Quick Printing

FEB 2015

Quick Printing is the resource for the Commercial printing, visual and graphic arts industries. Since 1977, Quick Printing has focused on improving efficiency and increasing sales and profits in the print shop. Industry experts share their ideas and

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MyPRINTResource.com Quick Printing | February 2015 23 Stuart Margolis Margolis Partners has long been recognized as the fnancial expert for family- owned businesses with a specialty in the printing, packaging and allied graphic communications industries. The frm is noted for its expertise in enabling companies to optimize profts. Proudly, it is the purveyor of the industry's Value-Added Principles of Management, and compiles the annual Printing Industries of America Ratios, the printing industry's premier fnancial benchmarking. income statement to monitor sales trends and general corporate management costs. This will enhance your ability to make timely decisions, particularly in today's more volatile economy. 5) Benchmark against the competition . Compare yourself to the PIA Ratio Studies. The Ratios reports are structured by specialization area and printer size to provide highly accurate industry benchmarks. Compare your own busi- ness to the proft leaders of your market niche. It will help you identify trouble- some cost areas and set achievable goals. Benchmarking: Set a Performance Dashboard To establish your "Dashboard" of Key Factors to those that are worth watch- ing, we advise you to frst take a glance at the factors that tend to vary among frms. Why? Because a comparison of some Ratio category results for proft leader (PL) per- formance to the industry average quickly reveals important secrets to success. Proft leaders consistently squeeze more out of every dollar they spend. § Direct and Support Labor (shows how much indirect labor is needed to have $1 of direct labor. The current support labor effciency is $1.19, including sales commis- sions). § Return on Investment (ROI). An ROI calculation removes fnancing issues and focuses on how much income your assets are producing. The current proft leader ROI is 22%. Facility Cost (how much it costs to run your facility) Production Costs: § Impressions per hour per piece of equipment § Average make ready time § Overtime per cost center § Waste measurement Sales § Hit ratios (sales quotes vs. actual jobs) § Number of cold calls § Number of possible prospects § Number of plant visits § Number of new clients Proft leaders continue to demon- strate, it is possible to be proftable in the printing industry. In summary: § Benchmark internally. Use your ratio comparisons as a benchmark for your own budget process and to quickly identify your company's problem areas. § Benchmark externally. Know your numbers, and compare them regu- larly to both the industry average and to proft leaders of the same size and product type. § Monitor changes in your numbers, and make timely management adjustments to improve or protect your proftability. PIA Ratios 2014: Industry Average vs. Proft Leaders (PLs) Ratio Industry Average Proft Leaders Variance Notes Proft Margin (as a % of Sales) 2.62% 10.28% 7.66% Removing PLs from industry standard leaves the remaining 75% of printers breaking even. Direct Labor (as a % of Sales) 14.96% 14.08% 0.88% PLs get more out of every dollar they spend in production. Total Payroll as a % of VA (*) 60.50% 52.02% 8.48% The largest expense area, but also the most controllable. Again, PLs get more out of every dollar the spent. Factory Payroll as a % of VA (*) 39.01% 34.46% 4.55% Includes management, production coordinators, payroll & benefts, etc. Total Factory Exps as a % of VA (*) 26.24% 24.38% 1.86% Includes building rent, utilities, repairs & maintenance, etc.; Excludes labor. Selling Expenses as a % of VA (*) 14.70% 12.26% 2.44% Sales salaries and commissions, benefts and taxes, as well as other selling costs. (*) Value Added We realize that monitoring each and every area can be overwhelming. To establish your own dashboard for the year, select areas that tend to be most problematic for you. Then, break down those areas of weakness into manageable goal areas such as: Financial: § Material % § Value Added § Total Labor Costs § Sales and Value Added per Employee § Value Added per Employee

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