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CTP--New Tools, Old Theories

September 1999
When considering a computer-to-plate purchase, printers usually look at utilization measurement rates to determine whether or not the purchase would be a wise one. But decision-makers should proceed with caution. While the use of utilization rates are based on sound, albeit traditional, financial principles, they do not take into account newer management theories.


BY HOWIE FENTON


Equipment purchasing decisions are never easy. This is particularly difficult today, due to the momentum-driving technologies such as computer-to-plate and the compressed life cycles of digital equipment. Now add to this problem the hidden expenses associated with the implementation of computer-to-plate such as:

  • Digital contract proofing—faster networks;

  • More thorough preflighting—color management; and

  • Digital blueline proofers—higher powered servers.


This results in many printers struggling to figure out what questions to ask and what answers will help them with their purchasing decisions.

Although all the questions won't be answered in this article, one popular strategy, known as utilization rates, can be tackled. However, relying on the utilization measurement alone can be a mistake because that does not take into account avant garde production strategies to overcome bottlenecks and the importance of value-added strategies.

There is a theory about utilization rates that claims it is a useful measurement 1) before buying equipment to help make good purchasing decisions and 2) to determine if you should keep or sell off existing equipment. Often, however, the use of this measurement is oversimplified.

In practical usage, most companies look at a utilization rate to determine if they should buy a certain piece of equipment or, if they already own it, if they should sell it. The use of utilization rates are based on sound, albeit traditional, financial principles that do not take into account newer management theories, such as the theory of constraint or value-added.

The traditional definition of value-added is "selling price minus production costs." An emerging definition of value-added comes from business magazines such as Business Week and Forbes. This theory talks about value-added as "the strategy to help differentiate your company from the competition." It talks about not competing with the same products and services on price. Rather, it advises competing with different or better products and services, and preferably charging more.

Using this definition, one could argue that you need to add value to remain profitable. If you accept this theory, then it follows that your value-added is added at certain steps in your workflow. Therefore, your value-added perception could be created in such departments as estimating, sales, scheduling and customer service.
 

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