Print equipment can be costly and run into six figure numbers for top of the range heavy production models. If you make the wrong decision when purchasing one of these machines it won’t just cost you an arm and a leg to put right – it may end up costing you your business. 

However, there are ways that you can mitigate the risk of splashing out on a new piece of kit. If you put in place a formalised structure that every investment decision has go through before being approved, it can take a lot of the grunt work out of the often gruelling due diligence process and enable printers to make the right choice more often.

There’s no right and wrong way of creating an investment decision template. Different printers use different methods although there is some commonality and overlap in the approaches used and some are more rigid and formulaic than others.

Take the example of London-based large-format specialist Displayways. The company goes through an incredibly rigorous research process, says managing director Rob Kelly. “First of all we look at the criteria of what we want the machine to produce, so we look at whether the onus is on quality, speed or a particular type of output for example. Then we go through a formal ‘request for information’ process.”   

This process – which is commonly abbreviated to RFI – entails asking manufacturers questions about their equipment and its capabilities. At Displayways Kelly “pre-identifies” machines that are capable of performing the function he needs fulfilled and then he creates a spreadsheet that features all of the different attributes that he wants the equipment to have – from a machine’s speed and ink usage through to its footprint. These questions are then sent out to manufacturers and when he’s received all of the information he starts to compare different models.

“We analyse every line and score the machines in terms of their production capabilities, their quality capabilities, ink usage, etc,” says Kelly. “Then we come up with a shorter list of machines that will do the job.”

The final stage in the process for Displayways is running a demo on the shortlisted machines so that a final comparison can be made. “We provide test files, settings and substrates that are relevant to the type of production that we want the machine to carry out,” explains Kelly. “We then compare the results.”

Once the decision has been made as to which machine is best suited to undertake the task in hand that’s when the company approaches the manufacturer to start negotiating around price.

London-based Park Communications follows a similarly rigorous process, with a heavy emphasis on testing machines that are being considered. According to Park managing director, Alison Branch, on a recent evaluation the company was told by a global printing equipment supplier that its testing was the most thorough that they had come across.

Branch says that all capex of more than £5,000 has to be approved by the company’s board – below the £5,000 mark it can be authorised by a director – with the purchasing process overseen by departmental managers.

“The manager will raise the initial proposal and on approval take responsibility for shortlisting the various alternatives, undertaking full testing, collating costs, summarising the benefits and agreeing performance acceptance criteria,” she explains. 

For large capital sums a director takes responsibility for the final negotiation with manufacturers and for investments north of £5,000 when a price has been agreed a “full cost benefit analysis, which includes a cashflow and net present value, will be presented to the board for consideration,” says Branch.  

Annual appraisal

At Portsmouth-based Bishops Printers, the company board usually discusses significant investment plans for the upcoming financial year thoroughly in November, although managing director Gareth Roberts says that senior managers are free to approach him throughout the year to consider purchasing equipment that may have been overlooked in the annual discussion. Once the company identifies the need for a new piece of kit that’s when the hard work starts, with the evaluation process sometimes taking a couple of years.

“Generally we try and visit trade shows and do some initial investigations before inviting two or three potential suppliers in to discuss and prepare costs/proposals,” says Roberts. “For areas where investment is significant, or we remain uncertain, we might ask to visit existing customer sites to gain feedback on the pros and cons of any potential investment. Where we have experience of the supplier or the equipment we might be able to make a decision relatively quickly, but in other areas the process might take two years and involve extended discussions and negotiations.”

Not everyone follows such a formalised path to investment as the likes of Park, Displayways and Bishops, but that doesn’t mean that their due diligence process isn’t as rigorous. 

Central Colour, based in Nottingham, typically looks at press investments every three to four years, with the process overseen by directors, general managers, production staff and senior print technicians, according to Richard Limer, joint managing director.

“We don’t have a formal purchasing structure for investing in new equipment,” says Limer. “As the interval draws closer we have management meetings to assess the future requirements of the business and the investment. We look at our client base and any change in our core business activity, which can sometimes dictate the direction in which we move. We use this time to also weigh up current machine reliability and any cause for concern.”

Although Limer says that during the most recent round of investment the company decided to buy another Mitsubishi – a machine that the company has historically used thanks to its “quality and reliability” – over presses from three other manufacturers, he wouldn’t rule out exploring other opportunities in the future. 

“We certainly aren’t tied to one manufacturer and if other manufacturers address our needs better than Mitsubishi during the next interval, we will be talking seriously. At the end of the day, it boils down to what’s best for Central Colour and our customers,” explains Limer.     

Return on investment

This criterion is also at the centre of any investment decisions that Bristol-based Taylor Brothers makes. “No investment proposal will be looked at in detail unless there is a clearly perceived need for it in terms of our markets,” says Charles Taylor, managing director. “That is to say will it improve what we do for our existing customers and will it help us attract new customers? How does it fit in terms of our existing markets and will it help us develop new ones?”

If these questions are satisfactorily met Taylor then starts to evaluate the economic benefits of the investment in terms of ROI and how the equipment will be funded. 

“That at least serves to establish the feasibility of the investment,” says Taylor. “As to assessing competing products, for most decisions we will take stock of what the market has to offer on a fairly informal basis, talking to suppliers, assessing the relative merits and talking to users in order to establish which product is most suited to our market needs and budget.”

He concedes that most of the technologies that the company is likely to invest in are fairly established and he tends to deal with long-established suppliers, which makes the comparison process much easier, but that isn’t going to be the case for every company.

Take the example of London-based FE Burman, which has a long track record of investing in technology that’s still in its infancy. According to managing director, Michael Burman, the company was one of the first to invest in scanners and digital printers and is often used as a beta testing site by manufacturers looking to break in new technology. Burman says that the company has established principles for new investment, but there isn’t a formal process that it follows.

“That’s because no two investment decisions are alike – the only common factors are you’re spending money,” says Burman. “In terms of what we purchase we tend to be at the front of developmental technology so there usually aren’t any comparative machines out there in the marketplace. If I were going to buy a lawnmower or a washing machine I’d go through a more formalised process because there are established markets for those products, so I can look at what’s available to me, what best fits my needs and then get the best price possible, but we’re not in the business of buying lawnmowers or washing machines.”

For Burman the investment decision-making process is similar to the challenge of crossing a river without a bridge. 

“I do as much work as I can in terms of checking and testing the market, and what that does is it makes the river narrower, but, in my experience, you can never get it so narrow that you can just step across. What you have to do is jump. You only jump if you have a degree of confidence in your supplier, that they are going to support you when you land on the other side. And having made the jump you have to make damn sure that the machine works because you’ve made that commitment.”

It’s clear that in the printing industry the investment journey differs from company to company with some following more rigorous and formalised processes than others. The common thread that all these businesses share is that when it comes to making that leap of faith they’re doing as much as possible to make sure that they land safely on the other side. 

Establishing an investment evaluation protocol 

First of all you need to pull together an RFI. The standard questions that should appear in any RFI include speed, quality, consumables consumption, thickness of substrates handled, colour gamut, footprint, etc. However, additional questions should be added which will be determined by what you want the machine to do. It’s sensible to get input from other members of staff about what these questions should include – from senior management all the way through to machine operators.

If investing in established technologies there will inevitably be more than one machine to choose from so send this RFI out to a number of different manufacturers and input their responses into a spreadsheet so that you can quickly compare and contrast on different metrics. Use this information to create a shortlist of potential candidates and then book machine demos to see what they can do. 

Use your own files and substrates during the demos and take along your machine operators so that they can get a feel for the equipment and its capabilities. The samples produced at these demos should be compared with one another to help you make a final decision on which machine will be most suitable for your needs. When you’ve reached this decision then you can enter into negotiations with the manufacturer about price.