Weekly Versus Monthly Pubs --Dickeson

Douglas Laidlaw was CEO of a Republic web offset printing subsidiary called Los Angeles Lithograph in Redondo Beach, CA, in the late 1960s. LA Litho printed two million weekly copies of TV Guide magazine. Boards and art arrived from the publisher at about 3 p.m. every Thursday afternoon and the last shipment of the magazines left the LA Litho shipping dock at 3 a.m. on Sunday. Throughput: 3 p.m. Thursday to 3 a.m. Sunday for two million copies; about 60 hours total process time for two million books every week.

"Strange thing," said Doug, "We do that job at well below our Budgeted Hourly Cost rates, but it's a nicely profitable job." Later, in the mid-'70s, I succeeded Doug at LA Litho and observed the same phenomenon. Over the years I talked to other printers expressing similar experience. Weeklies were somehow better profit sources than monthlies, bi- or semi-monthlies, quarterlies or catalogs.

Unanswered Questions

"Why is that? How can it be?" I said to myself every time I thought of it. It was "a mystery surrounded by a riddle wrapped in an enigma."

Camera to press, to bind, to shipping and mailing, was a linear, overlapping, continuous process from start to finish for a weekly pub. Production scheduling was self-optimizing. There was no choice. It had to be. It was applied Ohno's Kanban system.

Weekly pubs pull the work through the plant—there's no pushing it up into queues. It's called JIT—Just In Time. It was also Goldratt's throughput optimization from his TOC for Theory Of Constraints. It was Deming's insistence on minimizing variation for Continuous Improvement. When you're working minute-by-minute against a shipping deadline, you either master variation or you blow the job.

But Deming, Goldratt and Ohno didn't come on stage in the United States until the mid-'80s. Then James Gleick and his Chaos Theory explained variation in '87. A bit later, Dr. Donald Wheeler clarified the arcane statistics for managing variation.

Henry Ford had taught it with a continuously moving assembly line for his Model T in the '20s. "Hey, you can't possibly sell Tin Lizzies at those prices," they said. Sam Walton reinforced it in the '90s with superb inventory management software for the Wal*Mart stores. "Hey, Wal*Mart can't survive at those prices," we keep saying. We hear faint echoes of Sergeant Bilko in the old TV series shouting, "Move it. Move it. Move it. Move those direct materials," is the repeated message. Laidlaw intimated it in his comment about weekly pubs and costs.

What's so different about the table included above? There's a "Throughput Hours" column. For each of the 18 jobs listed, we see how long it took the Direct Materials of each job to get through the conversion process of the plant. Here's what this 18-job sample tells us:

* It takes 92 hours to get a job through the process.

* On average, each job yields $4,183 Value Added (VA).

* We're producing at $45 VA per process hour.

* Pricing is roughly 2.3 times materials.

* An average job sells for $7,500 and uses $3,300 direct materials.

The focus of this analysis is twofold: 1.) Rate of satisfying customer demand and 2.) Rate of converting materials to claims for cash. This points our concentration to results desired by both customer and printer. There's a third aspect of the table: marketing analysis. Perhaps there's a fourth aspect as well: capacity utilization. We're really appraising enterprise productivity with this table—satisfaction of both customer and supplier needs from the printing conversion process.

This 18-job sample suggests that Work In Process (WIP) inventories took 3.84 days to complete. (92.1/24) That's a process churn rate of 95 times a year. (365/3.84) Try this analysis on your own data. Then noodle it a bit. At your current price yields, how many times must you increase that WIP turnover to produce satisfactory earnings? As you increased turnover couldn't you drop prices and optimize enterprise earnings? Heresy! Shades of Sam Walton.

Other Industries Get It

What are we saying? Are we suddenly realizing that rate of Throughput—WIP turnover—is far more significant to earnings than Budgeted Hour Rate hocus-pocus? That's what Laidlaw, Deming, Ohno and Goldratt have been shouting these past 15 to 20 years. We just didn't get it. Other businesses in other industries got it, but in printing we've had tunnel vision. We've been staring at the wrong numbers! We must look at Throughput of Value Added per process hour—by job, by product, by materials and whatever.

The true secret of efficiency, productivity and profitability for manufacturing—for printing—is to be found in the speed and continuity of process throughput.

—Roger V. Dickeson

About the Author

Roger V. Dickeson is a printing productivity consultant based in Tucson, AZ. He can be reached via e-mail at rogervd@bigfoot.com.