 or $1,” says Pinkin. “Prices are all over the place; there could be a variance of 35 to 40 percent.”

Adds Pinkin, “It became impossible to win bids based on that simple, fixed pricing model.”

Everything is charged separately—from how an order is entered to line time to special instructions. There are charges for IT and for reverse logistics—when returns are made.