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...
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It’s made pricing much more complex, but “it’s what the market demanded,” acknowledges Pinkin. “This started out with the larger companies started pricing things these way and trickled down. It gives clients more control.”
One of the problems, says Pinkin, is that not all fulfillment companies are considering their fixed costs when they are pricing. “They are hurting themselves and hurting other companies also,” he says.
To counteract the wildly diverging prices, CCG, which is based in West Caldwell, NJ, looks to establish relationships that go beyond mere fulfillment. The 45-year-old company provides integrated marketing services, specializing in technology driven fulfillment, as well as supporting brand building tactics such as literature and sample fulfillment, direct mail, sampling, couponing, social media engagement. and rebates.
The Beauty of the Business
When a company is coming into the business, pricing is a big challenge, acknowledges Jim Rushing, president of R Fulfillment Solutions. “An order can have a lot of elements; it can come in one shot or individually as separate items. It is so varied—that’s part of the beauty of the business.”
Rushing, an auditor for MFSA, travels the country helping companies improve their fulfillment operations to ultimately receive accreditation. He looks at operational and technical requirements in receiving; hand assembly and kitting, shipping, inventory management, system reporting, returns, the quality of the software used to drive the business, client services, and even security—all are audited to make sure the company “is top notch.”
One of the newer trends is on-demand fulfillment, reports Rushing. Orders can be built on demand, or built in bulk and placed in inventory. Instead of 100 or 1,000 kits, a fulfillment order might require building three kits on demand.
If your company builds the kits in bulk and puts them into inventory; then there is a cost element of storage. If the kits are built to order, let’s say 10 demand kits instead of 1,000; each kit becomes more expensive to build.
Not an Easy Process
Of course, there are printers who have brought fulfillment in-house as a value-add service to their printing business.
The move is not a simple feat.
First off, “printing and fulfillment employ very different business models,” notes Quinn. “Printing and mailing use what I would call production or manufacturing models, producing revenue by running machines and selling the output. In fulfillment it is very much a service model; it’s not about the machines. We have software, people, and a building.”
Often printers move into fulfillment because a client asks them to do it. They go out and buy the software—necessary to be successful; they partially install it and then run fulfillment like it is part of the printing business. “You can’t run it that way,” says Quinn.
Fulfillment is the last touch before the consumer gets it, explains Complemar, chairperson, president and CEO, Christine B. Whitman. Headquartered in Rochester, NY, Complemar provides direct mail, short-run digital printing, fulfillment and distribution services to Fortune 1000 companies.
“It requires a very carefully orchestrated production schedule to accommodate clients who have their projects come late,” says Whitman.
Our business requires a complex infrastructure, adds Ann Wood, VP of operations. “For printers, it’s not part of their core competency; it takes only one bad order to ruin a relationship with a client,” says Wood. “A lot of printers underestimate how difficult it is.”
Of course, companies like Complemar would prefer that printers stick to their competency and not encroach on theirs’. Wood does bring up a good point, though. If you are a printer, for every 10 dollars of printed material, you would earn less than $1 dollar for fulfillment.
“The risk of not effectively delivering the job for $1 is not a great idea, without thinking through the type of infrastructure and IT organization and capabilities that rare required to provided fulfillment in an effective manner,” says Wood.
