In the previous segments we discussed the importance of managing the many pre- and post-pricing details of custom print projects. Because the ready-made, off-the-shelf goods they are built to buy donâ€™t require the same level of detail; commonly-used procurement methods and tools donâ€™t provide such functionality. Thatâ€™s unfortunate, because those same functions also set the stage for achieving the best possible price, effectively breaking the iron triangle in print buying.
The key to getting the best possible price on your print project is having at least one vendor willing to offer discounted pricing to fill open production capacity. Vendors seek fill-in work and will price it low because any revenue above cost of materials contributes directly to the bottom line. While this sounds simple enough, it requires an environment that is friendly to what weâ€™ll name contribution pricing. Proper management of pre- and post-pricing details builds that environment.
Such an environment requires a vendor pool large enough to access all of the capabilities needed as well as one or more vendors with open production capacity. Starting to sound familiar? It should. Itâ€™s one of the pre-pricing differences between custom print and approaches designed for ready-made goods discussed in previous segments. Each vendor should be qualified on a strictly objective basis on capabilities and output quality.
Specifications need to be complete, consistent and highly detailed so that they may be paired with vendor qualifications. They must include clear expectations of delivery dates, shipping details and quality level so vendors know whatâ€™s required from the beginning. This too should sound familiar as it is another pre-pricing difference between custom print and sourcing approaches for pre-made goods.
Much as it is in pre-pricing, communication between buyer and vendor is critical. Since vendors are offering low pricing based on a limited window of open production capacity, it is imperative that all opportunities, along with related information, make it to them as efficiently as possible. Also important is communication of the buyer’s understanding that vendors donâ€™t always have open capacity. The buyer must make clear that they know vendors canâ€™t always offer contribution pricing and are free to bid low, high, or not at all without penalty or risk of future expectations.
Management of post-pricing details is similarly important to an environment that fosters contribution pricing. Just as expedition of approvals, management of project milestones and curtailment of change orders help assure quality and service by keeping projects on-track, they also all create a fair, reliable and accountable environment for contribution pricing.
Obviously, when procurement tools are not built for sourcing goods with the pre- and post pricing requirements of custom printing, they will not be of much help when it comes to fostering contribution pricing. In our next segment we will take a look at how, with the people, processes and vendors you already have, you can break the Iron Triangle.