CTP--New Tools, Old Theories

When considering a computer-to-plate purchase, printers usually look at utilization measurement rates to determine whether or not the purchase would be a wise one. But decision-makers should proceed with caution. While the use of utilization rates are based on sound, albeit traditional, financial principles, they do not take into account newer management theories.

BY HOWIE FENTON

Equipment purchasing decisions are never easy. This is particularly difficult today, due to the momentum-driving technologies such as computer-to-plate and the compressed life cycles of digital equipment. Now add to this problem the hidden expenses associated with the implementation of computer-to-plate such as:

• Digital contract proofing—faster networks;
• More thorough preflighting—color management; and
• Digital blueline proofers—higher powered servers.

This results in many printers struggling to figure out what questions to ask and what answers will help them with their purchasing decisions.

Although all the questions won't be answered in this article, one popular strategy, known as utilization rates, can be tackled. However, relying on the utilization measurement alone can be a mistake because that does not take into account avant garde production strategies to overcome bottlenecks and the importance of value-added strategies.

There is a theory about utilization rates that claims it is a useful measurement 1) before buying equipment to help make good purchasing decisions and 2) to determine if you should keep or sell off existing equipment. Often, however, the use of this measurement is oversimplified.

In practical usage, most companies look at a utilization rate to determine if they should buy a certain piece of equipment or, if they already own it, if they should sell it. The use of utilization rates are based on sound, albeit traditional, financial principles that do not take into account newer management theories, such as the theory of constraint or value-added.

The traditional definition of value-added is "selling price minus production costs." An emerging definition of value-added comes from business magazines such as Business Week and Forbes. This theory talks about value-added as "the strategy to help differentiate your company from the competition." It talks about not competing with the same products and services on price. Rather, it advises competing with different or better products and services, and preferably charging more.

Using this definition, one could argue that you need to add value to remain profitable. If you accept this theory, then it follows that your value-added is added at certain steps in your workflow. Therefore, your value-added perception could be created in such departments as estimating, sales, scheduling and customer service.

And it may be maintained in other departments such as preflight, production and finishing. In fact, we could create a value-added chain that says the perception of value-added is created and maintained in certain departments and by certain equipment. The perception of value could result from improving your services, such as faster turnaround times, higher quality or "under one roof" services.

For a high-quality, fast-turnaround company, the value-added may come from first-time bids, sales, CSR and production. For one company, the value-added chain might be estimating, sales, CSR and production, with the value-added service being high quality. For another printer, who may accept finished film or "print-ready" digital files and create reprints, the value-added chain may be CSR, preflighting, manual stripping and printing, with the value-added service being "under one roof" convenience.

This demonstrates how equipment utilization rates may not be the critical determinant of a purchasing decision. If equipment, or the quality or productivity associated with that equipment, creates your value-added, then utilization rates may not be that important. The equipment may be needed for departments that create value-added or to help provide the value-added services.

Let's look at two examples. Some companies have very expensive digital proofers (about $100,000). If you look just at the utilization, it could be very low. Performing the math you find that your $100K proofer is used only eight hours a day in a two-shift shop (16 hours), resulting in a 50-percent utilization rate. Does that mean you should get rid of the equipment? What if one of the critical value-added services is based on digital proofing?

Digital proofing may be the only way to proof pages that are used with your computer-to-plate or direct-to-press equipment. Based on utilization theory, you might consider selling it. However, selling it would make it impossible to sell the added value of your digital printing service.

On the other hand, you may be considering the purchase of preflighting software. Performing research, you discover preflight is only performed eight hours a day, which, in a three-shift operation, results in a 30-percent utilization rate. Based on utilization theories, you may conclude that preflight software is not warranted.

However, what if preflight software helped you establish faster preflight? What if by using preflight software, you could preflight files and call customers back within four hours? What if one of the reasons customers preferred working with your company is that you got back to them sooner than anyone else? Fast feedback is a significant value-added service.

Theory of Constraint
The "Theory of Constraint" is a formal management philosophy that has emerged from books written by Eli Goldratt, in particular "The Goal." It contains many management ideas but, for this article, we will focus on the impact of bottlenecks and a strategy to synchronize manufacturing known as the "drum-rope-barrel theory."

This strategy discusses shutting down a resource when it adds to a bottleneck or exceeds the output of the bottleneck. A bottleneck is a place where demand exceeds capacity. Demand is how much work needs to be done. Capacity is how much work can be done. A resource is something that helps in the creation of the final product, which could be either a piece of equipment or a staff member.

One of the serious criticisms of the utilization rate is that you should not dedicate resources (staff) to operating a machine that is running 100 percent of the time, if that machine is not a bottleneck. The reason is that you are wasting some of your capacity (staff), which may be better used to address a bottleneck.

One of the main tenets of the Theory of Constraint is that you need to move the resources (staff) to the areas that are bottlenecks. And if that means leaving a piece of equipment idle, while resources are focused on the bottleneck, then that is better use of resources. Running a non-bottlenecked resource continuously to create a high utilization rate for that one piece of equipment can result in lower overall throughput.

There are two possible scenarios: The bottleneck could be before or the bottleneck could be after the resource with excess capacity. Often these theoretical discussions can become difficult to understand. Therefore, let's look at some case histories that may make this a bit easier to understand.

For example, let's take a printer whose platesetter requires a dedicated person, and the bottleneck is upstream, that is, before this resource (operator). In other words, the bottleneck is not in the platemaking area but in the digital proofing area. In this example, if the proof is made before the plates, then we have an example of a bottleneck (proofing) in front of the resource (operator) with excess capacity (platemaking).

A useful strategy to think about bottlenecks and how they move is to think about taking "snap shots" of how busy each department (another resource) is during different times of the day. In doing this, we would find minutes, hours or days in which there is work waiting to be done in one area—while someone else has nothing to do in another area. In this snap shot, the platemaking department has nothing to do, while the proofing area has too much work.

According to the Theory of Constraint, we would conclude that demand exceeds capacity in the proofing area (bottleneck), but capacity exceeds demand in the platemaking area. Thus, according to the Theory of Constraint, the remedy to this ailment is a strategy known as the drum-rope-barrel theory of scheduling.

Drum-Rope-Barrel Theory
This theory ties (with a rope) the amount of work down past the bottleneck (platesetter) to the amount of work in progress in the queue (or barrel) before the platesetters.

You create this queue of work-in-progress after digital proofing and before platemaking. Since the platesetter is faster then the bottleneck, when the queue (barrel) gets low, you turn it off—and use the platemaking people in another area that is bottlenecked (digital proofing). After you turn off platemaking, the work in the queue (barrel) is rising. The benefit is the reassigned staff (platemakers helping in digital proofing) are overcoming the bottlenecked work in the proofing area, increasing overall throughput.

When the pile of "OKed" digital proofs in the barrel gets to a certain height, you get the platemaking staff to return to the platesetter. Due to the increased capacity (speed) of the platesetter, the platesetter will quickly out-run the queue, and the process begins again.

Of course, shutting down the platesetting operation would NOT result in a high utilization rate, but, by synchronizing the operation of all the resources, it would increase the overall throughput, and you would get more pages proofed and printed.

As another example, let's take a printing operation where the platesetter is the bottleneck. In this case, it is important to keep the platesetter as busy as possible. For this company, measuring the utilization rate is important and useful for management decisions. Although oversimplified in many cases, this information can be used to help make decisions about number of shifts, staffing levels, where to implement QC inspection steps and if another piece of equipment is warranted.

For example, you discover that your platesetter is running 90 percent of the time during one shift. In other words, approximately eight out of 24 hours, resulting in a low, 30-percent utilization rate. Further research shows that your on-time delivery is 50 percent, because the presses on the second shift are running out of plates. Although you could conclude that you need another platesetter, a less expensive option would be to start a third shift.

On the other hand, if you find that the platesetter is being utilized 75 percent of the time across three shifts, and your press utilization rate is only 60 percent because they are waiting for plates, then it may mean it's time to buy another platesetter.

In summary, utilization rates are a traditional measurement that can be used to help assist in purchasing decisions. The utilization measurement is most useful when the resource measured is the bottleneck in a workflow.

However, a low utilization rate in a non-bottlenecked area requires further investigation. The resource may add value to the perception of your company, or it may be scheduled in a way to synchronize manufacturing. Either way, it does not mean that the resource (equipment) is not performing well or should be outsourced.

The drum-rope-barrel theory of scheduling is part of the Theory of Constraint philosophies discussed in the book "The Goal." In essence, the theory says it is better to turn off a resource for a period of time when its capacity exceeds demand.

Turning off the resource will result in a poor utilization rate. However, if this is not a bottleneck, it should not be interpreted to mean that the equipment should be sold or that the company should not consider replacing it. A low utilization rate, due to the drum-rope-barrel theory of scheduling, in a non-bottlenecked area could result in greater overall throughput.

Competing on value-added is a way to "stand-out" from the competition. The perception of enhanced value-added can come from individual departments or by delivering superior service. A resource, such as a piece of equipment, may have a low utilization rate but provide a significant contribution to your value-added perception. If that is the case, don't eliminate it because of the low utilization rate; instead, consider how to increase the capacity of that resource.

If a resource is a bottleneck, then utilization rates are a useful measure for purchasing, staffing and shift decisions. In addition, it may help you decide if you want to keep or replace that equipment.

About the Author
Howard "Howie" Fenton is the senior technical consultant of digital technology at the Graphic Arts Technical Foundation (GATF). He is the former editor of Pre magazine and has written two books on on-demand and digital color printing. He is on GATF's consulting team and performs audits on workflow re-engineering, prepress production, color management and equipment purchases, as well as the implementation and management of digital technologies. Readers can contact Fenton at (800) 910-GATF, ext. 605.

New from GATF/Apple: ColorSync Registry Certification

Earlier this year, GATF/PIA premiered a new program to help the graphic arts industry understand and implement color management. Developed at GATF, in cooperation with Apple Computer, the GATF/Apple ColorSync Registry takes a systematic approach to maximizing the quality of color reproduction. Companies can use this technology for their internal needs or in an attempt to qualify for a registry certificate, documenting compliance with GATF's specifications.

Do-it-yourself Option
GATF's color management programs offer something for everyone. The programs' flexibility will allow companies to participate at different levels according to their budgets and their needs. There are three different implementation strategies: two designed for do-it-yourselfers and a third for those interested in fast-track implementation.

For the do-it-yourselfer, there are two options. The "thrifty" do-it-yourselfer can simply buy the check lists, books and registry documentation, and prepare for the audit themselves. The estimated price for this option, with audit, is between $1,000 and $2,500.

The "thorough" do-it-yourselfer will need to buy the described materials, as well as attend two workshops: one on color management and another on training and testing in quality control and documentation procedures—procedures that are essential to ensure consistency in the process and that will prepare the company for the registry certification process. The estimated price for this option is between $3,000 and $5,000.

The time it will take to get up and running with the do-it-yourself options will be determined by the company's experience with traditional quality control procedures and expertise with color management hardware and software. However, a company committed to the project should be able to implement either of the do-it-yourself options in three to six months.

Fast Track Implementation
For those on a fast track, an expert can implement the entire process including quality control procedures, documentation strategies and creation of ColorSync (ICC) profiles. This registry consultant option is performed by a GATF or GATF-accredited consultant. This option, which prepares the company for the registry process, costs around $10,000 and requires three to six weeks.

Optional GATF Audit
The GATF/Apple ColorSync Registry program also includes an option for a one-day audit by a GATF-accredited consultant, who will verify that proper procedures have been implemented. Companies passing the audit will receive a registry certificate and, more importantly, a competitive advantage in being able to effectively work with color-managed customer files.

Web-posted Certification
A list of printers that earn the GATF/Apple ColorSync Registry certificate is posted on GATF's Website (www.gatf.org) and linked to Apple's Website (www.apple.-com/colorsync).

Achieving accreditation demonstrates proficiency in the "four Cs" of color management: consistency, calibration, characterization and conversion. To become eligible, companies must invest in the proper software, instruments and training.

Companies can purchase the GATF/Apple ColorSync Registry packet and equipment, and implement the technology themselves. Sold in the GATF Product Catalog, the registry packet will include the following components: a Guidelines booklet describing the ColorSync Registry program; an objectives and requirements CD-ROM disk containing the GATF/Apple ColorSync test form; a modular, 17x22˝ test form (two 11x17˝ pages) for ensuring proper process control on output devices and for characterizing devices with a user-definable color management profiling target; and a textbook, "The GATF Practical Guide to Color Management," by Adams and Weisberg.

The kit, priced at $495 for GATF/PIA members and $695 for nonmembers, is available through the GATF Product Catalog or by phoning the GATF order department at (800) 662-3916.

For More Information . . .
Those interested in the training courses should contact Rich Adams at GATF at (800) 910-GATF, ext. 582. Anyone interested in implementing color management should contact Howie Fenton at (800) 910-GATF, ext. 605.