Business Management - Productivity/Process Improvement

I know of only one production manager, at a printing company using a cost accounting system, who doesn't believe that increasing efficiency reduces his costs. How do I know this? I've spoken to him several times about the deceptions of cost accounting. He didn't learn the truth from the company that supplied the computerized cost system they have. Those guys believe it, too. I think they know better, but they couldn't sell a system to a printing company that didn't have a set of cost rates in it. Well, maybe they don't know better. I may have spoken too quickly. He didn't learn the truth

When the editor in the June issue of Business 2.0 wanted to seek out the 10 most successful electronic firms, he or she selected cash as the primary criterion. "...Cash flow is much more difficult to fake with accounting tricks, but also because the ability to generate cash is ultimately the key to any company's prosperity. . ." Still, in a recent survey, we read that accounts receivable are more than 50 days old for 90-plus commercial printing firms. Is this the typical cash realization from printing? Yes, I think it is. Does it mean that commercial printing companies place less value on cash as

Somebody, anybody, tell me I'm wrong. Pick a fight with me. Start an argument. Anything. Don't just sit there like a bump on a log. I've taken positions in this column that are heretical. I think. I've sent out copies of a putative book to a number of friends, including printers, and asked for their reactions a couple of months ago. Not a word have I heard. I'll send copies of Monday Morning Manager, A 12-Step Program to Printing Profitability, my book, in PDF format over the Internet, FREE, to anyone who requests a copy. All you need to do is drop me an

Misunderstanding surrounds the term "capacity" in our industry. Definition of this word has profound consequences for commercial printing. But I'm not sure that we're all singing from the same hymnal when we use that word. First, we speak of "capacity" in terms of hours of time in production centers. But we don't really mean hours of time—we mean units of throughput. But we don't really mean units of throughput because the length of runs is constantly changing—increasing or decreasing the number and complexity of machine changes. This increases or decreases the units of throughput that we can predict from a production center. It constantly

Follow the paper is the axiom of a successful printing firm of the present. The need to follow the paper will grow as the application of RFID takes shape over this next year or so. RFID in printing stands for Radio Frequency Identification tagging of inventories. Get ready for it, if you're not already. It's coming on like gangbusters. RFID isn't a new technology. It's been around for at least 15 years. It can give us more current information than a barcode—and faster. In fact, one of the problems is what to do with all of the current data RFID can supply. We're facing

We think a lot about timing labor on the press, prep, binder or shipping. We have computer systems that concentrate on keeping tabs of every minute of shop labor. We have tables of production standards for the time we think each of those activities will take when we estimate or schedule a job. When we compare the "profitability" of jobs we deduct these "costs." We base our pricing on these guesses of so-called labor costs and standards. What I'm about to suggest is radical—but elementary. Suppose we turned those expensive computer systems around and began focusing on paper instead of on labor. If we

What credit terms are most frequently granted by printers? 2/10/n30—2 percent if paid within 10 days, net due in 30 days. Or maybe it's 1/10/n30—1 percent. Either way, it's a pile of money when you think about it as yearly rates. Know what it amounts to on an annualized basis? A tad over 73 percent a year if you're using 2 percent. If you're using only 1 percent for 10 days quick-pay incentive it's a bit over 36 percent per annum. You knew that already, of course. Just wanted to remind you in order to make a point. Any customer that doesn't take advantage of

It's called Value Added in the Ratio Studies of the Printing Industries of America. Or, you can call it PVA for "Process" Value Added—looking at it from inside the shop. From outside the plant—the customer side—we call it PVA for "Perceived" Value Added. It's all one and the same. It's the difference between selling price of manufactured products and the cost of the raw materials converted to those products. Strip away selling price, the cost of raw materials, and outside job purchases and what you're left with is Value Added, either as a percentage or as a number. "Yes, we know all that, Roger.

"Beyond Budgeting" is a new book by Jeremy Hope and Robin Fraser recently published by Harvard Business School Press that's been provoking comment in the trade press. It's subtitled "How Managers Can Break Free from the Annual Performance Trap." It has a message for those few printing companies still spending time and effort at annual budgeting exercises. Back in an earlier day, I can recall the annual budgeting routine at printing companies. Along about two months before the close of a fiscal year, the company accountant would send out a form asking each department to predict their annual revenues and expenditures for the coming

Lotfi Zadeh, an electrical engineer in Southern California, calls this a "fuzzy" world we live in—a world where all the rules are "fuzzy logic." It's a gray, nebulous, world of shades and degrees. We buy sophisticated computer systems to help us price our product. But when it comes to pricing a job, there's no single "right" computer price. Our computers produce a nice, "crisp" number that we mark up and say, "This IS the price." Then we say, "Yeah, right," and proceed to bargain for some fuzzy value based on hunch and guess. We know that budgeted "costs" are just arbitrary fictions. We're groping.