Business Management - Productivity/Process Improvement

Continuously measure the capacity utilization of paper. We start our conversion process in commercial printing with a given amount of raw material—paper. Finally, we deliver a portion of that paper to our customer. The paper we don't deliver is waste. The statistic we must measure is the quantity of that waste. That's a key to productive success. The relationship between paper waste and profit is direct. If we don't measure the utilization of paper we can neither predict nor control efficiency—the effectiveness of the business. We must know the pounds of input and the pounds of deliverable output. Value added to paper is the difference

"I really don't trust the integrity of the formula establishing them," remarked a print executive. He was talking about the cost numbers produced by his computer management information system. "By and large, printers just don't trust the MIS cost data," said a printing industry expert consultant. More than a quarter-century ago, Wally Stettinius in his classic "Management Planning and Control," warned that, ". . .Unless they [cost accounting data] are complete, and reconciled regularly to the figures reported for financial purposes, the possibility—actually the probability—is that inconsistencies will creep in." Several times, over the past years, I've challenged printers to prepare a variance analysis of

Productivity begets a paradox. It's ugly, but it's wonderful. It liberates us while it demeans us. Love and hate are all mixed up in the paradox. When we increase productivity we increase throughput per hour of human time. We need fewer hours of labor to produce the same production units. Great! We need fewer people so we reduce headcount. Bad! Layoffs disrupt careers and families. It's said that Gutenberg and movable type displaced 10,000 monks producing books by hand. The Age of Enlightenment dawned. Great universities were fostered. But what happened to the careers, the hopes and plans of those 10,000 trained monks? In Belgium,

We know that we cannot predict the national deficit, the stock market, our sales, the weather for more than a few hours, the fingerprints or blood genomes of an individual, and almost any sequence you can name. Oh yes, poetically, you can predict that the sun will rise in the east tomorrow. But, actually, what precise second and where is east? The world is not linear and never has been. For centuries we assumed it was for the sake of rounding-off conveniences. The computer brought a screeching halt to that idea in the last half of the 20th century according to scientists in all

Here's the Voice of the Customer as heard by a folding carton printer in St. Paul, MN. Mike Jorgensen, president of Impressions Inc., an ISO 9000 certified company, gave us permission to reproduce their checklist. Look at it first and then let's talk about it. A. Delivery requirements 1. Delivery timeline drawn and discussed 2. Physical restrictions 3. Hours of operation 4. Labeling requirements 5. Transport time required 6. Preferred delivery parties 7. Bill of lading 8. Pallet requirements 9. Packing requirements 10. Weight restrictions 11. "Attention to" identified 12. Special wrapping or secondary packing needs B. Quality requirements 1. Customer's audit system (ISO, Baldrige, Mil Std 105, Six Sigma) 2. Identify objects to match as standard i. Computer monitor

Last month we looked at 10 years of Printing Industries of America (PIA) Annual Ratio Studies thanks to PIA's Ronnie Davis and Steve Kobey. Specifically, the history of Value-added resulting from Manufactured Sales minus Direct Order Additives (materials and buy-outs) was viewed. Values-added by the Profit Leaders (top 25 percent of reporting firms) were compared with those of the lower 75 percent and found to be within a half percentage point of each other over the years. Conclusion: It isn't pricing that distinguishes between the high and low groups. You could multiply the DOAs by 2.75 and have a reasonable Target Selling Price for either

Take a hard look at the included table. Ronnie Davis and Steve Kodey, of Printing Industries of America (PIA), provided us with the basic data. It's taken from the last 10 years of annual Ratio Studies PIA supplied its members. In 1992 the series was modified to report sales by printing firms of "manufactured" products. The classification of "profit leaders" as companies with 8 percent profit and above on sales was changed. Profit leaders became the top quarter of reporting firms with the highest percentage of profit on value-added sales. Value-added sales are manufactured sales less Direct Order Additives. First, the table tells us

It's beginning to look a lot like crisis—for a major portion of our commercial printing industry. The printing trade associations are struggling, merging to survive. Printcafe had an IPO (Initial Public Offering) in mid-2002 at $10 per share that, at this writing, now hovers at slightly more than $1 a share. That group, formed during the dotcom frenzy, is a kind of conglomerate or trade association of four or five printing MIS (Management Information System) suppliers. Those suppliers provide the computer data model for several thousand printing companies. A few weeks back I visited with a major Rocky Mountain area printer. "Rog, in all

Increased productivity doesn't translate directly to increased profits. "The main cause is a profound misunderstanding of the relationship between productivity and profits. Everyone from Alan Greenspan and Wall Street economists to corporate chieftains and financial journalists made the assumption that higher productivity and new technology would inevitably translate into higher profits." (From the cover story of Business Week, November 4, 2002, pg. 108, "The Painful Truth About Profits." ) Perhaps, in the long run, increased productivity converts to increased profits. But wasn't it Lord Keynes who said, "In the long run we shall all be dead?" It's a cold comfort to realize that it's

CAUTION: Some very bright consulting guys are touting Activity-Based Costing (ABC) for printing. Ten or 15 years earlier one of the top accounting firms was urging ABC for printers. Two years or so ago, I wrote a couple of columns suggesting ABC for printers. Every so often somebody thinks it's a great idea for printing, but it goes nowhere. Let's talk about it. The basic idea of ABC is that support departments, such as estimating, customer service, purchasing, materials management, scheduling, sales, accounting, etc., engage in activities that generate costs. They're resource consumers.  True. Those departments now operate without statistical measurement and control. Presently, we just load all those