The path to optimal performance and profitability for print production companies

5 December 2024

Costs within the printing industry in Western Europe are rising sharply. Just think of the wage disparity compared to other countries, the shortage of skilled employees and ever-increasing administrative costs. Margin pressure and loss of profitability are therefore known problems for many print production companies. But how can you, as a print production company drastically reduce or even halve, those administrative costs?

Western European countries have a wage disparity compared to other countries

The number of print production companies is declining year after year. But employment within the sector is also systematically going down as a result. People today are less likely to choose a job within the graphics industry. Moreover, Western European countries are then also the most expensive countries in Europe when it comes to the wage cost per effective hour worked. And that results in a serious wage disparity compared to other countries.

Countries with lower labour costs also produce much more cheaply. Machinery and substrates may be equally expensive everywhere, but the wage cost is on average only 1/3 compared to Western Europe. And this more expensive labour cost is responsible for the 40% administrative cost per print order.

Not to mention the ever-growing shortage of graphics-skilled staff facing the industry. To make up for this shortage, investments need to be made in providing training. Or company managers should opt for employees who can handle technology and databases. Or automation needs to be deployed.

Even more administrative costs due to an increase in small orders....

You read it right. Your administrative costs will increase even further as orders get smaller and smaller. And that's a problem. Say you have only 5 orders as a print business, but they are large orders, planning is not difficult. If they are small editions of about 100 copies, you need many more orders to achieve the same turnover. And that is a huge challenge. By planning manually, as you used to do, you can no longer keep track of production.

Also, delivery deadlines are getting tighter. This is part of people's mindset. We are all more demanding and expect our order to be delivered the very next day. The average delivery time of a print job today in Europe is 3 to 5 working days. Less than a decade ago, it was at least 1-2 weeks.

You may have the most advanced machines, but how do you make sure no errors creep into your print job? With the increasing number of those small orders, and the speed at which they need to be delivered, errors are also increasing exponentially. Having the right production machines is one thing, but being able to keep them running continuously requires extra attention. Your administrative workflow is not in balance with your production. Your production can handle a lot more, but your administration can't keep up.... That's why it's important to keep an overview of all orders and available production capacity. And you can only do that if your planning is right.

Halve your administrative costs and double your margin

The labour cost disparity and staff shortages can be addressed by robotising production and finishing processes. Still too often business leaders focus on production and machine optimisation. In doing so, they often forget that the administrative workflow must remain in balance with the production workflow. The weakest link is usually responsible for the efficiency loss you can obtain through production.

After more than 25 years of experience, we can conclude from benchmark data from more than 1,200 print businesses, that the administrative cost of a print order is in reality 40% of the total cost. And this high administrative cost is a culprit for many sign and print businesses. Multiple orders are lost, leaving good margins out of the equation. But the good news is that we can halve those to around 20%. Suppose the selling price of an order were to remain the same, that means the margin of an order could double!

Automation remains the cheapest option

We can conclude that automation is the cheapest option to reduce costs, and increase returns. The full printing plates start with your administrative processes. If you don't automate those with an MIS/ERP like MultiPress, you won't get your business processes under control, and you'll lose out to your competitors. So your company also needs a business software in which all aspects of an administrative workflow are available. Do you choose not to? Then nothing will change in the administrative workload for your employees in the first place. Subsequently, your administrative costs will not be reduced either. Especially if the production of your orders is not well coordinated. So chances are you will struggle to keep your head above water.

Do you also want to halve your administrative costs? Then get in touch now!