A Fortune 500 client engaged us to optimize their marketing print spend based on a 100,000 sq foot print facility they used for production and distribution. Employees at the facility complained that there was not enough work for them to do and often performed tasks that were unneeded, menial and/or time-consuming to demonstrate to headquarters that the facility was operating at its highest and best use.
Ingenuity Sourcing assessed the situation and analyzed the operation by interviewing the plant manager, observed the work that the crew was responsible for delivering, and documented the forms and marketing materials that were being produced. Along with this analysis Ingenuity visited the facility with the Marketing stakeholders for them to confirm the documents that were being developed and to provide context on the production facility. All in all, employees at the facility performed unnecessary tasks to appear productive creating negative downstream impacts.
Ingenuity Sourcing Solutions determined that the business problem was that the print facility was underutilized, had employees who were not fully allocated, worked with very old equipment that often-needed repair, paper costs were rising, mail costs were rising, paper stock was mounting as standard ordering of forms continued to pile up even though demand for both internally used paper forms and mailed marketing material demand slowed. This facility was costing this retailer millions of dollars per year to operate and provide marketing materials that few people within headquarters recognized as those involved relied upon years’ old tribal knowledge of “how they’ve always done it”.
In sum, the issues were multifaceted creating a complex web of issues. The first of these was the need for a shift from print to digital that was not reflected in the production strategy. The second was that dormant machines caused overuse of operational ones, leading to constant breakdowns leading to production inefficiencies. Next, the production team performed tasks manually to fill shifts due to lack of work. Lastly. shipped materials were discarded as online alternatives were available.
Ingenuity Sourcing Solutions findings were as follows:
- There was an overproduction of Marketing materials based upon a change in corporate strategy from print to website and digital engagement so customers to the retail locations weren’t even receiving the intended marketing message
- Much of the equipment within the facility was not used and had been dormant for several years which meant that the few machines that were in use were being overused and therefore causing much of the repairs that were needed
- The breakdowns of the few machines created delays in production and led to the crew’s underutilization as they waited for repairs to occur
- The overuse of the machines which subsequently broke down producing many more documents and marketing materials than were needed
- The internal documents and marketing materials were then shipped via FEDEX to each store location where store managers would receive them and throw them out because the same information was available via online portals and could be completed and sent back digitally instead of manually
- The crew manually completed tasks purposely using older machines due to the breakdowns of the faster machines and to fill their 8 hour shifts due to lack of work
- The internal documents and the marketing materials that were being produced filled up the large storage room to the point where paper stock and fully developed materials filled the rafters of paper that had no apparent use
As a result, the print facility was underutilized, incurring high operational costs and outdated machines led to frequent breakdowns, delays, and extensive repairs. The facility produced more marketing materials than needed due to a shift in marketing strategy. Materials were shipped to stores, only to be discarded as the same information was available online. Overproduced materials filled storage, resulting in unnecessary fixed costs.
Ingenuity Sourcing Solutions’ strategy employed a direct negotiation due to the specific use-case in this particular engagement to engage a partner that has appropriate competencies rather than engage in a market exercise. As such, Ingenuity engaged a third-party provider within our network that offers both print and digital solutions.
We then staged a collaborative assessment with our client and the provider by walking the facility with stakeholders to review findings and assessments and collaborated with the third-party provider to establish a new print strategy reflecting the client’s vision of tomorrow’s print needs as the “new normal” based upon their corporate strategy and direction.
Taking into consideration the anecdotal, empirical, print facility employee feedback and leadership guidance Ingenuity advised the closure of the facility based on the evolving marketing needs. Based upon the anticipated future of the need for increased digitization of marketing messaging Ingenuity Sourcing Solutions negotiated with the building leaseholder to minimize financial impact, both anticipated and unanticipated. Further, we advised that reducing marketing materials was critical to the marketing strategy and recommend the discontinuation of internal documents in favor of further utilization of the company messaging system for internal digital communication. Lastly, we orchestrated asset liquidation for the sale of assets via auction and sale of unused machinery and paper stock with a 4th party vendor.
As a result of our engagement our client saved $5 million in the first year (including hard and soft cost savings in addition to the sale of equipment and print stock). It is important to have industry experts assess situations holistically who know marketing value streams to extract the most value possible for every given engagement.
Ingenuity Sourcing Solutions’ holistic approach to marketing print spend optimization resulted in substantial savings for the client. By addressing not only the immediate issues but also the underlying operational and strategic challenges, Ingenuity created a streamlined, cost-effective, and future-focused solution that aligned with the retailer’s evolving marketing needs. This case highlights the importance of industry expertise and holistic assessment for maximum value extraction in procurement engagements.
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