This reluctance to be up front about a side of print that is as old as print itself, is potentially very damaging. While in the realms of customer service, open debate and the sharing of good practice has led to massive leaps forwards, a lack of openness about outsourcing is hindering improvements here. To make the most out of these deals and to ensure all parties are protected, this has to change.
The first task is to de-sensitise the outsourcing issue. The past few years have seen much discussion of how shifting processes back in-house brings efficiencies and better service. While this may be true in some cases, it is certainly not true for all. And, contrary to common perception, many companies are still outsourcing extensively, and with good reason.
For example, Paul Manning, managing director of Rapidity, says he is currently outsourcing around £1.7m worth of work per year. Sam Neal, managing director at Geoff Neal Litho, meanwhile, says he is outsourcing around £500,000 worth of perfect binding every year.
Neal says the reasons are simple. "A lot of machinery has come a long way and you can do a lot now in-house, but when you need something off mainstream, something off A4 or A5, you need some expertise," he says. "Also, outsourcing is often much more cost-effective than keeping the work in-house.
"We have three firms – one that does the shorter run work, one that does the weird and wonderful work and one that wants the longer run work – we can’t buy a binder that does all those things well enough to make it competitive to keep it in-house."
Clearly, the major benefit of outsourcing comes from not having to invest in kit, staff or specialist skills to do something you would not require often enough to justify the expense of doing it yourself. In addition, specialist online operations such as Printed.com and Exaprint are opening the door to new revenue streams by bringing outsourcing, even of fairly specialist items, to the desktop.
Admitting that outsourcing is a regular part of the everyday industry, and explaining why it is a good idea, is only half the battle. Printers also need to share best practice in working with other suppliers on outsourced jobs to ensure these relationships are beneficial to all parties. For starters, in a world where print companies can go bust overnight and where one bad job can ruin a reputation forever, some assurances are generally needed.
Neal says Geoff Neal Litho works by building extremely close relationships with its suppliers with clearly set out stipulations. "Our suppliers work to our terms and conditions and to our service levels. We audit them and we meet regularly face to face. That’s how we outsource. It is a case of working with key partners and having agreed rules," he says.
Manning’s approach is similar. He says that his account managers work extremely closely with suppliers to build productive relationships within clearly set out parameters. He adds that there are some other considerations too.
"We work within our ISO 9001 and ISO 14001 certifications when stipulating what is required from a supplier and as such we demand a high standard of process control and environmental sustainability. We also look for location and take recommendations seriously to make sure we’re not using untried and untested companies," he explains.
Price pressure
Price is obviously a big factor in any deal. Both Manning and Neal explain that they are not just chasing the cheapest quote, they want a competitive deal for high quality work. "We want the supplier to make a decent margin," says Neal. Sometimes, though, there is little room for manoeuvre on price and this has to be handled properly. In these circumstances it will be printers who have built up a reputation for reliability and fair dealing who will find favour. "People know we only ask for a better price when there’s no alternative," says one print boss.
A lot of what printers tend to do when it comes to outsourcing is off-the-cuff and informal like this. It goes back to print’s roots as a close-knit, informal industry where trust was paramount and a person’s word was more valuable than a written contract. These days, counsels Nicola Langley, commercial solicitor at the BPIF, you should be more careful.
"If a printer is outsourcing work, then I would advise that best practice is to have a written contract," she explains. "However, if there isn’t a single document that records all the terms of the agreement for the work, printers should not assume that there is no legally binding contract. A contract can contain written terms, spoken terms and terms that are implied by statute and common law.
"Hence a specific written contract is preferable as all the parties can be certain about exactly what they are agreeing to and disputes can be more easily resolved."
She adds that this contract should be comprehensive: "Certainly the price, quantity, time for delivery, specifications... In fact, all of the terms that the printer has in the contract with its own customers should be included. Time for delivery is often the big issue here; if the delivery schedule is set in stone then the printer must make that absolutely clear to the subcontractor and make it an express term of the contract.
"The printer commissioning the work should also think about the potential damage to his reputation should the goods be defective, or not delivered at all – what will his liability to his customer be? What will his potential loss of profit be? And could he recover those losses from the subcontractor? The printer may want to add an indemnity clause to cover this.
"Finally, the printer should think about including a confidentiality and non-solicitation clause if there are concerns that the subcontractor may attempt to "poach" the customer," she concludes.
You might think most printers would already have these types of contracts in place, but Gary Benner, co-owner of SM Finishing, says this is not the case.
"We complete compliance and confidentiality agreements, but nothing along the lines of a legal contract; it just hasn’t been asked of us," he says. "Luckily, most job instructions and other communication are sent via email so we all have something to refer back to. This always ensures clarity as to who has said what and what was agreed and promised."
So it is not just the outsourcers that would benefit from a contract – the suppliers could also use more clarity to ensure their backs are covered. And, as Manning says, this clarity is key, as outsourcing is not without risks.
"A major challenge associated with outsourcing print is that you are carrying the can for any mistakes that are not yours. As such, it is imperative to have suitably knowledgeable and qualified people placing the work as well as excellent suppliers you can rely on to help you out when needed. An ‘arms-length’ approach to outsourcing, in my opinion, is lazy and dangerous," he says.
Protect yourself
Langley stresses, however, that if you take the right measures to protect yourself, these risks can be alleviated and the multiple benefits of outsourcing can be enjoyed by supplier and outsourcer alike.
And that, really, is the message printers need to heed. The practice of outsourcing is a useful and valid part of the printing industry that should not be swept under the carpet, but discussed openly. This way the potential downsides of the practice are mitigated and the plentiful benefits can be utilised.
That’s something that will not only benefit the printers doing the outsourcing, but the suppliers – who are often the victims of bad deals or deals gone wrong – too.
The supplier view: SM Finishing
Gary Benner is co-owner of SM Finishing, based in Nottingham. His company specialises in various finishing processes, including saddlestitching and guillotining. Benner says the company focuses on large-volume jobs with quick turnaround times.
When it comes to taking on work outsourced by printing companies, Benner says he is always careful to ensure his business is covered financially.
"We will always ask for payment up front with all new customers," he says. "We also monitor the time longer-term customers are taking to make payments."
He says legal contracts tend not to be part of any deal, explaining that compliance and confidentiality agreements are pretty standard but printers never request anything beyond that. As a result, when things go wrong for either side, it is often a case of trawling back through emails or phone records to sort out "who said what and what was agreed or promised".
As for how printers could help the outsourcing process become smoother and more congenial for both parties, he argues two keys areas need to be considered.
"Better pricing is the first area," he says. "And printers also need to be clearer in communicating what the requirements of the job are and exactly what the delivery schedule is."
