Paper Use = Hidden Profits – Mine the Gold

The last several years in the printing industry have tested management’s ability to reduce and control costs. Virtually every printing company implemented cost reduction programs.

The economy may finally begin to show signs of recovery. Improvements in the printing industry are evident but not dramatic.

Printing businesses are currently perceived as about as lean as they can be made. Companies may be profitable, although nowhere near where they should be. Printers want sale growth. The market remains very competitive. Companies are doing everything they can.

What is the one major cost of the business that did not undergo rigorous analysis and cost cutting?  Is it the cost of Paper?  Purchasing personnel are pricing paper every day. They are getting the best price they can. What else can be done?

How would you like to find an inexpensive way to save 4% to 8% of your paper costs?

• Not by - adding equipment.
• Not by - changing purchasing practices and vendors.
• Not by - implementing digital print solutions.
• By - doing things a little different within the organization.

Any way you cut it, saving 4% or more of paper cost is a lot of money.

So how do you do it?

The development of a paper usage management system is the answer.

The Process

System Analysis

System analysis involves developing a complete understanding of all the paper usage standards in estimating, job planning, paper allocation, warehousing and material handling, trim configurations, packaging waste including core and slab off, makeready waste, running waste, count control procedures, and finishing waste as well as the quantities produced versus shipped and billed.   -- That’s a mouthful.

You obtain this information through discussions with management of the various departments and the study of the established standards and procedures in estimating, job planning, material handling, pressroom, finishing and shipping departments. You further review with your various management what is going on in the plant that may differ from the established standards. 

Now what?

Detailed Job by Job Analysis

The foundation of the success of the program is measuring each and every job’s paper usage against the estimate. The first step is establishing a baseline of paper consumption against the estimate. A sample of 50 jobs including all typical job configurations is selected. You will want to dig out the following information:

• Job specifications
• Quantity ordered, produced, shipped, billed
• Overs allowed
• Paper used per usage report, Paper allowed for in estimate, Paper allocated to the job
• Quantities printed, makeready sheets, gross sheets, net count
• Count provided finishing department
• Any job completion reports from bindery and applicable information
• 
  

The accumulation of this information will help in the development of the usage baseline.

In addition, as this information is developed, one must look for the story relative to the specific job. What is unusual? Where are the inconsistencies? Where are the breakdowns in reporting? What caused the over consumption of paper on this job? Are we producing more product than we ship and bill and why?

Now what?

Measurements

Now that a full understanding of the standards and procedures has been developed and the baseline for paper usage and quantities billed versus produced and shipped is established, it is time to implement ongoing measurements. The measurements will lead management to the areas where improvements can be made.

• Production Standards – The Bouncing Ball
  • In the vast majority of printing companies departments run somewhat autonomously. Estimating does not communicate with planning relative to every change in standard. The plant personnel go to planning, customer service or purchasing and explain that a certain configuration of a job or specific type of paper caused them problems. No one wants any jobs to be “short”. The department head makes the change to the standards for that particular issue. As time goes on the plant works through their problem and figures out how to produce the job. The plant does not go back and to have the other department change the standards because now they always have plenty of paper for the job.
• Specific Ongoing Measurements
  • Job by job measurements are established as follows:
    • Actual paper usage versus amount allowed per estimate for each job.
    • Quantity billed, shipped, and produced as compared to overs allowed.
    • Paper usage report expanded to include slab off waste or sheet waste and warehouse damage.
    • Finishing department measurements are established for each type of major equipment which measures the number of leftover components per pocket or machine.
    • More as are needed for further analysis and improvement.
    • 
      

These basic measurements and daily review of the information will lead management  to the changes and adjustments in the standards and procedures. The measurements also provide information to be compared to the baseline established through the detailed job analysis above. This gives you the scorecard from which to measure improvements.

How is this managed?

Management of Program

This program needs the support and active participation of upper management. Without it the program will risk becoming another “flavor of the month” improvement effort.

It is recommended that a paper usage coordinator be chosen to lead this program. The paper usage coordinator needs the support of a committee which consists of upper management, plant manager, purchasing manager, pressroom manager, finishing manager and others as needed. The paper usage coordinator chairs the committee and is responsible for measurements, communication with both the plant and the committee, minutes and follows through on action items developed.

Initially weekly meetings will be needed to sort through all the issues that have surfaced and develop appropriate action items. After three months bi-weekly meetings can take place.

Expectations

After the initial review and upon the implementation of the measurements positive results appear immediately. This is the result of the awareness factor. The employees see that someone is actually watching, responding and listening. In most cases the plant employees have known about the issues but nobody has ever done anything about it. The employees get excited about helping out.

After the initial awareness factor improvements (which can amount to 30% to 40% of the total savings) the standard and procedural issues emerge as the measurements are reviewed. Management makes the needed changes and the savings are generated.

Generally, large well managed facilities will uncover savings of at least 4% of paper cost. Savings of up to 8% have been generated through an expanded version of this program in smaller operations.. It is entirely dependent on the hidden opportunities within the specific organization. After the implementation of this program the opportunities will no longer be buried deep in the records of the company.

Like any thing else, management must continue to monitor results and participate on an ongoing basis. This program must become a permanent part of the management system or the savings will simply fade away.