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Fulfillment Services -- Delivering Value-added

March 2003
By Erik Cagle

Of all the value-added services that printers offer their customers today, either as a generator of increased press work or as a cog in a one-stop service machine, fulfillment is one of the most economical—and popular—options.

According to the National Association for Printing Leadership (NAPL) "State-of-the-Industry Report," 58.6 percent of printers currently offer fulfillment services, while 12 percent say they will offer it by the year 2004, bringing the total to just under 71 percent. It is among the top non-printing services sought by commercial printers.

K/P Corp. of San Ramon, CA, which generated $86 million in sales last year, is celebrating its 10th year of providing fulfillment services, making it a grizzled veteran relative to the industry. Those early years, according to Dan Plunkett, senior vice president of operations, were particularly challenging, as K/P found many of its clients weren't prepared to buy into the single-source mentality.

No Bundling

"We definitely came into fulfillment with the strategy of keeping our printing presses going," Plunkett states. "In retrospect, that strategy didn't work very well. Back in the 1994 to 1996 period, people who controlled fulfillment had nothing to do with the procurement of print. So when you tried to tie it all together, the (print buyers) really didn't want to consider the benefits of sourcing fulfillment and direct mail along with printing. K/P made many attempts to present a more holistic, overall cost approach, which included printing, and ended up losing opportunities. Clients wanted a company that was 100 percent focused on fulfillment; they believed those suppliers would do a better job for them."

K/P learned some tough lessons early on. During the ramping-up process, the printer chose to grow knowledge and abilities within its organization as opposed to bringing in experts in the fulfillment realm. The first eight months were particularly challenging, Plunkett admits.

K/P then imported talent with fulfillment experience in other industries, which helped steer it in the right direction. Plunkett believes the environment was a lot more forgiving in those days than it is now.

"Whether we were smart or just lucky, the time period in which we developed fulfillment expertise was much easier than now," he says. "The industry was much more immature 10 years ago. Today, there is some really good competition. If we were breaking into it now, we'd need to take a much more aggressive stance as far as bringing top-notch expertise into the organization early on.

"The technology we were using back then was nothing compared to today. Fulfillment has evolved into a complex digital process. It's impossible to do any kind of major fulfillment work without advanced Internet capabilities. At the very least you must have the ability to take digital files from your customers' Websites and download them into your system. When we started, it was a telephone and fax world. If you had software that could manage your inventory and orders, you could play in the game."

K/P has come into its own, fulfillment-wise, in the last three years, according to Plunkett, making it a 50-50 split with printing. A sizeable portion of K/P's printing work, in fact, is now being driven by the fulfillment business.

For Penn Litho of Cerritos, CA, fulfillment represented a graduation in degree of service. The company had always offered small-scale mailing and fulfillment projects, according to President Carol Geddes, which occasionally entailed outsourcing work to another vendor.

Penn Litho didn't actively market these capabilities initially. That has changed.

Complete Solutions

"Our clients were asking us for an end-to-end solution," she says. "It put us in a better position to understand and address their marketing needs, rather than offering just the commodity of print. We are just beginning to see the positive results. Not only does it bring in value-added sales—fulfillment, mailing and digital printing—but it increases the client loyalty in terms of print buying."

Geddes felt the initial startup process went quickly, but it was kept in check to allow Penn Litho to establish its workflow. A good deal of the learning curve centered on implementing a new IT system.

Another printer, Daniels Graphics in Asheville, NC, has provided business-to-business literature fulfillment services since 1958. According to Jim Daniels, president and CEO, fulfillment evolved into "an information-driven marketing support service" as opposed to traditional fulfillment.

"In the early 1990s, we determined that the digitization of information and the printing industry, along with new communication technologies, presented us with an opportunity to leverage our fulfillment capabilities with the increasingly sophisticated information management services offered by our sister company, Daniels Communications," Daniels says. "Our fulfillment services became proactive rather than reactive. We didn't just receive a request, fulfill it and ship it; we married this function to our data collection activities pertaining to literature ordering and transactions, as well as information requests serving both business and the consumer. This information is analyzed and reported to our customers for use in their marketing and distribution planning.

"Our 'value-added' proposition is assisting companies in determining the effectiveness of their marketing, what they should print and where it should be distributed."

Programming software, e-commerce and cross-platform compatibility were the primary challenges Daniels Graphics faced during its fulfillment growth. The printer evolved into an integrated platform that included fulfillment, marketing, warehousing and distribution solutions.

Delving into the world of fulfillment was a way for the Courier Corp. to protect niche publisher clients, according to James Conway, chairman, president and CEO of the North Chelmsford, MA-based book printer. "Some of the smaller niche publishers that we were printing for weren't big enough to do fulfillment on their own," he says. "It was a defensive posture to make sure we didn't lose business that might have otherwise gone elsewhere."

Courier's introduction to the world of fulfillment went relatively smooth, especially in comparison to the learning curves encountered on the more challenging press hardware. Conway points out that the financial commitment for fulfillment is considerably less than that required of a four-color press.

"It's not much at all. You're dealing with racks, storage, flow racks, cartons, a few mailing machines," he says. "You're talking tens of thousands of dollars as compared to a press, where many types run in the millions of dollars."

As for printers who hesitate to undertake an offering that does not speak to their core competencies, Conway advises to think of the client. "You know you have to add capabilities like fulfillment and other services to your business, because customers don't have as many people to handle it. If you can add services that will make it easier for clients to deal with one player rather than two, three or four different suppliers, then that's going to save the customer time and money. In the long run, it's a great return on investment and a way to win market share."

Keeping in Mind . . .

Printers offer their thoughts and advice for companies adding fulfillment for the first time:

Dan Plunkett, K/P Corp.: "A lot of companies have a tendency to think that the business can be treated as an offshoot of a printing company. You make a mistake if you enter this business without realizing that you're now part of the fulfillment industry. Although we began in the fulfillment business with the intent of filling our presses, we soon realized that it was a viable business in and of itself. This led us to becoming part of the fulfillment industry rather than just doing it ad hoc because our primary focus had been printing for so many years. This is very important for people to understand. It is a different industry and you have to be willing to be a part of it."

Carol Geddes, Penn Litho: "First, get feedback from your largest and most loyal clients. Ask your top salespeople if they would see the benefit from the added service offering. Be sure that key people in your company support your vision, or you may not succeed. Make sure you hire an experienced team to head up the launch. Invest in technology—mailing and fulfillment clients expect the best in this area."

Vaughan Fisher, Daniels Graphics: "Our fulfillment services are integrated into a broad spectrum of marketing support services revolving around information management. We believe these trends will continue to accelerate. In our market and business model, fulfillment plays a vital role, but is subservient to the considerations of marketing ROI, on-demand printing, market segmentation, e-commerce, data collection and anagement. Our advice would be to know your market and what it demands or desires of your company. Understand the technologies affecting demand for services and the role fulfillment plays in your business model."

James Conway, Courier Corp.: "Do it. It doesn't require a big an amount of capital, and it doesn't take that much time to get involved and train the people. Starting off small, you don't need to find warehouse space. Just find some empty, or underutilized, space that's in your facility now. You don't need thousands of square feet to get started. You just need a nice, clean area and some trainable, dedicated employees."

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