Written by Howard Fenton
Senior Technology Consultant
NAPL
One of the surprises in the NAPL 2012/2013 Digital and Large Format Pricing Study was the amount of respondents who were creating their estimates by hand. The report says, “By far the most stunning statistic is that 22% of all survey participants still do not use estimating software. We find it hard to believe because print estimating software has been available for over 30 years and the cost to install and train is far less than the cost of labor to do manual quotes, not to mention the consistency and accuracy of computer estimating.”
On a recent assignment I worked with a company that prefers making estimates by hand. When asked why they’ve done manual estimating for years, they said they felt very proficient in the process and they could not afford the luxury of estimating software. Maybe that was true at one time, but it’s not anymore. Years ago, you could get away with a fudge factor in your estimates, monitor rush jobs easily, and keep up with billing.
Due to our hyper-competitive environment, there is no longer room for a fudge factor in estimates. NAPL leaders know their cost to the penny. You might have been able to easily monitor rush jobs back in the day of your dad’s print shop, but today almost every one is a rush job. And while an unthinkable concept a few years ago, today’s graphic arts companies are selling just one product or service at a time. With Web storefronts, print on demand and fulfillment services invoices can represent one product which could overwhelm traditional billing procedures.
Today, accurate estimates, close monitoring of schedules and on-time billing are not luxuries but rather essential business practices. This is discussed in the latest NAPL book entitled, “Business Growth Through Effective MIS” written by Greg D’Amico. In this book, Dr. D’Amico talks about the evolving role of MIS systems in graphic arts companies and will be the subject of an upcoming webinar.
On Tuesday February 19, 2013 at 11:00 a.m. (EST) NAPL’s NewsTalk live presentation will talk about the challenge of implementing Print MIS systems and our panel of leaders will share their trials and tribulations in choosing, implementing and fine tuning their print MIS systems. If you’re interested in attending the webinar, feel free to sign up.
Also, we are interested in learning more about why companies are reluctant to invest in estimating software or Print MIS software. Do you prefer manual estimates over software estimates? Does your company monitor schedules using scheduling boards or schedules printed on paper? Are your invoices created manually?
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Howard Fenton is a consultant and business advisor at NAPL. Howie advises commercial printers and in-plants on benchmarking performance against industry leaders, increasing productivity through workflow management, adding and integrating new digital services, and adding value through customer research. He is a paid contributor to this blog.
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2 Comments
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The profit margin has shrunk considerably over the last 20 years, leaving not much room for error.
Mike,
What you say is true. One of the things our research shows us is that a common denominator of leaders is they know their cost “per product” to the penny. That is one of the reasons why we were stunned to learn in our latest pricing study, that 22% of those surveyed did not use estimating software.
And I’m starting to see more and more problems associated with not understanding costs.
On my last 2 consulting assignments when we did some time and motion studies and
compared actuals versus estimates we found that companies were losing money with certain types of work. The reason is that they had not updated their time standards or their BHRs and their cost estimates were wrong. They were wondering what was going on. They were seeing increases in volume but decreases in profits. In other words they were actually losing money every time they did those types of jobs.
So, you’re right – there’s no room for error. That’s why that 22% of companies not using estimating software is such a surprise. It’s difficult if not impossible with all the constantly changing costs to be able to update your costs without some type of automated software.