Death to the triple bid
Please do not get me wrong, I am not against using a competitive tender process to buy marketing print. However, what I am against is relying on the triple bid process as the main way of buying print. I have seen far too many presentations by marketing services and print management companies, where their answer to the client’s question ‘how do you ensure we get the best price?’ is ‘we triple bid every job’. Some go on to say they choose the lowest price, others let the client choose (which is surely a derogation of duty if they are meant to be providing an expert print buying service?). Either way triple bidding is not the best way to get the best price or product in every case.
Some of the flaws in the triple bid process include:
It presumes the buyer is going to the right three suppliers – does the buyer know the current market well enough to know who to go to at that time? If quoting is automated does the system push the buyer to the suppliers that are appropriate for that product?
It increases the printers estimating overhead and often in large tender process for little or no return.
It can delay response time if all the client actually needs is a quick indicative price.
The bid process often takes place before the job is actually ready to be produced. Subsequent changes to the quantity, specification or schedule can affect market price and should trigger a competitive retender but often that doesn’t happen, or the benefits of market conditions (a particular printer may be quiet at the point the job is ready and happy to offer a lower price to fill capacity, for example) are not realised.
And as discussed in an earlier article, if the suppliers that are tendered are adding on large rebates to the price, that are then given back to the print management company, the client isn’t even guaranteed the best market price.
Triple bidding should remain in the print buyer’s armoury, as it is definitely better than not running any competitive buying process at all. It is just that there are smarter ways to buy print.
So, what are the smart ways to buy marketing print?
This is by no way a definitive list on the best way to approach print buying for a client - each client has different requirements as we can see from point 1 below. However, adopting one or more of these approaches will improve your print buying.
1. Understand your client and analyse their spend – there are two distinct parts to this and the first is to understand your client. In agency speak this would be called ‘an immersion process’. It is the process of really getting to know what makes a business or organisation tick, what is really important to them and their brand and how they work internally. Immersion is as important to an outsourced print manager as it is to an internal print buyer. I had one client whose share price was dependent on the number of subscribers they had, so if an acquisition mailing went late not only would the call centre have nothing to do, the share price could be directly affected. Another client wanted the flexibility to pull campaigns at the last minute and always made last minute changes, which meant booking immovable slots on large inline web presses wasn’t practical for them. Understanding your client’s needs impacts on the suppliers you use and the price a client pays.
The second part to understanding the client is understanding what and when they buy. The why is often established through the immersion process, but the what and when is through analysis. Analysis of a year’s spend allows you to see patterns to the buying process and establish the most appropriate method for buying those products or campaigns. A catalogue produced at peak time may need to be contracted in advance or on an annual basis. In retailers, formats and prices may need to be agreed in advance, ready for the weekly panic to get POS in store for the weekend, following the Monday trading meeting results. Detailed analysis of spend allows baseline pricing to be established for regularly produced items. From the baseline maximum contract rates can be agreed with one or more printer(s) which allows for accurate price listing and/or enables capacity or spot buying.
2. Break the costs out, as the devil is in the detail – splitting out studio, production (which can be subdivided depending on the process), material, kitting and delivery costs are key. Material is a commodity item that can constitute up to 70% of the cost of a job (although typically between 40 and 60%) and is bought at a fixed ton or per square metre rate, delivery costs are standard and easy to check, data processing and personalisation costs can be simple to price list and so on. It is very easy to check across suppliers to identify what they are best suited for and where their costs are centred. You may then choose to buy constituent parts from different suppliers or place with one supplier for speed to market and use negotiation to agree the price.
3. Simplify and automate low value or regular standard work – we live in an age where people are used to online buying and in the print world online trade printers are often lower cost than the traditional printer for simple products. Aim to make the end-to-end pricing and fulfilment of low value work as simple a process as possible, use methods like: open PO’s; consolidated invoicing; paying by credit card to reduce the cost of order processing; single sourcing from one supplier for low value repeat items; creating a shopfront for clients to self-serve or providing an administrator to process the orders. If the effort is put in upfront to optimise the process, set up the technology and supply chain correctly and agree pricing, there is no need to, or benefit from competitively tendering the work each time. Save the hands-on buying and project management for complex campaigns that require that specialist expertise.
4. Use predictive buying techniques – all the retailers I have worked with have told me how unique and unpredictable their print requirements are, however in reality most clients’ buying patterns are predictable once you understand how they work, even if exactly what they produce isn’t. Christmas comes at the same time each year, in-store dates for campaigns generally don’t move, the trading meeting happens at the same time each week. Supply chains can be set up and space booked in advance if you understand what your client is most likely to require. For example, one retailer I worked with didn’t place their order for paper until they know the final quantity of vouchers they would need. This approach led to a scramble to find paper and inflated paper costs due to the short notice period. In reality they were always going to produce at least ten million vouchers so the paper for the million could have been ordered in advance and the balance topped up from stock when the final quantity was confirmed, saving the buyers time and the retailer money. If you leave the sourcing of suppliers and buying to the last minute, everything becomes a panic to find suppliers who can fulfil the requirement and the price generally goes up as a result. If you work with suppliers and book work in advance, it is better for them too as the work becomes predictable. A proportion of the benefit gained at the suppliers for better planning and more efficient manufacturing can be passed back to the client
5. Buy capacity – Genuine capacity buying is probably the most under-utilised tool in the print buyer’s armoury. Both client and supplier can benefit if capacity buying is exercised well. In simple terms if the right work is dropped into the right printer at the right time for them, they can afford to sell a proportion of their capacity at a significantly lower cost. The buyer’s job is to try to match work with available capacity in the market. One way to do this is agree a maximum price for standard or regularly produced formats with a group of suppliers with similar capability. When a job goes live and you have the artwork in your hands, offer it to the suppliers on a best price now basis. The equivalent of spot buying, against a guide price, in market. Another way is to buy spare press time, for example if a company isn’t working at the weekends and is covering its costs during the week, then that is spare capacity you could fill for them. Both parties benefit and that can be reflected in the price paid. Capacity buying can only work for a proportion of marketing print spend, it isn’t easy to manage or appropriate for complex campaigns, but if it is done well the benefits are significant.
So please join my campaign against the lazy approach to buying marketing print which relies solely on a tender or bid process. There are many smarter ways to buy and most of them rely on understanding your client’s business and their needs and working with the printers to fulfil theirs.
Mike Newman, theSPC
Help is at hand
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