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Category Spend Management-Print and Print Services
Print is a category that is complex to both purchase and manage due to numerous specifications and continuous change in requirements, each with their own pricing
structure. There are various types of print, including offset and digital, as well as hundreds of differing grades of paper, inks and finishing options. The category touches various areas within an enterprise, such as marketing(including brand management), communications,
finance, investor relations, human resources and many others. For this reason, the methods used to purchase printed materials or services are often fragmented with limited enterprise-wide visibility into expenses.
However, despite the volumes spent on print and associated waste, print procurement has eluded widespread optimization to date. Print purchase requisitions are too often spread throughout an organization among employees unfamiliar with the industry. These frontline individuals are blind to true costs, the consequences of change orders, and the cumulative effect of sub-optimal ordering and over-ordering.
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Category Spend Management:
Print and Print Services
A Complex Category Made Simple
October 2006
– Underwritten in part by –Category Spend Management: Print & Print Services
Executive Summary
Print is a category that is complex to both purchase and manage due to numerous
specifications and continuous change in requirements, each with their own pricing
structure. There are various types of print, including offset and digital, as well as
hundreds of differing grades of paper, inks and
finishing options. The category touches various One consumer products
areas within an enterprise, such as marketing company attributed
(including brand management), communications, approximately $4.8 million in
finance, investor relations, human resources and savings to the usage of print
many others. For this reason, the methods used to procurement technology
together with a managed
purchase printed materials or services are often
service provider.
fragmented with limited enterprise-wide visibility
into expenses.
However, despite the volumes spent on print and associated waste, print procurement has
eluded widespread optimization to date. Print purchase requisitions are too often spread
throughout an organization among employees unfamiliar with the industry. These
frontline individuals are blind to true costs, the consequences of change orders, and the
cumulative effect of sub-optimal ordering and over-ordering.
Key Business Value Findings
Enterprises report that their top strategic procurement action is the continuous effort to
aggregate and centralize enterprise-wide spending. With the category of print
specifically, Aberdeen has found that many enterprises do not leverage volume discounts
but instead continue to engage multiple print suppliers and utilize ad-hoc purchasing
methods that may vary in different business units or regions. A centralized approach also
allows for improved monitoring and tracking of purchases. We found that on average,
41% of print is purchased off-contract, leading to significant lost savings
opportunities.
Figure i: Print Procurement and Management Processes
Manually sourced/procured by local procurement person/dept
16%
5% 25% Manually sourced/procured by w hoever has the need
Manually sourced/procured by a centralized procurement group
Automated process using generic e-procurement/e-sourcing solution
27% Automated process using a specific print procurement/management solution
27%
As shown in Figure i, approximately 80% of respondents are manually sourcing and
procuring print materials and services, 27% of which is sourced and procured by
whoever has the need. However, if we consider Best in Class enterprises (top 20% of
performers) and how they responded to this particular question, approximately 67% of
these enterprises use automated processes for print management.
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Aberdeen Group • iCategory Spend Management: Print & Print Services
Implications and Analysis
Best in Class enterprises are able to achieve significantly better results and on average,
are sourcing and procuring 64% of their print online. This not only refers to their use of
automation tools but also means that they have standardized policies and are involving
the procurement function. These enterprises are also able to achieve faster lead times
(i.e., order-to-delivery cycle time) and as a result have gained significant savings. On
average, top-performing companies have realized 23% hard-dollar cost savings compared
to the average of 8% for all other enterprises.
Recommendations for Action
" Assess and map out current processes for
purchasing print and print services One consumer products
company attributed
" Streamline procurement processes and
approximately $4.8 million in
collaborate with marketing/design de- savings to the usage of print
partment procurement technology
together with a managed
" Identify current print suppliers and optimize service provider.
the supply base
" Improve collaboration between procurement and other internal functions,
especially marketing/design departments
" For larger printing requirements, utilize sourcing events
" Measure and report on savings, performance and compliance with contracts
All print and electronic rights are the property of Aberdeen Group © 2006.
ii • Aberdeen GroupCategory Spend Management: Print & Print Services
Table of Contents
Executive Summary .............................................................................................. i
Key Business Value Findings.......................................................................... i
Implications and Analysis................................................................................ii
Recommendations for Action..........................................................................ii
Chapter One: Issue at Hand.................................................................................1
Factors Driving Enterprises ........................................................................... 1
Chapter Two: Key Business Value Findings .........................................................3
Print Expenses .............................................................................................. 3
Total Cost Approach................................................................................ 5
Prioritized Actions .......................................................................................... 5
Print Sourcing and Supplier Performance...................................................... 5
Chapter Three: Implications & Analysis...............................................................8
Technology Solutions and Service Providers................................................. 9
Outsourcing or Managed Services.......................................................... 9
Best in Class Strategies............................................................................... 10
Reported Benefits of Automation........................................................... 10
Chapter Four: Recommendations for Action ......................................................12
Recommendations for Laggards.................................................................. 12
Priorities for Industry Average Performers ................................................... 13
Next Steps for Best in Class........................................................................ 13
Featured Underwriters .......................................................................................14
Appendix A: Research Methodology ..................................................................16
Appendix B: Related Aberdeen Research & Tools .............................................18
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Aberdeen GroupCategory Spend Management: Print & Print Services
Figures
Figure i: Print Procurement and Management Processes..................................... i
Figure 1: Major Factors Driving Improvement in Print Procurement.....................1
Figure 2: Visibility into Print Expenses, Enterprise-Wide......................................2
Figure 3: Print Spending Trend Over Last Two Years...........................................3
Figure 4: Distribution of Print Expenses ...............................................................4
Figure 5: Formal Print Management Programs ....................................................4
Figure 6: Print Purchased on Long-Term Contracts vs. Bidding Each Job...........6
Figure 7: Print Supplier Performance Measurement ............................................6
Figure 8: Print Procurement and Management Processes...................................8
Figure 9: Process Standardization BIC vs. Others ...............................................8
Figure 10: Automation of Travel Planning/Booking and Expense Management ...9
Figure 11: Key Performance Indicators (Best in Class vs. All Others)................ 11
Tables
Table 1: Prioritized Strategic Actions ....................................................................5
Table 2: Competitive Framework........................................................................17
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Aberdeen GroupCategory Spend Management: Print & Print Services
Chapter One:
Issue at Hand
" Print is a significant spend category in many industries
" In addition to cost, print has significant impact in hard-to-quantify areas such as brand
awareness and image
" Off-contract spend is rampant in print
Key Takeaways
" Performance of print suppliers is lower on average than other categories of similar sizes
rint expenses within an enterprise can be fairly significant. For example, Aberdeen
interviewed a financial services company that spends over $90 million a year on
P printing. With such large amounts at stake, it is no wonder that reducing costs is a
primary concern. According to our survey base, print expenses, on average,
account for between 3% and 5% of total operating expenses. There are several industries
in which this percentage is much higher, such as the publishing industry, consumer
products and financial services. In most cases, reducing costs is not the only concern;
maintaining brand image and consistency is top of mind as well.
Factors Driving Enterprises
As shown in Figure 1, the biggest factor driving enterprises to improve their print
procurement and ongoing print management is the increased need to reduce costs and
improve efficiency, as well as emphasis on involving procurement within this process.
Figure 1: Major Factors Driving Improvement in Print Procurement
Continued effort to reduce costs and improve
efficiency 84%
Increased emphasis on procurement's involvement in 51%
buying print
Efforts to aggregate and centralize enterprise-w ide 48%
spending
Spending on printed materials and services fragmented
across the enterprise 46%
Pressure to maintain brand image through consistent
26%
and approved printed materials
Corporate emphasis for coordination/collaboration 19%
betw een procurement and marketing
Source: AberdeenGroup, October 2006
" Efforts to reduce print costs - Being a fairly large area of spend for many
enterprises, reducing print expenses as well as spending on other categories in
general is a priority. For certain companies, such as a consumer products company
with high packaging and labeling costs, this particular category of spend is of
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Aberdeen Group • 1Category Spend Management: Print & Print Services
strategic importance. This is largely due to the criticality of maintaining brand
consistency and quality while keeping costs at an acceptable level.
" Procurement's involvement in print-
buying decisions - Cost is not always a "The real benefit is not necessarily
focus issue when an enterprise's printing cost; it is accuracy and quality. The
needs are handled by the marketing or printed documents have to be
design department. Almost 50% of the 100% right due to various
regulatory requirements and have
survey base reports that there is an increased
need for procurement specialists to be to get out on time."
- Procurement Group
involved in buying print. Aberdeen research
has shown that purchases made outside of a Health Care Insurance Company
procurement department's control result in
premium prices, and in many cases, poor supplier performance. Ironically, the
tendency of marketing professionals to stick with favored vendors for fear of
lessened quality can isolate the category of spend, transitioning it from true strategic
sourcing that can improve quality through more competitive bidding and systematic
supplier performance measurement.
" Effort to centralize spend categories - In recent years, the procurement function
has started to show its strategic importance and it is in spend categories such as
these that various functions are learning from procurement. Management
centralization allows for an easier and more structured method to improve and
monitor compliance. This includes analyzing spend, which results in improved
sourcing of printing needs, better management and compliance with contracts, and
ensuring supplier compliance with negotiated pricing.
" Fragmented and inconsistent methods of buying print - According to nearly
45% of survey respondents, the methods used to purchase printed materials vary
largely enterprise-wide. In many cases, there is no defined method; printed materials
are bought on an as-needed basis with little consideration for rush charges or prior
inventory (often resulting in wasted materials). Even though print is a complex
category of spend, it should be approached in a systematic manner enforcing basic
procurement principles.
The first step in this process is to improve visibility into how much is actually being
spent on various print categories. As Figure 2 shows, nearly 40% of enterprises report
having poor visibility and another 31% have multiple functions or departments
purchasing their own printing needs.
Figure 2: Visibility into Print Expenses, Enterprise-Wide
21% Limited/poor visibility into spending on various print categories
38% Multiple functions/departments involved in print procurement and management
10% Print procurement and management is centralized by business unit or region
31% Single centralized organization oversees procurement and management of print
Source: AberdeenGroup, October 2006
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2 • AberdeenGroupCategory Spend Management: Print & Print Services
Chapter Two:
Key Business Value Findings
" Print expenses are on the rise, according a significant number of survey respondents
" Total costs associated with printed materials exceed unit costs (including warehousing,
distribution and obsolescence costs)
" A prioritized and strategic action is to centralize and aggregate spending on print and
Key Takeaways
print services
rint is a complex category to both purchase and manage due to the numerous
specifications and continuous change in requirements, each with its own pricing
P structure. There are various types of print (offset, digital) and hundreds of differing
grades of paper, inks and finishing options. Aberdeen categorized enterprise printing
needs into the following six categories:
1. Office documents (desktop printing)
2. Marketing collateral (product, service and company collateral)
3. Point-of-sale material
4. Office stationery (envelopes, letterheads)
5. Business forms (invoices, statements)
6. Packaging materials (cartons, labels)
Print Expenses
To make things more complicated, enterprises find that it is rare to secure a printer that
caters to multiple categories. Print suppliers often specialize in only one or two particular
areas within which there are further categories.
Figure 3: Print Spending Trend Over Last Two Years
INCREASED DECREASED STAYED THE SAME
23% 26%
35% 33%
47% 48%
17%
28%
29% 30%
15% 12%
57%
49%
38% 36% 37% 40%
Documents Marketing Point of sale Office Business Forms Printed
Collateral material Stationery packaging
Source: AberdeenGroup, October 2006
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Aberdeen Group • 3Category Spend Management: Print & Print Services
As Figure 3 shows, few categories of Figure 4: Distribution of Print Expenses
print expenses have decreased over the
Printed
last two years; in fact, for a significant
packaging
percentage of survey respondents, Business 13%
expenses have increased. Forms Documents
Approximately 57% of enterprises 12% 19%
report an increase in spending on
marketing collateral and almost half of
the survey pool reports the same for Office
Stationery
office/document printing.
10%
On average, approximately 37% of all
print expenses are attributed to Point of Marketing
sale Collateral
marketing collateral (including
material 37%
product, service and company 9%
collateral) and the fact that it is
trending upwards should be of concern Source: AberdeenGroup, October 2006
(Figure 4). The next largest category is office or document printing, which contributes
19% on average to overall print expenses. It should be noted that these numbers differ
depending on various industries, products and services.
With regards to marketing expenses, printed materials and services make-up, on average,
18% of an enterprise's marketing expenses. Marketing expenditures are a key factor in
generating sales and revenue at companies and are thus often sacrosanct in many
organizations. This is even truer at companies that spend much time, money, and energy
on "brand-building" marketing. However, enterprises are increasingly seeking ROI
numbers from marketing initiatives and for this to happen they need to better understand
marketing expenditures.
Given the significance of printing expenses, enterprises have taken the time to formalize
programs around print procurement and management (Figure 5). However, there is still a
significant percentage of enterprises (nearly 46%) that do not have such programs.
Figure 5: Formal Print Management Programs
8%
5%
Less than 6 months
29%
6 to 12 months
More than 12 months
41% None, budgeted to start w ithin 12 months
17%
No completed or planned activity
Source: AberdeenGroup, October 2006
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4 • AberdeenGroupCategory Spend Management: Print & Print Services
Total Cost Approach
Enterprises often fail to realize that costs associated with printed materials continue to
increase even after the material is printed. In many cases, organizations will print
thousands of documents at a time to achieve a lower cost per unit. However, the material
is not used immediately and must be stored in inventory (storage costs) until they are
distributed (courier costs) or thrown away because the content of the materials become
outdated (obsolescence costs). Other costs to consider include errors, reorders and rush
charges which can significantly add to the total cost of printed materials.
Prioritized Actions
Enterprises reported that their top strategic action is the continuous effort to aggregate
and centralize enterprise-wide spending. With the print category specifically, Aberdeen
has found that many enterprises do not leverage volume discounts, but instead continue
to engage multiple print suppliers and utilize ad-hoc purchasing methods that may vary in
different business units or regions. A key step that enterprises are also concerned about is
the ability to gather and classify spend data. Also, ensuring executive level support is
critical in order to standardize print procurement policies and procedures, according to
46% of survey respondents.
Reduction of "maverick" (off-contract) buying is a common theme in various categories
of spend as well as procurement overall. Compliance to negotiated contracts is certainly
of importance to enterprises, especially due to the savings potential involved.
Table 1: Prioritized Strategic Actions
Aggregate and centralize enterprise-wide spending on print 52%
Improve ability to aggregate and classify spend data for printed materials 48%
Secure executive support for print purchasing policies and procedures 46%
Improve compliance to negotiated supplier contracts (i.e., reduce maverick spend) 45%
Outsource all management of print expenses 29%
Establish standard policies and procedures for sourcing, procuring, and managing
28%
print projects
Support aggressive supplier rationalization under preferred supplier program 19%
Source: AberdeenGroup, October 2006
Print Sourcing and Supplier Performance
Purchasing print and securing print services
are not simple tasks; there are numerous "We recently completed a deep dive
complexities that are involved. When it into our print spend and have a plan to
comes to larger printing projects, enterprises reduce our 400 suppliers (plus our
internal print shop) to around 50. The
need to better understand their spend on
company has 600 plants throughout
various categories of print throughout the
the country and printing expenses and
company. This can give them the leverage to
processes were disjointed and difficult
gain volume discounts and optimize their
to monitor and control.""
supply base.
- Procurement manager at a large
manufacturer
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Aberdeen Group • 5Category Spend Management: Print & Print Services
Figure 6 shows the percentage of enterprises whose print jobs are set up with a longer-
term contract versus bidding out each job. According to the survey pool, approximately
21% of enterprises bid/select a printer for each project. Only 14% reported that more than
80% of their print jobs are bought on pre-negotiated contracts. Some of the more
advanced procurement groups have successfully optimized their print supplier base and
have identified two or three preferred suppliers for each type of print job.
However, in some cases, this is not Figure 6: Print Purchased on Long-
enough, as the procurement director at a Term Contracts vs. Bidding Each Job
consumer products company noted, "We
None, w e bid or select a
have preferred suppliers identified, but 21%
printer for each print project
there is still a large amount of maverick
Less than 20% 31%
buying, mainly due to our lack of controls
and monitoring. We have a number of Betw een 21% and 40% 9%
different manufacturing locations and a
41% to 60% 16%
lot of them spot-buy."
With regards to supplier performance, 61% to 80% 9%
Aberdeen found that there is fairly large
More than 80% 14%
percentage of enterprises that use
effective supplier performance Source: AberdeenGroup, October 2006
measurement tactics (Figure 7).
Approximately 41% reported that they have no procedures for such measurement, while
nearly 21% conduct analysis on pricing (either on a job-by-job basis or periodically).
Figure 7: Print Supplier Performance Measurement
4%
10%
41% 11%
14%
20%
Enterprise pays w hat suppliers quote for services w ith little to no market pricing comparisons
Proactive market pricing comparisons on a job-by-job basis
Periodic market pricing comparisons
Standardized procedures and metrics applied across all areas of print spend
General procedures for measuring supplier performance but applied inconsistently
No formal procedures for supplier performance measurement
Source: AberdeenGroup, October 2006
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6 • AberdeenGroupCategory Spend Management: Print & Print Services
Example: A European consumer packaged goods company:
According to the procurement manager responsible for indirect print spend at a European
consumer packaged good company, "We currently use an internal system for online
auctions and sourcing. For example, we source creative/artwork services for a certain
product category. We recently completed negotiations a two year contract to provide
these services for a particular category for the whole of Europe."
"In terms of supplier performance, we measure print suppliers on three metrics that are
key as we manufacture for retailers:"
- In Time - Referring to lead times; important due to specific launch slots to the
retailers
- In Quality - Consistency of colors and brand image; variances and errors are
investigated and responsible parties are held accountable
- Fulfillment - Ensuring that the entire order was delivered in full
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Aberdeen Group • 7Category Spend Management: Print & Print Services
Chapter Three:
Implications & Analysis
" A high percentage of enterprises continue to use manual methods to purchase print
" There is significant interest in outsourcing or using a managed service provider for the
print category
" Best in Class companies, on average, source and procure a higher percentage of their
Key Takeawaysprint needs online, and have achieved faster order-to-cycle times and have realized 23%
savings, on average
n regards to our survey pool, actual amounts spent on print categories ranges from
$50,000 to $150 million a year for larger corporations that are in industries that
I require large amounts of printing. However, the processes used to manage this
expense differ across all companies, with a hefty percentage still relying on manual
processes.
Figure 8: Print Procurement and Management Processes
Manually sourced/procured by local procurement person/dept
16%
5%
25% Manually sourced/procured by w hoever has the need
Manually sourced/procured by a centralized procurement group
Automated process using generic e-procurement/e-sourcing solution
27% Automated process using a specific print procurement/management solution
27%
Source: AberdeenGroup, October 2006
As shown in Figure 8, close to 80% of respondents are manually-sourcing and/or
purchasing print materials and services, 27% of which is sourced and procured by
whoever has the need. However, if we consider Best in Class companies and how they
responded to Figure 8, approximately 62% of them use automated processes.
With regards to
Figure 9: Process Standardization BIC vs. Others
standardization, a higher
percentage of Best in Class Process standardized and 19%
aligned enterprise-w ide
companies demonstrate 56%
standardized and well-aligned Processes standardized at 25%
processes (78%) whether business unit or region 22%
enterprise-wide or at a
Department level (e.g., finance, 15%
business unit or regional level HR) 17%
(Figure 9). Such processes All Others
16% Best in Class
allow for more efficient and Highly decentralized processes
6%
cost-effective methods of
26%
purchasing and managing
No formal process
0
print expenses.
Source: AberdeenGroup, October 2006
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8 • AberdeenGroupCategory Spend Management: Print & Print Services
In terms of functional responsibility, the response among enterprises was varied.
Although a significant percentage (32%, on average) reported that procurement is
responsible for buying printed materials and print services, there were 20% that attributed
this responsibility to the marketing/design function. It was interesting to note that nearly
68% of Best in Class enterprises mentioned that this responsibility falls under
procurement.
Technology Solutions and Service Providers
Outsourcing the management of an enterprise's print procurement and management is a
concept that is somewhat further-developed throughout Europe than in North America.
However, as shown in Figure 10, there is significant interest in print services.
Approximately 17% of enterprises are currently using outsourcing to a third-party or
using a managed service provider for their printing needs, whereas over the next two
years, this number jumps to 26%, representing more than a 50% increase.
Additionally, the interest in utilizing e-procurement systems, whether generic or specific
for print, is fairly high and continues to remain this way. Usage of more manual and
homegrown systems looks to be drastically dropping over the next couple of years.
Figure 10: Automation of Travel Planning/Booking and Expense Management
Currently Use Plan to Use Within 24 months
63%
40%
29% 30% 28% 29%
26%
17%
7% 6%
Limited automation, Ad-hoc or E-Procurement Generic e- Print management
print purchased via homegrow n system specifically procurement outsourced to third
by phone, fax or systems for for purchasing and/or sourcing party / Managed
email purchasing printed materials solution service provider
Source: AberdeenGroup, October 2006
Outsourcing or Managed Services
Survey respondents have continually shown
"Our plan is to outsource this category,
interest in print procurement outsourcing
however, we need to have our own house
firms, or "managed service providers," as in order first. We recently put in processes
they are sometimes called. Leveraging web- which will allow for aggregation of print
based platforms for requisition creation and spend, spend-tracking and monitoring and
category spend reporting, these solution have mandated that all print is purchased
providers handle many more value-added via the procurement group," according to a
procurement manager at a large insurance
services a specialist can provide, such as
provider.
strategically-sourcing preferred vendors,
suggesting alternative printing methods to
reduce costs when requisitions from business-line owners come through, and providing
consolidated billing for all print spend, regardless of final supplier fulfillment.
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Aberdeen Group • 9Category Spend Management: Print & Print Services
Properly executed, outsourcing print activities to an external provider can offer the
company an end-to-end print management service, encompassing creative support,
template design/customization, document reproduction and proofing, and post-production
inventory management and logistics. Managing inventory is a key factor, as there often
can be large amounts of wasted or obsolete material that results in unnecessary costs,
which is unlikely if a third-party is focused on managing this issue.
Best in Class Strategies
Benchmark participants fell into one of three categories: Laggard, Industry Average, or
Best in Class, based on their characteristics in four key areas: Process (standardization,
effectiveness, and efficiency of print management and procurement processes);
Organization (alignment and structure around management of print category expenses);
Knowledge (visibility into spending, compliance and performance metrics); and
Technology (level of automation, which includes procurement and sourcing, as well as
collaboration and workflow).
Quantitatively and qualitatively, companies addressing print from a procurement
discipline find compelling benefits. Enterprises we have interviewed have reported more
accurate orders, better category and process visibility, improved project and supplier
management, and enhanced stakeholder accountability into expenses. However, exactly
how do companies receive these benefits? Best in Class companies developed centralized
and standardized print purchase policies and procedures, gained visibility into detailed
purchasing information, and established collaboration between procurement and line-of-
business (e.g., marketing) professionals that are in need of print services.
These actions were underpinned by the elimination of paper and spreadsheet-based
processes and replaced with online technology solutions. More than half of Best in Class
companies have reported that the availability of collaboration and project management
technology was a top capability to their success, ranking it second after standardized
procedures and executive support.
Reported Benefits of Automation
There are certainly benefits to automation, as it helps to make processes more efficient,
and allows for compliance-tracking and supplier performance monitoring. One of the
benefits survey respondents have received from automation is reduced overall print
spending. This is attributed to two major factors: increased negotiating leverage and
improved visibility across the enterprise. Additional benefits include reduced order-
to-delivery cycle times and optimization of print supply bases.
As shown in Figure 11, Best in Class enterprises are
able to achieve significantly better results. Best in One consumer products
Class companies, on average, are sourcing and company attributed
procuring 70% of their print spend online. This not approximately $4.8 million in
only refers to their use of automation tools, but also savings to the usage of print
means that they have standardized policies and are procurement technology
together with a managed
involving the procurement function in this process. service provider.
These enterprises are also able to achieve faster lead
times (i.e., order-to-delivery cycle time) and as a
result have gained significant savings. On average, top-performing companies have
All print and electronic rights are the property of Aberdeen Group © 2006.
10 • AberdeenGroupCategory Spend Management: Print & Print Services
realized 23% hard-dollar cost savings, compared to the average of 8% for all other
enterprises.
Figure 11: Key Performance Indicators (Best in Class vs. All Others)
% of Print Sourced & Procured Order-to-Delivery Cycle Time
Online
64%
17 Days
26%
5.5 Days
BIC Other BIC Other
Hard Dollar Cost Savings
23%
8%
BIC Other
Source: AberdeenGroup, October 2006
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Aberdeen Group • 11Category Spend Management: Print & Print Services
Chapter Four:
Recommendations for Action
" Streamline procurement processes and collaborate with marketing/design
" Eliminate paper- and spreadsheet-based processes, and replace them with online tech-
nology solutions
" Identify current print suppliers and optimize this supply base
Key Takeaways
" Support visibility into detailed marketing project and purchasing data
rint involves both the complexity of the printing services and the logistics of
finished goods, therefore, print procurement poses unique supply management
P challenges. The most efficient companies will be those that can effectively build,
maintain, and manage a highly flexible network of print supply partners that can
be accessed as needed to provide optimal response to print demand. The following are
some recommendations from Aberdeen that enterprises should consider:
Recommendations for Laggards
1. Assess and map out current processes for purchasing print. This includes figuring
out which functions have the ability to purchase printed material and print services
and determining which process they use. Identify the various printing needs re-
quired by the entire company.
2. Eliminate paper- and spreadsheet-based processes, and replace them with online
technology solutions. Whether it is simple email-based workflow or more advanced
dedicated project management, once clear policies and supplier agreements are in
place, consider leveraging or expanding existing technology investments to track
day-to-day purchases and supplier performance.
3. Streamline procurement processes and collaborate with marketing/design.
Monitoring and tracking these expenditures will be a much easier task if everything
is centralized. Some companies are mandating that all print-purchasing be approved
by the procurement department, thereby, also leading to a more centralized
approach.
4. Identify current print suppliers and optimize this supply base. Based on the
capabilities identified, create a list of preferred print suppliers that will cater to all
your printing needs and assign more than one supplier to a particular category. This
list should be the result of a thorough examination of their capabilities and cost
drivers. After contracts are created with each of these suppliers, you will have a
network of approved printers that can meet all your printing needs.
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12 • AberdeenGroupCategory Spend Management: Print & Print Services
Priorities for Industry Average Performers
1. Improve collaboration between procurement and other functions, especially
marketing. Working together, these two groups have a better chance of reducing
print expenses while maintaining appropriate quality levels (i.e., brand image).
2. Utilize sourcing events for larger printing requirements. There are additional
savings to be realized in competitive bidding situations, where suppliers will
compete by revising their quotes and reducing their pricing on individual orders.
3. Measure and report on savings, performance and compliance with contracts. In or-
der to keep improving, it is important to continuously measure metrics such as com-
pliance with contracts and realized savings.
Next Steps for Best in Class
1. Make use of spending data to gain insight into ROI on marketing initiatives.
Marketing and sales collateral pieces are often ordered in bulk and stored for future
use, however, enterprises need to gain further insight into other costs involved, such
as warehousing and distribution.
2. Support visibility into detailed marketing project and purchasing data. The more
information different stakeholders have about a company's marketing purchasing
requirements, such as the difference between basic printing jobs and even branding
elements like color scheme and paper stock, the better prepared individuals are to
make the most cost-effective decision for the company.
3. Consider using a managed service provider if want to focus on core competencies.
There are many cases in which an enterprise can greatly benefit from outsourcing
this entire category of spend to a third-party.
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen Group • 13Category Spend Management: Print & Print Services
Featured Underwriters
This research report was made possible, in part, with the financial support of our under-
writers. These individuals and organizations share Aberdeen's vision of bringing fact
based research to corporations worldwide at little or no cost. Underwriters have no edito-
rial or research rights and the facts and analysis of this report remain an exclusive pro-
duction and product of Aberdeen Group.
AccessPlus is one of the UK's leading providers of business communications solutions.
We believe we are unique in the range and quality of the services we provide, in Print
Management, Data Solutions, Document Management, Logistics and Campaign Deliv-
ery. We apply our in depth expertise to understand the 'DNA' of your business, in order
to bring greater efficiencies and ongoing, sustainable cost savings to your business com-
munications. Supported by our own, proprietary software systems, our services cover
every stage of the journey, from creative development, through print management and
fulfillment, to response handling, data management and contact centre support.
For additional information on AccessPlus:
Access House, The Promenade, Clifton Down, Bristol, BS8 3AQ, UK
+ 44 (0) 844 800 1066 or healthcheck@accessplus.co.uk
www.accessplus.co.uk
The ProProcure Marketplace is an on-demand category management platform solely fo-
cused on the procurement of Promotional Marketing Materials. Companies utilizing Pro-
Procure have seen significant cost savings of up to 55%. The system enables Order Ag-
gregation, RFQ's, self-policing of vendors/suppliers (KPI's), and control over brand
trademarks. Additionally, sophisticated creative briefs exist on the platform that enables
custom product development and quoting. ProProcure's platform will manage over $200
million in promotional marketing transactions by the end of 2007. Proprocure: We are
focused where others aren't even looking.
For additional information on ProProcure:
Westminster House, 70 Packhorse Road, Gerrards Cross
Buckinghamshire, SL9 8HY, UK
(978) 225 8099 (USA), +44 (870) 380 1717 (UK)
sparadiso@proprocure.com (USA), frank.treanor@proprocure.co.uk (UK)
www.proprocure.com or www.proprocure.co.uk
All print and electronic rights are the property of Aberdeen Group © 2006.
14 • AberdeenGroupCategory Spend Management: Print & Print Services
HH Print Management is a strategic supply partner helping large multi-national clients to
outsource or radically overhaul their BTL marcomms and print management supply
chains. Key learnings and insights, based on HH's experiences across the EU, are applied
to provide tailored outsourced services for print procurement, digital asset management,
creative services, warehousing and logistics. The solutions are delivered with dedicated,
regional teams and bespoke technology using the global HH procurement network and
expertise. The HH client base includes leading brand in the Retail, FMCG, Technology,
Hospitality and Travel, Pharmaceutical and Healthcare sectors.
For additional information on HH Print Management:
City House, Sutton Park Road, Sutton, SM1 2AE, Surrey, UK
+44 (0)870 766 9263 or acatalanotto@hhas.com
www.hhprintmanagement.com
Cirqit is a leading sourcing and procurement services company that provides print cate-
gory management services and software applications. Through comprehensive managed
services (business process outsourcing), Cirqit delivers dramatic cost savings and allows
companies to focus on core competencies. Cirqit will give your organization the exper-
tise, resources, and tools to control and manage your print procurement process, increase
marketing productivity, improve supply chain performance, and permanently reduce print
costs. Solutions include managed services, Internet-based procurement applications, and
category-specific consulting services. Cirqit is headquartered in Whippany, N.J. The
company's offices are located in Chicago, Seattle, Atlanta, Miami, Detroit, Santiago -
Chile, Mexico City, Buenos Aires - Argentina, and Sao Paulo - Brazil.
For additional information on Cirqit, Inc:
100 S. Jefferson Road, Whippany, NJ 07981
877.424.7748
www.cirqit.com
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen Group • 15Category Spend Management: Print & Print Services
Appendix A:
Research Methodology
etween September and October 2006, AberdeenGroup examined processes,
technology priorities and strategic actions of 160 enterprises. Responding
B Procurement and Marketing executives completed an online survey that included
questions designed to determine the following:
" Enterprise challenges with print procurement and ongoing management and
strategies most critical for their success
" Current and future use of technology or service providers to improve processes
and gain efficiencies
" Successful strategies used by top performing companies
Aberdeen supplemented this online survey effort with telephone interviews with select
survey respondents, gathering additional information on management of the procurement
of printed materials and print services as well as successful strategies, experiences, and
results.
The study aimed to identify best practices for print procurement and provide a framework
by which readers could assess their own contract management capabilities.
Other demographics of respondents include:
" Job title/function: The research sample included respondents with the following
job titles: Procurement executives (54%); Marketing (21%); Supply
chain/Logistics (9%), Business process management (8%), IT (7%), Sales (7%)
" Industry: The research sample included respondents from financial services and
banking (21%), consumer goods (15%), chemicals/pharmaceuticals (13%), pub-
lishing/media (11%), high-tech (10%), food/beverage (8%)
" Geography: 65% of study respondents were from North America, 26% from
EMEA, 9% from Asia/Pacific.
" Company size: About 46% of respondents were from large enterprises (annual
revenues of US$1 billion or greater); 32% were from midsize enterprises (annual
revenues between $50 million and $999 million); and 22% of respondents were
from small businesses (annual revenues of less than $50 million).
Solution providers recognized as sponsors of this report were solicited after the fact and
had no influence on the direction or results of the report. Their sponsorship has made it
possible for AberdeenGroup to make these findings available to readers at no charge.
All print and electronic rights are the property of Aberdeen Group © 2006.
16 • AberdeenGroupCategory Spend Management: Print & Print Services
Table 2: Competitive Framework
Competitive Framework Key
The Aberdeen Competitive Framework defines enterprises as falling into one of the three following levels of
PRINT practices and performance:
Laggards (30%) – PRINT practices that are significantly behind the average of the industry, and result in
below average performance
Industry Average (50%) – PRINT practices that represent the average or norm, and result in average in-
dustry performance.
Best in Class (20%) – PRINT practices that are the best currently being employed and significantly supe-
rior to the industry norm, and result in the top industry performance.
Source: Aberdeen Group, October 2006
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen Group • 17Category Spend Management: Print & Print Services
Appendix B:
Related Aberdeen Research & Tools
Related Aberdeen research that forms a companion or reference to this report include:
" The Category Spend Management Report Series 2
Print and Print Services
A Complex Category Made Simple
October 2006
– Underwritten in part by –Category Spend Management: Print & Print Services
Executive Summary
Print is a category that is complex to both purchase and manage due to numerous
specifications and continuous change in requirements, each with their own pricing
structure. There are various types of print, including offset and digital, as well as
hundreds of differing grades of paper, inks and
finishing options. The category touches various One consumer products
areas within an enterprise, such as marketing company attributed
(including brand management), communications, approximately $4.8 million in
finance, investor relations, human resources and savings to the usage of print
many others. For this reason, the methods used to procurement technology
together with a managed
purchase printed materials or services are often
service provider.
fragmented with limited enterprise-wide visibility
into expenses.
However, despite the volumes spent on print and associated waste, print procurement has
eluded widespread optimization to date. Print purchase requisitions are too often spread
throughout an organization among employees unfamiliar with the industry. These
frontline individuals are blind to true costs, the consequences of change orders, and the
cumulative effect of sub-optimal ordering and over-ordering.
Key Business Value Findings
Enterprises report that their top strategic procurement action is the continuous effort to
aggregate and centralize enterprise-wide spending. With the category of print
specifically, Aberdeen has found that many enterprises do not leverage volume discounts
but instead continue to engage multiple print suppliers and utilize ad-hoc purchasing
methods that may vary in different business units or regions. A centralized approach also
allows for improved monitoring and tracking of purchases. We found that on average,
41% of print is purchased off-contract, leading to significant lost savings
opportunities.
Figure i: Print Procurement and Management Processes
Manually sourced/procured by local procurement person/dept
16%
5% 25% Manually sourced/procured by w hoever has the need
Manually sourced/procured by a centralized procurement group
Automated process using generic e-procurement/e-sourcing solution
27% Automated process using a specific print procurement/management solution
27%
As shown in Figure i, approximately 80% of respondents are manually sourcing and
procuring print materials and services, 27% of which is sourced and procured by
whoever has the need. However, if we consider Best in Class enterprises (top 20% of
performers) and how they responded to this particular question, approximately 67% of
these enterprises use automated processes for print management.
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen Group • iCategory Spend Management: Print & Print Services
Implications and Analysis
Best in Class enterprises are able to achieve significantly better results and on average,
are sourcing and procuring 64% of their print online. This not only refers to their use of
automation tools but also means that they have standardized policies and are involving
the procurement function. These enterprises are also able to achieve faster lead times
(i.e., order-to-delivery cycle time) and as a result have gained significant savings. On
average, top-performing companies have realized 23% hard-dollar cost savings compared
to the average of 8% for all other enterprises.
Recommendations for Action
" Assess and map out current processes for
purchasing print and print services One consumer products
company attributed
" Streamline procurement processes and
approximately $4.8 million in
collaborate with marketing/design de- savings to the usage of print
partment procurement technology
together with a managed
" Identify current print suppliers and optimize service provider.
the supply base
" Improve collaboration between procurement and other internal functions,
especially marketing/design departments
" For larger printing requirements, utilize sourcing events
" Measure and report on savings, performance and compliance with contracts
All print and electronic rights are the property of Aberdeen Group © 2006.
ii • Aberdeen GroupCategory Spend Management: Print & Print Services
Table of Contents
Executive Summary .............................................................................................. i
Key Business Value Findings.......................................................................... i
Implications and Analysis................................................................................ii
Recommendations for Action..........................................................................ii
Chapter One: Issue at Hand.................................................................................1
Factors Driving Enterprises ........................................................................... 1
Chapter Two: Key Business Value Findings .........................................................3
Print Expenses .............................................................................................. 3
Total Cost Approach................................................................................ 5
Prioritized Actions .......................................................................................... 5
Print Sourcing and Supplier Performance...................................................... 5
Chapter Three: Implications & Analysis...............................................................8
Technology Solutions and Service Providers................................................. 9
Outsourcing or Managed Services.......................................................... 9
Best in Class Strategies............................................................................... 10
Reported Benefits of Automation........................................................... 10
Chapter Four: Recommendations for Action ......................................................12
Recommendations for Laggards.................................................................. 12
Priorities for Industry Average Performers ................................................... 13
Next Steps for Best in Class........................................................................ 13
Featured Underwriters .......................................................................................14
Appendix A: Research Methodology ..................................................................16
Appendix B: Related Aberdeen Research & Tools .............................................18
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen GroupCategory Spend Management: Print & Print Services
Figures
Figure i: Print Procurement and Management Processes..................................... i
Figure 1: Major Factors Driving Improvement in Print Procurement.....................1
Figure 2: Visibility into Print Expenses, Enterprise-Wide......................................2
Figure 3: Print Spending Trend Over Last Two Years...........................................3
Figure 4: Distribution of Print Expenses ...............................................................4
Figure 5: Formal Print Management Programs ....................................................4
Figure 6: Print Purchased on Long-Term Contracts vs. Bidding Each Job...........6
Figure 7: Print Supplier Performance Measurement ............................................6
Figure 8: Print Procurement and Management Processes...................................8
Figure 9: Process Standardization BIC vs. Others ...............................................8
Figure 10: Automation of Travel Planning/Booking and Expense Management ...9
Figure 11: Key Performance Indicators (Best in Class vs. All Others)................ 11
Tables
Table 1: Prioritized Strategic Actions ....................................................................5
Table 2: Competitive Framework........................................................................17
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen GroupCategory Spend Management: Print & Print Services
Chapter One:
Issue at Hand
" Print is a significant spend category in many industries
" In addition to cost, print has significant impact in hard-to-quantify areas such as brand
awareness and image
" Off-contract spend is rampant in print
Key Takeaways
" Performance of print suppliers is lower on average than other categories of similar sizes
rint expenses within an enterprise can be fairly significant. For example, Aberdeen
interviewed a financial services company that spends over $90 million a year on
P printing. With such large amounts at stake, it is no wonder that reducing costs is a
primary concern. According to our survey base, print expenses, on average,
account for between 3% and 5% of total operating expenses. There are several industries
in which this percentage is much higher, such as the publishing industry, consumer
products and financial services. In most cases, reducing costs is not the only concern;
maintaining brand image and consistency is top of mind as well.
Factors Driving Enterprises
As shown in Figure 1, the biggest factor driving enterprises to improve their print
procurement and ongoing print management is the increased need to reduce costs and
improve efficiency, as well as emphasis on involving procurement within this process.
Figure 1: Major Factors Driving Improvement in Print Procurement
Continued effort to reduce costs and improve
efficiency 84%
Increased emphasis on procurement's involvement in 51%
buying print
Efforts to aggregate and centralize enterprise-w ide 48%
spending
Spending on printed materials and services fragmented
across the enterprise 46%
Pressure to maintain brand image through consistent
26%
and approved printed materials
Corporate emphasis for coordination/collaboration 19%
betw een procurement and marketing
Source: AberdeenGroup, October 2006
" Efforts to reduce print costs - Being a fairly large area of spend for many
enterprises, reducing print expenses as well as spending on other categories in
general is a priority. For certain companies, such as a consumer products company
with high packaging and labeling costs, this particular category of spend is of
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen Group • 1Category Spend Management: Print & Print Services
strategic importance. This is largely due to the criticality of maintaining brand
consistency and quality while keeping costs at an acceptable level.
" Procurement's involvement in print-
buying decisions - Cost is not always a "The real benefit is not necessarily
focus issue when an enterprise's printing cost; it is accuracy and quality. The
needs are handled by the marketing or printed documents have to be
design department. Almost 50% of the 100% right due to various
regulatory requirements and have
survey base reports that there is an increased
need for procurement specialists to be to get out on time."
- Procurement Group
involved in buying print. Aberdeen research
has shown that purchases made outside of a Health Care Insurance Company
procurement department's control result in
premium prices, and in many cases, poor supplier performance. Ironically, the
tendency of marketing professionals to stick with favored vendors for fear of
lessened quality can isolate the category of spend, transitioning it from true strategic
sourcing that can improve quality through more competitive bidding and systematic
supplier performance measurement.
" Effort to centralize spend categories - In recent years, the procurement function
has started to show its strategic importance and it is in spend categories such as
these that various functions are learning from procurement. Management
centralization allows for an easier and more structured method to improve and
monitor compliance. This includes analyzing spend, which results in improved
sourcing of printing needs, better management and compliance with contracts, and
ensuring supplier compliance with negotiated pricing.
" Fragmented and inconsistent methods of buying print - According to nearly
45% of survey respondents, the methods used to purchase printed materials vary
largely enterprise-wide. In many cases, there is no defined method; printed materials
are bought on an as-needed basis with little consideration for rush charges or prior
inventory (often resulting in wasted materials). Even though print is a complex
category of spend, it should be approached in a systematic manner enforcing basic
procurement principles.
The first step in this process is to improve visibility into how much is actually being
spent on various print categories. As Figure 2 shows, nearly 40% of enterprises report
having poor visibility and another 31% have multiple functions or departments
purchasing their own printing needs.
Figure 2: Visibility into Print Expenses, Enterprise-Wide
21% Limited/poor visibility into spending on various print categories
38% Multiple functions/departments involved in print procurement and management
10% Print procurement and management is centralized by business unit or region
31% Single centralized organization oversees procurement and management of print
Source: AberdeenGroup, October 2006
All print and electronic rights are the property of Aberdeen Group © 2006.
2 • AberdeenGroupCategory Spend Management: Print & Print Services
Chapter Two:
Key Business Value Findings
" Print expenses are on the rise, according a significant number of survey respondents
" Total costs associated with printed materials exceed unit costs (including warehousing,
distribution and obsolescence costs)
" A prioritized and strategic action is to centralize and aggregate spending on print and
Key Takeaways
print services
rint is a complex category to both purchase and manage due to the numerous
specifications and continuous change in requirements, each with its own pricing
P structure. There are various types of print (offset, digital) and hundreds of differing
grades of paper, inks and finishing options. Aberdeen categorized enterprise printing
needs into the following six categories:
1. Office documents (desktop printing)
2. Marketing collateral (product, service and company collateral)
3. Point-of-sale material
4. Office stationery (envelopes, letterheads)
5. Business forms (invoices, statements)
6. Packaging materials (cartons, labels)
Print Expenses
To make things more complicated, enterprises find that it is rare to secure a printer that
caters to multiple categories. Print suppliers often specialize in only one or two particular
areas within which there are further categories.
Figure 3: Print Spending Trend Over Last Two Years
INCREASED DECREASED STAYED THE SAME
23% 26%
35% 33%
47% 48%
17%
28%
29% 30%
15% 12%
57%
49%
38% 36% 37% 40%
Documents Marketing Point of sale Office Business Forms Printed
Collateral material Stationery packaging
Source: AberdeenGroup, October 2006
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen Group • 3Category Spend Management: Print & Print Services
As Figure 3 shows, few categories of Figure 4: Distribution of Print Expenses
print expenses have decreased over the
Printed
last two years; in fact, for a significant
packaging
percentage of survey respondents, Business 13%
expenses have increased. Forms Documents
Approximately 57% of enterprises 12% 19%
report an increase in spending on
marketing collateral and almost half of
the survey pool reports the same for Office
Stationery
office/document printing.
10%
On average, approximately 37% of all
print expenses are attributed to Point of Marketing
sale Collateral
marketing collateral (including
material 37%
product, service and company 9%
collateral) and the fact that it is
trending upwards should be of concern Source: AberdeenGroup, October 2006
(Figure 4). The next largest category is office or document printing, which contributes
19% on average to overall print expenses. It should be noted that these numbers differ
depending on various industries, products and services.
With regards to marketing expenses, printed materials and services make-up, on average,
18% of an enterprise's marketing expenses. Marketing expenditures are a key factor in
generating sales and revenue at companies and are thus often sacrosanct in many
organizations. This is even truer at companies that spend much time, money, and energy
on "brand-building" marketing. However, enterprises are increasingly seeking ROI
numbers from marketing initiatives and for this to happen they need to better understand
marketing expenditures.
Given the significance of printing expenses, enterprises have taken the time to formalize
programs around print procurement and management (Figure 5). However, there is still a
significant percentage of enterprises (nearly 46%) that do not have such programs.
Figure 5: Formal Print Management Programs
8%
5%
Less than 6 months
29%
6 to 12 months
More than 12 months
41% None, budgeted to start w ithin 12 months
17%
No completed or planned activity
Source: AberdeenGroup, October 2006
All print and electronic rights are the property of Aberdeen Group © 2006.
4 • AberdeenGroupCategory Spend Management: Print & Print Services
Total Cost Approach
Enterprises often fail to realize that costs associated with printed materials continue to
increase even after the material is printed. In many cases, organizations will print
thousands of documents at a time to achieve a lower cost per unit. However, the material
is not used immediately and must be stored in inventory (storage costs) until they are
distributed (courier costs) or thrown away because the content of the materials become
outdated (obsolescence costs). Other costs to consider include errors, reorders and rush
charges which can significantly add to the total cost of printed materials.
Prioritized Actions
Enterprises reported that their top strategic action is the continuous effort to aggregate
and centralize enterprise-wide spending. With the print category specifically, Aberdeen
has found that many enterprises do not leverage volume discounts, but instead continue
to engage multiple print suppliers and utilize ad-hoc purchasing methods that may vary in
different business units or regions. A key step that enterprises are also concerned about is
the ability to gather and classify spend data. Also, ensuring executive level support is
critical in order to standardize print procurement policies and procedures, according to
46% of survey respondents.
Reduction of "maverick" (off-contract) buying is a common theme in various categories
of spend as well as procurement overall. Compliance to negotiated contracts is certainly
of importance to enterprises, especially due to the savings potential involved.
Table 1: Prioritized Strategic Actions
Aggregate and centralize enterprise-wide spending on print 52%
Improve ability to aggregate and classify spend data for printed materials 48%
Secure executive support for print purchasing policies and procedures 46%
Improve compliance to negotiated supplier contracts (i.e., reduce maverick spend) 45%
Outsource all management of print expenses 29%
Establish standard policies and procedures for sourcing, procuring, and managing
28%
print projects
Support aggressive supplier rationalization under preferred supplier program 19%
Source: AberdeenGroup, October 2006
Print Sourcing and Supplier Performance
Purchasing print and securing print services
are not simple tasks; there are numerous "We recently completed a deep dive
complexities that are involved. When it into our print spend and have a plan to
comes to larger printing projects, enterprises reduce our 400 suppliers (plus our
internal print shop) to around 50. The
need to better understand their spend on
company has 600 plants throughout
various categories of print throughout the
the country and printing expenses and
company. This can give them the leverage to
processes were disjointed and difficult
gain volume discounts and optimize their
to monitor and control.""
supply base.
- Procurement manager at a large
manufacturer
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen Group • 5Category Spend Management: Print & Print Services
Figure 6 shows the percentage of enterprises whose print jobs are set up with a longer-
term contract versus bidding out each job. According to the survey pool, approximately
21% of enterprises bid/select a printer for each project. Only 14% reported that more than
80% of their print jobs are bought on pre-negotiated contracts. Some of the more
advanced procurement groups have successfully optimized their print supplier base and
have identified two or three preferred suppliers for each type of print job.
However, in some cases, this is not Figure 6: Print Purchased on Long-
enough, as the procurement director at a Term Contracts vs. Bidding Each Job
consumer products company noted, "We
None, w e bid or select a
have preferred suppliers identified, but 21%
printer for each print project
there is still a large amount of maverick
Less than 20% 31%
buying, mainly due to our lack of controls
and monitoring. We have a number of Betw een 21% and 40% 9%
different manufacturing locations and a
41% to 60% 16%
lot of them spot-buy."
With regards to supplier performance, 61% to 80% 9%
Aberdeen found that there is fairly large
More than 80% 14%
percentage of enterprises that use
effective supplier performance Source: AberdeenGroup, October 2006
measurement tactics (Figure 7).
Approximately 41% reported that they have no procedures for such measurement, while
nearly 21% conduct analysis on pricing (either on a job-by-job basis or periodically).
Figure 7: Print Supplier Performance Measurement
4%
10%
41% 11%
14%
20%
Enterprise pays w hat suppliers quote for services w ith little to no market pricing comparisons
Proactive market pricing comparisons on a job-by-job basis
Periodic market pricing comparisons
Standardized procedures and metrics applied across all areas of print spend
General procedures for measuring supplier performance but applied inconsistently
No formal procedures for supplier performance measurement
Source: AberdeenGroup, October 2006
All print and electronic rights are the property of Aberdeen Group © 2006.
6 • AberdeenGroupCategory Spend Management: Print & Print Services
Example: A European consumer packaged goods company:
According to the procurement manager responsible for indirect print spend at a European
consumer packaged good company, "We currently use an internal system for online
auctions and sourcing. For example, we source creative/artwork services for a certain
product category. We recently completed negotiations a two year contract to provide
these services for a particular category for the whole of Europe."
"In terms of supplier performance, we measure print suppliers on three metrics that are
key as we manufacture for retailers:"
- In Time - Referring to lead times; important due to specific launch slots to the
retailers
- In Quality - Consistency of colors and brand image; variances and errors are
investigated and responsible parties are held accountable
- Fulfillment - Ensuring that the entire order was delivered in full
All print and electronic rights are the property of Aberdeen Group © 2006.
Aberdeen Group • 7Category Spend Management: Print & Print Services
Chapter Three:
Implications & Analysis
" A high percentage of enterprises continue to use manual methods to purchase print
" There is significant interest in outsourcing or using a managed service provider for the
print category
" Best in Class companies, on average, source and procure a higher percentage of their
Key Takeawaysprint needs online, and have achieved faster order-to-cycle times and have realized 23%
savings, on average
n regards to our survey pool, actual amounts spent on print categories ranges from
$50,000 to $150 million a year for larger corporations that are in industries that
I require large amounts of printing. However, the processes used to manage this
expense differ across all companies, with a hefty percentage still relying on manual
processes.
Figure 8: Print Procurement and Management Processes
Manually sourced/procured by local procurement person/dept
16%
5%
25% Manually sourced/procured by w hoever has the need
Manually sourced/procured by a centralized procurement group
Automated process using generic e-procurement/e-sourcing solution
27% Automated process using a specific print procurement/management solution
27%
Source: AberdeenGroup, October 2006
As shown in Figure 8, close to 80% of respondents are manually-sourcing and/or
purchasing print materials and services, 27% of which is sourced and procured by
whoever has the need. However, if we consider Best in Class companies and how they
responded to Figure 8, approximately 62% of them use automated processes.
With regards to
Figure 9: Process Standardization BIC vs. Others
standardization, a higher
percentage of Best in Class Process standardized and 19%
aligned enterprise-w ide
companies demonstrate 56%
standardized and well-aligned Processes standardized at 25%
processes (78%) whether business unit or region 22%
enterprise-wide or at a
Department level (e.g., finance, 15%
business unit or regional level HR) 17%
(Figure 9). Such processes All Others
16% Best in Class
allow for more efficient and Highly decentralized processes
6%
cost-effective methods of
26%
purchasing and managing
No formal process
0
print expenses.
Source: AberdeenGroup, October 2006
All print and electronic rights are the property of Aberdeen Group © 2006.
8 • AberdeenGroupCategory Spend Management: Print & Print Services
In terms of functional responsibility, the response among enterprises was varied.
Although a significant percentage (32%, on average) reported that procurement is
responsible for buying printed materials and print services, there were 20% that attributed
this responsibility to the marketing/design function. It was interesting to note that nearly
68% of Best in Class enterprises mentioned that this responsibility falls under
procurement.
Technology Solutions and Service Providers
Outsourcing the management of an enterprise's print procurement and management is a
concept that is somewhat further-developed throughout Europe than in North America.
However, as shown in Figure 10, there is significant interest in print services.
Approximately 17% of enterprises are currently using outsourcing to a third-party or
using a managed service provider for their printing needs, whereas over the next two
years, this number jumps to 26%, representing more than a 50% increase.
Additionally, the interest in utilizing e-procurement systems, whether generic or specific
for print, is fairly high and continues to remain this way. Usage of more manual and
homegrown systems looks to be drastically dropping over the next couple of years.
Figure 10: Automation of Travel Planning/Booking and Expense Management
Currently Use Plan to Use Within 24 months
63%
40%
29% 30% 28% 29%
26%
17%
7% 6%
Limited automation, Ad-hoc or E-Procurement Generic e- Print management
print purchased via homegrow n system specifically procurement outsourced to third
by phone, fax or systems for for purchasing and/or sourcing party / Managed
email purchasing printed materials solution service provider
Source: AberdeenGroup, October 2006
Outsourcing or Managed Services
Survey respondents have continually shown
"Our plan is to outsource this category,
interest in print procurement outsourcing
however, we need to have our own house
firms, or "managed service providers," as in order first. We recently put in processes
they are sometimes called. Leveraging web- which will allow for aggregation of print
based platforms for requisition creation and spend, spend-tracking and monitoring and
category spend reporting, these solution have mandated that all print is purchased
providers handle many more value-added via the procurement group," according to a
procurement manager at a large insurance
services a specialist can provide, such as
provider.
strategically-sourcing preferred vendors,
suggesting alternative printing methods to
reduce costs when requisitions from business-line owners come through, and providing
consolidated billing for all print spend, regardless of final supplier fulfillment.
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Aberdeen Group • 9Category Spend Management: Print & Print Services
Properly executed, outsourcing print activities to an external provider can offer the
company an end-to-end print management service, encompassing creative support,
template design/customization, document reproduction and proofing, and post-production
inventory management and logistics. Managing inventory is a key factor, as there often
can be large amounts of wasted or obsolete material that results in unnecessary costs,
which is unlikely if a third-party is focused on managing this issue.
Best in Class Strategies
Benchmark participants fell into one of three categories: Laggard, Industry Average, or
Best in Class, based on their characteristics in four key areas: Process (standardization,
effectiveness, and efficiency of print management and procurement processes);
Organization (alignment and structure around management of print category expenses);
Knowledge (visibility into spending, compliance and performance metrics); and
Technology (level of automation, which includes procurement and sourcing, as well as
collaboration and workflow).
Quantitatively and qualitatively, companies addressing print from a procurement
discipline find compelling benefits. Enterprises we have interviewed have reported more
accurate orders, better category and process visibility, improved project and supplier
management, and enhanced stakeholder accountability into expenses. However, exactly
how do companies receive these benefits? Best in Class companies developed centralized
and standardized print purchase policies and procedures, gained visibility into detailed
purchasing information, and established collaboration between procurement and line-of-
business (e.g., marketing) professionals that are in need of print services.
These actions were underpinned by the elimination of paper and spreadsheet-based
processes and replaced with online technology solutions. More than half of Best in Class
companies have reported that the availability of collaboration and project management
technology was a top capability to their success, ranking it second after standardized
procedures and executive support.
Reported Benefits of Automation
There are certainly benefits to automation, as it helps to make processes more efficient,
and allows for compliance-tracking and supplier performance monitoring. One of the
benefits survey respondents have received from automation is reduced overall print
spending. This is attributed to two major factors: increased negotiating leverage and
improved visibility across the enterprise. Additional benefits include reduced order-
to-delivery cycle times and optimization of print supply bases.
As shown in Figure 11, Best in Class enterprises are
able to achieve significantly better results. Best in One consumer products
Class companies, on average, are sourcing and company attributed
procuring 70% of their print spend online. This not approximately $4.8 million in
only refers to their use of automation tools, but also savings to the usage of print
means that they have standardized policies and are procurement technology
together with a managed
involving the procurement function in this process. service provider.
These enterprises are also able to achieve faster lead
times (i.e., order-to-delivery cycle time) and as a
result have gained significant savings. On average, top-performing companies have
All print and electronic rights are the property of Aberdeen Group © 2006.
10 • AberdeenGroupCategory Spend Management: Print & Print Services
realized 23% hard-dollar cost savings, compared to the average of 8% for all other
enterprises.
Figure 11: Key Performance Indicators (Best in Class vs. All Others)
% of Print Sourced & Procured Order-to-Delivery Cycle Time
Online
64%
17 Days
26%
5.5 Days
BIC Other BIC Other
Hard Dollar Cost Savings
23%
8%
BIC Other
Source: AberdeenGroup, October 2006
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Aberdeen Group • 11Category Spend Management: Print & Print Services
Chapter Four:
Recommendations for Action
" Streamline procurement processes and collaborate with marketing/design
" Eliminate paper- and spreadsheet-based processes, and replace them with online tech-
nology solutions
" Identify current print suppliers and optimize this supply base
Key Takeaways
" Support visibility into detailed marketing project and purchasing data
rint involves both the complexity of the printing services and the logistics of
finished goods, therefore, print procurement poses unique supply management
P challenges. The most efficient companies will be those that can effectively build,
maintain, and manage a highly flexible network of print supply partners that can
be accessed as needed to provide optimal response to print demand. The following are
some recommendations from Aberdeen that enterprises should consider:
Recommendations for Laggards
1. Assess and map out current processes for purchasing print. This includes figuring
out which functions have the ability to purchase printed material and print services
and determining which process they use. Identify the various printing needs re-
quired by the entire company.
2. Eliminate paper- and spreadsheet-based processes, and replace them with online
technology solutions. Whether it is simple email-based workflow or more advanced
dedicated project management, once clear policies and supplier agreements are in
place, consider leveraging or expanding existing technology investments to track
day-to-day purchases and supplier performance.
3. Streamline procurement processes and collaborate with marketing/design.
Monitoring and tracking these expenditures will be a much easier task if everything
is centralized. Some companies are mandating that all print-purchasing be approved
by the procurement department, thereby, also leading to a more centralized
approach.
4. Identify current print suppliers and optimize this supply base. Based on the
capabilities identified, create a list of preferred print suppliers that will cater to all
your printing needs and assign more than one supplier to a particular category. This
list should be the result of a thorough examination of their capabilities and cost
drivers. After contracts are created with each of these suppliers, you will have a
network of approved printers that can meet all your printing needs.
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12 • AberdeenGroupCategory Spend Management: Print & Print Services
Priorities for Industry Average Performers
1. Improve collaboration between procurement and other functions, especially
marketing. Working together, these two groups have a better chance of reducing
print expenses while maintaining appropriate quality levels (i.e., brand image).
2. Utilize sourcing events for larger printing requirements. There are additional
savings to be realized in competitive bidding situations, where suppliers will
compete by revising their quotes and reducing their pricing on individual orders.
3. Measure and report on savings, performance and compliance with contracts. In or-
der to keep improving, it is important to continuously measure metrics such as com-
pliance with contracts and realized savings.
Next Steps for Best in Class
1. Make use of spending data to gain insight into ROI on marketing initiatives.
Marketing and sales collateral pieces are often ordered in bulk and stored for future
use, however, enterprises need to gain further insight into other costs involved, such
as warehousing and distribution.
2. Support visibility into detailed marketing project and purchasing data. The more
information different stakeholders have about a company's marketing purchasing
requirements, such as the difference between basic printing jobs and even branding
elements like color scheme and paper stock, the better prepared individuals are to
make the most cost-effective decision for the company.
3. Consider using a managed service provider if want to focus on core competencies.
There are many cases in which an enterprise can greatly benefit from outsourcing
this entire category of spend to a third-party.
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Aberdeen Group • 13Category Spend Management: Print & Print Services
Featured Underwriters
This research report was made possible, in part, with the financial support of our under-
writers. These individuals and organizations share Aberdeen's vision of bringing fact
based research to corporations worldwide at little or no cost. Underwriters have no edito-
rial or research rights and the facts and analysis of this report remain an exclusive pro-
duction and product of Aberdeen Group.
AccessPlus is one of the UK's leading providers of business communications solutions.
We believe we are unique in the range and quality of the services we provide, in Print
Management, Data Solutions, Document Management, Logistics and Campaign Deliv-
ery. We apply our in depth expertise to understand the 'DNA' of your business, in order
to bring greater efficiencies and ongoing, sustainable cost savings to your business com-
munications. Supported by our own, proprietary software systems, our services cover
every stage of the journey, from creative development, through print management and
fulfillment, to response handling, data management and contact centre support.
For additional information on AccessPlus:
Access House, The Promenade, Clifton Down, Bristol, BS8 3AQ, UK
+ 44 (0) 844 800 1066 or healthcheck@accessplus.co.uk
www.accessplus.co.uk
The ProProcure Marketplace is an on-demand category management platform solely fo-
cused on the procurement of Promotional Marketing Materials. Companies utilizing Pro-
Procure have seen significant cost savings of up to 55%. The system enables Order Ag-
gregation, RFQ's, self-policing of vendors/suppliers (KPI's), and control over brand
trademarks. Additionally, sophisticated creative briefs exist on the platform that enables
custom product development and quoting. ProProcure's platform will manage over $200
million in promotional marketing transactions by the end of 2007. Proprocure: We are
focused where others aren't even looking.
For additional information on ProProcure:
Westminster House, 70 Packhorse Road, Gerrards Cross
Buckinghamshire, SL9 8HY, UK
(978) 225 8099 (USA), +44 (870) 380 1717 (UK)
sparadiso@proprocure.com (USA), frank.treanor@proprocure.co.uk (UK)
www.proprocure.com or www.proprocure.co.uk
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14 • AberdeenGroupCategory Spend Management: Print & Print Services
HH Print Management is a strategic supply partner helping large multi-national clients to
outsource or radically overhaul their BTL marcomms and print management supply
chains. Key learnings and insights, based on HH's experiences across the EU, are applied
to provide tailored outsourced services for print procurement, digital asset management,
creative services, warehousing and logistics. The solutions are delivered with dedicated,
regional teams and bespoke technology using the global HH procurement network and
expertise. The HH client base includes leading brand in the Retail, FMCG, Technology,
Hospitality and Travel, Pharmaceutical and Healthcare sectors.
For additional information on HH Print Management:
City House, Sutton Park Road, Sutton, SM1 2AE, Surrey, UK
+44 (0)870 766 9263 or acatalanotto@hhas.com
www.hhprintmanagement.com
Cirqit is a leading sourcing and procurement services company that provides print cate-
gory management services and software applications. Through comprehensive managed
services (business process outsourcing), Cirqit delivers dramatic cost savings and allows
companies to focus on core competencies. Cirqit will give your organization the exper-
tise, resources, and tools to control and manage your print procurement process, increase
marketing productivity, improve supply chain performance, and permanently reduce print
costs. Solutions include managed services, Internet-based procurement applications, and
category-specific consulting services. Cirqit is headquartered in Whippany, N.J. The
company's offices are located in Chicago, Seattle, Atlanta, Miami, Detroit, Santiago -
Chile, Mexico City, Buenos Aires - Argentina, and Sao Paulo - Brazil.
For additional information on Cirqit, Inc:
100 S. Jefferson Road, Whippany, NJ 07981
877.424.7748
www.cirqit.com
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Aberdeen Group • 15Category Spend Management: Print & Print Services
Appendix A:
Research Methodology
etween September and October 2006, AberdeenGroup examined processes,
technology priorities and strategic actions of 160 enterprises. Responding
B Procurement and Marketing executives completed an online survey that included
questions designed to determine the following:
" Enterprise challenges with print procurement and ongoing management and
strategies most critical for their success
" Current and future use of technology or service providers to improve processes
and gain efficiencies
" Successful strategies used by top performing companies
Aberdeen supplemented this online survey effort with telephone interviews with select
survey respondents, gathering additional information on management of the procurement
of printed materials and print services as well as successful strategies, experiences, and
results.
The study aimed to identify best practices for print procurement and provide a framework
by which readers could assess their own contract management capabilities.
Other demographics of respondents include:
" Job title/function: The research sample included respondents with the following
job titles: Procurement executives (54%); Marketing (21%); Supply
chain/Logistics (9%), Business process management (8%), IT (7%), Sales (7%)
" Industry: The research sample included respondents from financial services and
banking (21%), consumer goods (15%), chemicals/pharmaceuticals (13%), pub-
lishing/media (11%), high-tech (10%), food/beverage (8%)
" Geography: 65% of study respondents were from North America, 26% from
EMEA, 9% from Asia/Pacific.
" Company size: About 46% of respondents were from large enterprises (annual
revenues of US$1 billion or greater); 32% were from midsize enterprises (annual
revenues between $50 million and $999 million); and 22% of respondents were
from small businesses (annual revenues of less than $50 million).
Solution providers recognized as sponsors of this report were solicited after the fact and
had no influence on the direction or results of the report. Their sponsorship has made it
possible for AberdeenGroup to make these findings available to readers at no charge.
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16 • AberdeenGroupCategory Spend Management: Print & Print Services
Table 2: Competitive Framework
Competitive Framework Key
The Aberdeen Competitive Framework defines enterprises as falling into one of the three following levels of
PRINT practices and performance:
Laggards (30%) – PRINT practices that are significantly behind the average of the industry, and result in
below average performance
Industry Average (50%) – PRINT practices that represent the average or norm, and result in average in-
dustry performance.
Best in Class (20%) – PRINT practices that are the best currently being employed and significantly supe-
rior to the industry norm, and result in the top industry performance.
Source: Aberdeen Group, October 2006
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Aberdeen Group • 17Category Spend Management: Print & Print Services
Appendix B:
Related Aberdeen Research & Tools
Related Aberdeen research that forms a companion or reference to this report include:
" The Category Spend Management Report Series 2