New Trend: Pre-Approval —Morgan
IN LATE April, Print Buyers Online.com conducted one of our popular Quick Poll surveys to see if more print buyers are pre-qualifying printers before they are able to work with them. Seventy-one major print buyers answered the following question:
“Do your print suppliers have to be on an approved supplier list in order to work with your organization?”
• Fifty-four percent of print buyers said, “Yes.”
• Forty-six percent of print buyers said, “No.”
This is in stark contrast to how printers responded to a similar question. Here are the results of a Quick Poll directed toward our print supplier members:
“In the last year, do you believe that more customers are requiring that their printers must first pre-qualify and be on an approved supplier list before they can use them?”
• Thirty-three percent of print suppliers said, “Yes.”
• Sixty-three percent of print suppliers said, “No.”
• Four percent of print suppliers said, “I don’t know.”
These surveys were also conducted in April 2007. Our research shows that more print buyer respondents are requiring printers to be pre-approved. In fact, our print buyer respondents indicated that the requirement to use pre-approved suppliers has increased from 31 percent to 54 percent in just 12 months’ time! Yet our print supplier respondents were unaware of this trend, as their percentages remained almost constant between 2007 and 2008.
The data speaks for itself; pre-qualification lists are becoming mandatory among many buying companies. Whether you believe this to be a good or bad practice, it is clear that this is an important trend—and one that warrants our attention.
One of myriad reasons supplier lists have become more important to print buyers is that they serve to delineate the rights and responsibilities of both parties. Erin Hynek, a commodity manager and print buyer for UPS, noted, “Our approved supplier list includes having a signed legal agreement and confidentiality agreement on file.”
In my mind, the pre-approval process is taking the place of the now-defunct Terms and Conditions for Sale document, which was created to minimize the number of conflicts between printers and their customers, as well as to diminish a printer’s financial liability when a job went awry. These standards were set up by parties that represented printers, and it is important to understand the new shift. Print buyers are now creating their own terms and conditions—and they expect their suppliers to adhere to them.
Another major print buyer uses the pre-qualification process as a background check on each printer. She said, “You really need to check out your suppliers before handing them a job. After all, the final product that is put out there represents your company, not the printer.”
David Mitchell, commodity manager of print materials for Arbonne, commented, “When I came on board as the senior print buyer, I re-qualified the current supplier base against potential new suppliers that I had worked with in the past. The current suppliers had to be competitive, exceed my current level of service, and show how they manage quality throughout the entire manufacturing process, thus reducing the chance of a rejection.”
Lee Watson, president of Aerios Direct, also shared his thoughts on the subject. “We interview potential print partners and—based on their answers regarding management, customer service, technology, whether they use new or old equipment, their amortization policy, their color controls and their willingness to execute a joint NDA—we either do or do not add them to our ‘Aerios Hard-Wired Network.’ ”
Here is feedback from another print buyer, who sheds light on why an approved supplier list is important for her company. Ulfras Floyd is a production manager with North Charles Street Design Organization, who is responsible for purchasing printing, managing bidding and overseeing contractor performance. “I qualify printers by looking at their samples and equipment lists, giving them our Vendor Standards document, and reviewing it with them so they understand and agree to our expectations,” she says. “It makes things go more smoothly, and the printer is able to supply a more accurate quote once they know more about our work, or to honorably decline to work with us if they don’t feel their company has sufficient capability.”
A manager of print procurement at Supervalu, added, “We thoroughly scrutinize all suppliers—from their products to their services. We qualify based on financial and legal stability, production and delivery capabilities, innovation, diversity status and activities, in addition to price competitiveness. It’s quite a lot to go through but, on the other end, when qualified, a printer knows that they are trusted and have our loyalty.
“When we know them as well as we do after our approval process, then and only then do we feel that we approach projects as true ‘partners’ and not just buyers and suppliers. Ninety-nine percent of our business goes to the approved suppliers. This allows us to work on finding best-case solutions and driving out costs, instead of spending all of our time on soliciting and analyzing bids from the hundreds of printers who contact us.”
Pre-Approved Gets Bid
Another reason print buyers take advantage of the pre-approval process is to ensure that everyone on their lists can support their specific projects. This can save them valuable time; they won’t be sending out bids to printers who don’t have equipment necessary for the job.
Cynthia Schultz, a production manager at The Richards Group, commented, “Each of our vendors has been carefully screened to meet the particular quality, price and service expectations of the agency and its clients. We support color-managed workflows employing ICC profiles and expect our print partners to be able to use these profiles to achieve accurate color on-press.”
Others utilize print management systems to pre-approve their print suppliers. Gretchen Carroll, a commercial print buyer for United-Healthcare, reported, “Our company currently uses Printellect to quote, award and invoice projects. This allows us to better manage print dollars spent.”
One print buyer said that all printers have to go through an annual Request for Proposal (RFP) process. He shared, “Each year, we go through a substantial RFP process that awards the printing contract to one vendor as primary and two additional backup vendors. If any particular vendor wins the contract three years consecutively, they are automatically awarded two additional years. Because of this extensive RFP process, we very rarely need to go outside of the approved supplier list.”
A representative at Kentucky Printing said, “Since we are a ‘print broker’ for a university, all of the printers we use for the university must be pre-approved and be posted as a ‘certified printer’ on the university Website for purchasing. For other clients, we have a working relationship with several additional printers.”
While the majority of our print buyer respondents are in favor of pre-approved lists, others have expressed their reservations. As one PBO member stated, “Our process of getting a vendor on our approved list makes it difficult to source new suppliers and get truly competitive pricing. I’ve also talked with vendors who will not quote work with us because of past issues with these restrictions. It adds a layer of complexity to my job as production manager and is not the best practice for my organization.”
Whether or not you believe the pre-approval process is helpful or hurtful to your business, there’s no doubt that the trend is gathering momentum with major print buyers. The upside to this is that pre-approved lists can encourage stronger strategic interactions and, ultimately, elevate the value of print.
Those who embrace this trend may find new doors opening to them. PI
About the Author
Suzanne Morgan is president of the annual Print Oasis Print Buyers Conference (www.printoasis.com) and Print Buyers Online.com, a free e-community for print buyers and suppliers (www.printbuyersonline.com). PBO, which has 11,0000 members who buy $13 billion a year in printing, conducts research on buying trends and teaches organizations how to work more effectively with print suppliers. Morgan can be reached at email@example.com.