Printing and Purchasing

Archive for December, 2011

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Roger L. Putnam Vocational Technical High School – Print Shop

The students in Putnam’s Print Center deserve hearing an alternative view to the articles in the Springfield Republican and MassLive.com concerning purchasing a two-color press. Roger L. Putnam Vocational Technical High School has helped many students learn a trade over the years and I am one of those students. When I attended Putnam, the Print Shop faculty, Mr. Al Chapman, Mr. Jay Clune and Mr. Bruce Dodd, instructed me about printing, and had a positive influence in my printing career.  On their advice, I continued my education at Rochester Institute of Technology’s School of Printing. Because of my education, I have worked for several large top-rated printing companies in the Pioneer Valley such as; Magnani and McCormick, Inc., Allied Printing Services, Inc., and Dow Jones & Co., home of the Wall Street Journal.

As the construction for the new Putnam comes to a close, several are recommending changes to the print shop which would require hundreds of thousands of extra dollars to modify the building and purchase a new larger press.  The reasons given for these changes are for the students to make more money, to train on a press that is used locally and smaller printers are closing, which use smaller equipment, leaving only large printers, with large presses.

“It wouldn’t be right to lie to kids,” said J. M. “Buck” Upson of Pioneer Tool Supply in West Springfield and a longtime advocate for vocational education in the region. “It wouldn’t be fair to have them go through this program for three years and not give them the skills they need to get jobs in today’s big printing companies.”

“Smarter and better trained means higher paid workers, and that’s why Putnam needs the kind of press that is big enough to print catalogs and magazine-sized booklets. Workers capable of handling those presses can earn up to $25 an hour.”

Residents of Springfield, MA deserve to know there are other viewpoints and information that they need to know before making a final decision.

  • Because the printing industry as a whole is in decline, small and medium-size printers are closing. The recession hasn’t helped the printing industry where over 2,000 companies closed in 2010 alone. The printing industry can be compared to farming during the turn of the 1900’s when people sold their farms and moved to the city leaving fewer but larger farms. The decline of printing can be attributed for the following reasons:
  1. Technology: Since graduating from Putnam, technology has improved making presses three times faster, and desk top publishing where an individual can print at home.
  2. Internet: Mail reduction has reduced the need for fewer envelopes and letterheads and documents posted on the web has also reduced the need for printing.
  3. Digital Printing: This has allowed customers to order smaller quantities economically.
  4. International: Competition from off and near shore has reduced local printing.
  •  Raising the money to purchase a larger press and to modify the building is only part of the added costs. The larger the press the higher the operating and consumable costs. Examples of operating/consumable costs are electricity, rollers, blankets, packing, fountain solution, blanket wash, ink, paper, repairs, etc.
  •  Medium to large sized printers purchase four to eight color presses. A six-color press provides greater versatility, allowing the printer to print four color process, 1 PMS color [corporate color] and a spot varnish in one pass. Normally these presses have an aqueous coater too.
  • The Print Shop in previous years had a larger press, a Heidelberg KORD, however, it didn’t run very much in contrast to the duplicators [small presses] which produced work daily. For a student to become proficient they need to run the press all the time. It takes years to become proficient at running a multi-color press which is confirmed in one of the MassLive articles. “It can take two to three years to get a worker off the street up to speed.” Does Putnam have the volume of work needed to make a student proficient in operating a larger multi-color press? If Putnam has the volume of work, how will faculty decide which student[s] will be given the time to become proficient? Most large printers would start a student as feeder operator/2nd press person not as the lead press person, except on a small press.
  • Putnam could install a color copier/printer and network it with the battery of existing MACs. The future of printing is personalization. With this network, students can learn to prepare files for variable data printing, and prepare mail files per the US postal regulations.
  • Since digital printing is a growing segment of the industry, Putnam could consider installing a Vutek. With a Vutek students can train to develop complex layouts, cartons, pocket folders and test their files by printing them. The students could learn the art of ruling up a much larger press sheet such as 28×40”. A second machine, Putnam could purchase is an I-cut where students could test their die building skills needed for pocket folders and cartons. Since the I-cut can score and cut, the pocket folder, box project that was printed on the Vutek can be cut to final size even on 16pt board where scores and flaps can be verified.
  • A school should be a place where students learn the fundamentals and diversity of their trade, to setup/run different equipment, to solve problems, and to learn the mechanics and chemistry of the trade. These fundamentals can be taught with smaller presses [duplicators].
  • If higher paying jobs are the concern, why not teach the fundamentals of print planning or estimating? Here the student can make more than as a press operator.

Students should have the best equipment and training, which will give them the best chance for a good career. It is my hope there will be an open debate within Springfield on how to properly equip the new Putnam Print Shop.

Printing: Paying the Right Price

When a customer’s order is complete, will they have paid the correct price?

In traditional printing, there are numerous variables that affect costs – these variables are driven by customer requirements, such as: quantity, number of colors, coating types, and finishing operations, to name a few.  In digital printing, however, there are fewer variables that affect cost.  It can be said that each variable produces waste and the printer estimates the price based on historical averaging of these known variables.

Conventionally[i], the delivered quantity of an order has been +/- 10 % of the quantity ordered, – for either traditional or digital printing.  Furthermore, the delivered quantity will most likely be different than what was ordered.

How will the customer evaluate the invoice during the auditing phase so to determine the proper price from the ordered quantity versus the delivered and the estimated price versus the invoice? The answer to this query lies in the billing technique used by the sales representative.  The easiest technique to use and comprehend is the “Thousand-Rate Price” [TRP]; however, it is generally inaccurate, because the customer has already paid for the fixed cost, as the following example demonstrates.

                          Quote                          Quote

Item                  Quantity A                    Quantity B

Quantity            90,000                         100,000

Pricing              $29,000                        $30,000

TRP                  $322.22                        $300.00

The “thousand-rate” price [TRP] is defined as: the estimated price [$30,000] divided by the order quantity [100,000].

Another technique is Additional-Thousand Pricing [ATP], which should be lower than the Thousand-Rate Price [TRP], because all the Fixed Costs [FC] have been covered in the base quantity [100,000] estimated price.

Fixed Costs [FC] are defined as: costs that remain constant, regardless of any change in a company’s activity[ii]. They include such items as: pre-press, plates, equipment and material make-readies, dies, etc.

Pre-Press                    $15,000

Plates                              1,000

MR Press & Bindery        2,500

Dies                                    500

MR Materials                   1,000

FC                                $20,000

The “Additional-Thousand” Price [ATP] is defined as: the estimated price less fixed costs divided by the order quantity or the variable cost to produce one-thousand pieces. The additional-thousand pricing can be sub-divided into two categories: arbitrary discount [ADATP] and variable cost pricing [VCATP].

Variable Costs [VC] are defined as: costs that change in proportion to a change in a company’s activity [quantity] or business[iii] and include such items as: non-make-ready materials; paper, ink, and non-make-ready equipment or production run costs.

The Arbitrary Discount Additional-Thousand Price [ADATP] is defined as: a discount percentage the sales representative has developed based on their intuition over the years such as discounting the Thousand-Rate Price by 30%. This discounted rate may or may not be a fair price, i.e. $300 x 70% = $210

                          Quote               Quote

Item                   Quantity A        Quantity B

Quantity             90,000             100,000  

Pricing             $29,000             $30,000

TRP                 $322.22             $300.00

ADATP             $225.55             $210.00

The Variable Cost Additional-Thousand Pricing [VCATP] is defined as: the Thousand-Rate Price with all Fixed Costs subtracted: TRP – FC = ADATP.

For illustration purposes, assume that Quote Quantity B is the ordered quantity, and the printer delivered a quantity of 102,000 giving the customer a 2% over run. Two percent over run is well within printing guidelines.

When evaluating the invoice the customer may use extrapolation or interpolation when there is a minimum of two different quantities per illustration.  For reliability when using interpolation or extrapolation, the estimated quantities should be within a reasonable quantity range of the billing quantity. When quantities are drastically different from the estimated quantities however, other factors within print production or estimating may influence the accuracy such as: plate ware, additional make-readies, price discounts on materials, arbitrary printer charges, etc.

Extrapolation would be used to audit the invoice pricing for the illustration above. The illustration below provides how the VCATP is determined.

                         Quote               Quote

Item                  Quantity A        Quantity B      VCATP

Quantity            90,000     –       100,000   =     10,000 quantity difference

Pricing             $29,000    –       $30,000   =      $1,000 pricing difference

TRP                 $322.22            $300.00           $1000/10,000=$0.10 each or $100/M

ADATP             $225.55            $210.00

Extrapolation is defined as:  the process of constructing new data points outside a discreet set of known data points.[iv]

Interpolation is defined as: constructing new data points between known data points.[v]

The following are three pricing examples based on the illustration:

TTP: 2 x $300=600 + 30,000 [Order Price] = $30,600

ADATP:  2 x $210=420 + 30,000 [Order Price] = $30,420

VCATP:  2 x $100=200 + 30,000 [Order Price] = $30,200

Alternatively the example showed a delivered quantity of 98,000, then $200 would be deducted from the 100,000 price of $30,000 = $29,800.

To sum up the arguments, VCARP is clearly the fair price for both parties, and additionally for the customer it is the best price, for most occasions.

The following are important keys to insure the printing is priced fairly:

  • When requesting pricing, always request a minimum of two quantities.
  • Use extrapolation or interpolation to verify pricing.

————–

Your comments and your print-procurement questions are appreciated concerning this article and other related matters.


[i] “11. OVER-RUNS AND UNDER-RUNS. Over-runs or under-runs not to exceed 10% on quantities ordered, or the percentage agreed upon, shall constitute acceptable delivery. Printer will bill for actual quantity delivered within this tolerance. If customer requires guaranteed exact quantities, the percentage tolerance must be doubled.”[http://www.multiad.com/print/Virtual_Center_PDFs/White_Paper_PDFs/PRINTING%20CUSTOMS-rev.6-25.pdf ]

[ii] http://www.investopedia.com/terms/f/fixedcost.asp

[iv] [http://en.wikipedia.org/wiki/Extrapolation]

[v]  Ibid.

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