Crouser & Associates Performance Group program helps printers prosper through
on-site assistance and twice yearly group meetings. For more information by
Email or call (304) 342-5100. Crouser Report OnLine is the
Copyright
Thomas P. Crouser. Material may not be reproduced in whole or in part without written
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The Case of Price
Crouser Report OnLine February 14, 1996
Transmitted from Rochester, New York
Crouser Report OnLine Copyright 1996 Thomas P. Crouser, February 29, 1996 -
Material may not be reproduced in whole or in part without prior written
consent.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Tom Crouser presents
Power Pricing
in NEW ORLEANS on Saturday, March 23rd
for the Gulf Coast Association of Quick Printers. For meeting information,
message Gator4Fun@aol.com. Also, we will be soon visiting Pennsylvania,
Florida, Iowa, California, Michigan, Tennessee, Colorado and North Carolina.
Two on-site dates are available in the south in April along with one in
Colorado in May. Other appointments are being accepted for September and
later. Reply to me for more
details.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Letters
Transmitted from Pittsburgh, Pennsylvania
One of our client friends responded to a recent clients only message with
this note:
Your comments ...
The Customer Service Rep, much like the person waiting
on you at McDonald s, does some production work such as make copies and take
brokered orders (fills Cokes and gets the fries). So, most of the time, the
CSR just handles the brokered item, orders it, checks it in, bills it and
handles questions from vendors.
reverberated here at our shop in a way I
doubt you might have anticipated. Specifically, your reference to fast food
operations. It s an analogy I have been rather unsuccessfully promulgating
with my son for literally years.
The essence of the argument is, I guess: whether systems can/should be
developed and placed that deal with the commonality of jobs in order to take
them in, process them, do them and deliver them in efficient, productive and
profitable ways - as opposed to treating each as
an art project
- for which
a new wheel must be invented each time. Obviously, since I m on 100%
commission as the owner, you know which way I fall. My guess is that I am not
alone in this argument with employees (whether family, or not) who skew
towards an attitude of
individuality of each job
as opposed to the
commonality of each job
Obviously - to me at least - this ability to find
ways to find commonality in each food order (from order taking, to
preparation to wrapping, to deliver, whether it s eggs, chicken, burgers or
double burgers) is the driving force behind fast fooders ability to lower
costs and prices while reaping higher market share and profitability over
traditional
restaurants. It s more than equipment. It s attitude and a
systems approach. My guess is that you might find this analogy an intriguing
theme for one of your articles. And, yes, I d love to wave it in my son s
face - who rejected the analogy in this case. What s a poor father to do?!?!
* * * *
Er, fire the son? Okay, just kidding. Actually, Theodore Levitt (marketing
guru, Harvard professor, author of that timeless Harvard Business Review
piece,
Marketing Myopia
which said if the railroads thought of themselves
as being in the transportation business versus the railroad business, the
face of transportation as we know it would have been changed), authored
(another) Harvard Business Review piece which was, I believe, published in
the 1970 s. It was entitled,
The Industrialization of The Service Sector
inwhich (going from memory) he argued very successfully that it was the
systematic approach to service which was the key to service success versus
the concept of service as servitude. He cited McDonald s French fry scoop
which allowed a specific number of fries to be delivered to their contained
with one fell swoop (within +/- 2% or so). He cited Transamerica Corporation
and their
industrialization
of life insurance policy processing. And there
were many other excellent examples. Basic thing I remember is that service is
best approached systematically rather than by heroics. Anyway, would be glad
to look it up and report more if you are interested. P.S. Levitt was, at
least at one time, a member of the board of Multigraphics.
* * * *
Here s a note from Ray Andrews in Chicago and an interesting thing he s doing
using customer communications software.
* * * *
From: RayANDREWS
To: TomCrouser
Have installed Launch and coupled it with the new LASERMASTER 1800 DPI
direct-to-plate Laser printer. We re still tuning the runs on the plates, but
generally, they are working well. In short, I ve taken the two technologies
to create a new system that promises:
Direct from your desktop computer to
our plates ... saves you time, hassle, errors in translation and film-making
costs
(no quality half tones or tight screens, yet, though). It is receiving
terrific response from both independent and corporate graphic artists, many
of whom are hooking up modems they ve had on the shelf for a year or more
just to get in on it. Looking forward to a feature on it in our local weekly
newspaper (complete with picture) this Thursday. To early to count the
chickens, but it seems more promising than anything we ve tried in years.
Planning on a happy trail when I can find the damn thing. Ray
* * * *
Thanks, Ray. Carl Gerhardt has a request.
* * * *
Subj: Hamada C248 and Process Color
From: CGERHARDT
To: TomCrouser
Tom, I continue to enjoy your newsletters and AOL dialog. Now I am looking
for some help that perhaps you can help me find. I recently acquired another
shop and along with it an Hamada C248 2 color landscape press. I am looking
for other printers that have experience with this press. We are doing some
process color and other more complex work that fits the landscape format. The
press operator was also
acquired
with the Hamada. We think this press will
do a lot more than he thinks it can. For example, he only wants to run one
process color job at a time rather than
gang jobs
which we feel we need to
do for productivity. Also, just did an 11x17 (8 1/2 x 11 2-up) direct mail
piece that offset badly and now he says we have to run 1 up to prevent the
problem. Perhaps someone has had enough experience with this press to give us
some ideas. Thanks in advance for any help you can give.
Carl Gerhardt, American Speedy Printing, Colorado Springs, (719) 260-9898
* * * * *
OK, Carl. Let s see who has some answers. Please respond and I ll publish. .
. In another matter, the following cliet question about overtime came up.
* * * * *
If an employee who works 8 hours daily & 40 hours a week (before paying
overtime) works 34 hours in 4 days, can you let them go after 6 hours on the
fifth day to not pay overtime? Is there some rule against this if the norm is
an 8 hour day?
Tom: Normally, your statement is correct. There are some exceptions in states
which require overtime to be paid after eight hours of work in one day,
however that is not true in your state. Typically, the work week (which is
168 contiguous hours or 7 days x 24 hours, the choice of starting and
stopping is chosen by management) is the determining factor on overtime.
After 40 hours worked within the work week, then overtime will be paid.
However, there is another, underlying statement in your question. Although
you can do what you describe (sent the press operator home early), I would
not particularly advise it. Consider this: I work for you and I go out of my
way to not go to my kid s ballgame on Thursday evening to get the big rush
job out. Then, you turn around and send me home early on Friday so I don t
get overtime pay!!! In short, your position is correct, but not popular among
our most valuable asset, our workers. In my opinion, consider the worker
first. As we know, good press operators are hard to come by.
* * * *
And here s a message I received this morning which typifies many I get during
the course of a month. It s about selling this #$%^&* place.
* * * *
Subj: Print Shop for sale
To: TomCrouser
I read your brochure today about your consulting. It sounded very
interesting, I know someone can make a lot of $$ in my shop = it has a lot of
potential. It is in an excellent school district. The problem is not the
shop - it is me!! I am tired, bored and want to go about the business of
being a grandparent!! Please give me some advise as to how to go about
selling it!! Brokers do not work!
I think the key is here is your statement someone else can make a lot of $$$
in your shop - - -> so I assume you are not. Therefore, you are telling
someone else that they can pay you good money for potential, even though you
have not made good money - - - - -> and that doesn t sell regardless of
whether you are using a broker, consultant or palm reader.
So, my advice is fix whatever is wrong or be willing to take a substantially
reduced price. (I d be very glad to chat with you over the telephone (etc.)
more at length on your specific situation.)
Keep the faith. Tom
* * * *
But, before I could send my message, I received the following from the same
reader. They wrote:
* * * *
I reread my last mail to you and it didn t make much sense, I am sorry! I
left out an important part. After I read your brochure, I decided that I do
not have the energy my print shop deserves. So I would like to sell. Any
advise??
Unfortunately, your message made (believe me), perfect sense to me. I believe
you have perhaps not run out of
energy
but you have run out of
answers.
If someone could help you find a way to
fix
it and you had a clear plan, I
think you would find yourself
re-energized
and easily able to
fix
it.
(Fact is, after many people fix their shop, they lose the desire to
sell the
business.
) Again, please send me you number and we ll chat. Tom
* * * *
In a different matter, Bruce is a new sales representative and is looking for
some guidelines.
* * * *
< I am a new sales rep in the print world. I now work for a high quality 2
color printer. I am looking for a simple Checklist that would help a sales
rep ask the correct questions when speaking to a customer. I also am
wondering if there would be any kind of a worksheet that I could use to
organize my information before I give it to the estimator.>
Hey, Bruce. A checklist to ask the right questions. . .humm. Actually, I
think you are describing probing skills which allow you to uncover the
customer s requirements. From there, you convert the customer requirements to
production specifications and, I think, you are asking for a specific sheet
which would relate to the specifications of jobs. In other words,
Did I get
everything down that I need in order for the estimator to value the job?
Specifically, no I don t have such a sheet. I think it might be very
difficult to develop and administer since a sheet such as this would require
one to list all possible alternatives and that s a pretty big job. I think a
possible better solution would be for you to
learn
the steps of printing
production. (I am assuming your are new to the process.) When you know what
is required to produce a 48 page booklet with a 4 color cover, you will then
be able to
remember
the information required by the estimator. So, my
suggestion would be for you to receive practical training in production.
However, I ll ask some of our other friends to comment. Thanks and good luck
with your new position.
* * * *
So, what do you think. Have anything you can add to help Bruce? Send me a
message and I ll include in a later edition. . . .MIVANS send us a reference
on plant layouts.
* * * *
Subj: Re: Shop Layout
From: MIVANS
To: TomCrouser
Tom, In reply to your request for plant layout info. You could recommend John
Geis s book
Plant Layout
available from GATF in Pittsburgh. 412/621-6941.
It is an excellent source. MIVANS
* * * *
Thanks. John s book is an extremely good primer on plant layout and I have
used it for years. It is generally focused on
plants
as opposed to retail
printing
stores,
but many of the principles are the same.
* * * *
Now, let s get back to our plate charge discussion. Here are some recent
comments:
* * * *
From: HalSan
To: TomCrouser
Tom, Very interesting comments about plate charges. We charge $28.00 for
plate & film the first time up. We don t charge for storage for a reburn..
We then charge $7.00 each time we use the plate which is the same charge we
have for photo-direct plates. Sometimes job specs change and jobs that
required metal plate may change to photo-direct. This method helps us keep
our pricing relatively simple & repeatable. Hal Wendt, International Minute
Press
* *
From: GeneN126
To: TomCrouser
Tom, Just thought I would put in my 2 cents worth about storing and charging
for plates etc. On a reprint we charge for a new plate each time. We also do
not give a detailed enough invoice that the customer would see every charge.
Most of our customers have no idea what goes into the manufacture of their
product and they don t care. They just want it done right now. Only the
sophisticated buyer understands. The charge for a new plate is usually minor
compared to the cost of the whole job. Very few industries list every item on
their invoices.
When we are running several jobs for the same customer that requires wash-up
and ink charges we charge for each job and then show it as a discount on the
invoice. That way the next time the our customer needs to reprint just one
item they won t be expecting the reduced rate, and they are grateful for the
discount each time we do multiple jobs of the same color (I saw this either
on AOL or in the NAQP Newsletter). Gene Newhall, The Press Room
* *
From: CraigTen
To: TomCrouser
We too have a hefty charge for NFP - $45. We store plates and negs at no
charge and only charge for a plate if it is because it has worn out. We find
that most of the plates we store are never used again but often the negs are
(with stripped in changes). Then, of course, we charge for a new plate -$20.
Many years ago I had a customer want his plates (but not the negs) as he
wanted to change printers. It was no great loss as he was a very slow pay and
quite obnoxious. We were so glad to get rid of him that we washed his plates
in straight water to make them nice and pretty! I hope he was most
appreciative! HA!
* * * *
Thanks, y all. Now, let s talk about something real interesting: BUDGETS.
Alright, maybe not so interesting, but at least beneficial. Here s what one
reader wrote:
* * * *
Do you have any literature you could share with me about budgeting? I m
looking for something that would give a percentage of sales to be spent
toward marketing, advertising, maintenance, petty cash, etc. I m not even
sure what would be included. Please let me know. Thanks, Sue
Okay, Sue. Actually one source would be an operating ratio study such as
those done periodically by the National Association of Quick Printers or
Printing Industries of America. In your shop, the NAQP study would be more
germane. Now, just because once you have an average of what everyone is
doing, does not mean that is what you should spend.
I use, generally, the following targets. Direct Materials = 25%, Total Labor
(including payroll taxes, etc. but not including Owner s Compensation) = 25%
and Total Overhead = 25%. Leaves 25% for Income Before Owner s Compensation.
Now, the average shop has something like 13% left over, so they are spending
more in one or more of the categories.
Now, within Total Overhead, specific accounts, such as advertising,
maintenance, etc. as an
industry standard
is generally immaterial since
different companies have different priorities. A younger firm may need more
advertising as a percentage of sales and an older firm which may need more
equipment maintenance. So, each line item is budgeted based on what is needed
for this (your) specific company with a target of 25%.
Some companies, however, adopt different
strategies.
One company I work
with has a 35% cost of direct materials (low prices), 30% cost of wages (pays
well and low prices), and a 12% cost of overhead (he s tough on overhead
items - doesn t spend anything). That gives him 28% income before owner s
comp. He has older equipment, a very strong balance sheet (over $1 million
sitting in the cash account of the business), and buys equipment from his
excess funds as the equipment becomes proven and warranted for his area.
Anyway, point is, different companies can have different
strategies
which
would be reflected in the budget.
So, average operating ratios on specific accounts in overhead are of
interest, but do not form your specific strategy. I advise you to budget
based on what you need to spend, and don t spend one penny more. Later, Tom.
(I attached information on budgeting from the January 1996 Crouser Report
issue specifically addressing budgeting. You may find a copy in the NAQP
Publications section of America OnLine or on PrintUSA at
http:\\www.printusa.com on the internet.)
* * * *
And speaking of NAQP, Peter Grogan, freshly back from a hard trip to New
Orleans where he moderated an extremely good session on Digital stuff, brings
up a very interesting topic: system administrators and can we do without
them?
* * * *
From: PeterGPrnt
To: TomCrouser
. . .The big guys have the ability to hire
system administrator
types that
keep the computers going (horrors! you mean these computers need
ATTENTION?????). How do we smaller guys configure networks, software, install
upgrades, etc. ourselves and still spend time on the business- say, selling?
We have 3 power PC type Macs in our prepress department all loaded with ram,
etc.
Jane s hard drive fried on startup Monday morning. Now, we have a great
backup strategy, but I had not backed up her workstation. The supplier (Power
Computing- the main Mac clone maker) has been unable to ship a replacement
(it s under warranty), so I. . .ordered a drive from another supplier. We
keep gig sized drives around for just such problems, but we have had to
rebuild her drive (translate install fonts, programs, etc.- about 6 hours
worth of work). This, of course, has to be done partly in working hours and
partly after hours. Here til 1:00 am on Tuesday. We have a network/ computer
guy on retainer that assists a lot, but is not an answer for all questions.
You never hear these type discussions in our conference meetings.... as we
move toward more and more color, which means more and more complexity in the
art files with more and more needs for preflighting, and more and more needs
for network capabilities, I see many of our peers falling by the wayside due
to the complexity. Think about the overall system needed to reasonably feed a
Heidelberg DI..... graphics stations, scanners (color), the network, etc. I
estimate a minimum $250,000 investment just to feed one of those things, so
you d have about a $750,000 system to sell it s output. Not including
bindery. It s a new model, and that s the trend. So, what steps should be
taken to grow toward this company of the future?
Peter Grogan
* * * *
Big question. Actually, two questions in one. First, can we expect to operate
with hi-tech gizmos without having techies on board? The obvious answer is
no, but how are you faring out in the field with this challenge? If you are
hiring these types, where are they coming from and how are you attracting
them? If you are not hiring these types, what are you doing to compensate?
Second, what steps should we take to grow toward the company of the future?
In my opinion, we must envision the shop of the future, assess were we are
today, and define the difference. Then we can design our steps. Missing in
that process, of course, is the details. What s your opinion on the details?
What is the shop of the future? And, what steps do you believe we should be
taking now to be prepared?
* * * *
Now that we have opened that dialogue, I might as well start another one.
Martin Turnbull of PrintUSA sent a very thought provoking suggestion. I
reproduce part of it here in hopes that it may encourage some discussion from
those most affected. Here s the scoop:
* * * *
Subj: Articles from a wife s viewpoint.
From: martin@usa.net (Martin L. Turnbull)
To: TomCrouser@aol.com
Tom and Mrs. Crouser: Our wives are a vital part of our lives, our success
and our business. We need to provide them avenues of expression in our
industry. This has been too long overlooked. I think every lady in the
industry would appreciate articles from a woman s viewpoint discussing the
issues of work, family, marriage, struggles, victories, marital conversation
- or the loss of - due to working together
day in day out. Vacations or the lack of, feelings of being trapped.
Articles that make you laugh, or cry. Articles that our wives can identify
with. Would Mrs. Crouser write an article or two?
* * * *
Well, I don t know about writing, but I am sure the blonde woman will be glad
to tell you a story or two. Actually, it s a great idea, Martin. And, in
addition to my approaching my assistant just kidding, honey with the
idea, I propose the idea to everyone reading this message. Let s hear from
you! Send me some messages and I will group them for a discussion. And,
before we leave you today, here s Linda.
* * * *
From: LKMPrint
To: TomCrouser
Thanks for your support for us printers! I find at least 97% very applicable
to what we are doing, problems we might have, questions, etc. We really
appreciate the info! Thanks, Linda Melzer and staff at Printing & Promotion
Plus by Minuteman Press (Colton, CA)
* * * *
And thank you, Linda, for the kind words. Actually, I have been getting a lot
of
cards and letters,
most of which I am able to respond to within a short
period. There have been looking embarrassed several very thought
provoking questions which I have not yet been able to dedicate an appropriate
amount of time to research. However, I do want you to know I have them in my
file and am addressing them as time permits between making a living, etc.
So, if you have sent me a message which I said I would address, and haven t -
- -> it s just because you question was so good. So, hang in there and Happy
Trails til we meet again. Tom Crouser
* * * * *
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You can also reach us through the Internet at crouser@ibm.net or America
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(USA). End.
Happy Trails...Tom Crouser
Crouser & Associates - Helping Printers Prosper Since 1985
Crouser & Associates Performance Group program includes two on-site evaluations
by Tom Crouser each year along with two group meetings. Management training is held during the group
meetings along with participation in a meeting with non-competing printers. Join others who have decided
to run their business instead of the business running them. Reply to by Email to
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Return to Crouser Index at http://www.printusa.com/articles/crouser.htm
Date inserted: Saturday, February 17, 1996 2:23:22 PM
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