Opportunity Costs and the Compelling Business Case for Production Inkjet
Weighing a decision whether or not to make an investment in new technology is a unique experience for every print service provider. It requires calculating the potential ROI based on factors specific to each business, its customers, and its capabilities. But there’s a certain degree of due diligence that is required for everyone.
If you’re a PSP considering a first-time or expanded investment in production inkjet, you’re probably depending on classic “before and after” models or cost vs. benefit exercises to justify your decision. But the elements included in your analysis might not be the obvious buckets on a traditional spreadsheet. Opportunity cost is one of them. In economics, it is defined as the opposite of the benefit that would have been gained had you taken an action you did not—the missed opportunity.
Examining the Cost of Lost Opportunities
Opportunity costs are not generally considered by accountants or included on financial statements in the same way as explicit costs or actual outlays like equipment, training, buildout, labor, etc. But they should be.
The opportunity costs of deciding not to invest in production inkjet, for example, represent what you can’t do as the result of that decision.
The opportunity costs of deciding not to invest in production inkjet, for example, represent what you can’t do as the result of that decision. The jobs you’ll have to turn down. The customers who will take their business elsewhere. The mounting number of high-value applications beyond your capabilities. The repercussions of slowing your business growth or waiting too long to secure long-term profitability.
Making the Inkjet Decision at Goodway Group
During a recent webinar, Karen Kimmer, a business development leader with Keypoint–InfoTrends, spoke with Mike Janowski, president of Goodway Group of Massachusetts, about the cost-benefit analysis behind the company’s decision to invest in inkjet. In July 2018, the full-service provider of integrated communications technology and printing solutions added a Canon VarioPrint i300 sheetfed inkjet press to its fleet of offset and digital toner devices. And opportunity costs figured prominently in the decision.
Kimmer opened the conversation with an overview of production inkjet’s evolution into the fastest growing core printing technology in the industry, with an expected CAGR of 4.4 percent by 2024. This wasn’t news to Janowski. He definitely had production inkjet on his radar for quite some time and had watched its steady advance. But it wasn’t until someone handed him a magazine printed on inkjet at an industry meeting that he experienced the full impact of the evolution.
“I saw firsthand the outstanding quality of inkjet printing, including vibrant color that rivaled anything we could produce on digital toner.”
No More Lost Opportunities
Though he wasn’t waiting for a specific customer need to spur a decision, Janowski recognized the time was right to add inkjet to the company’s capabilities—especially as a way of capturing lost opportunities. He acknowledged Goodway Group had been “walking away from high-margin jobs we knew we couldn’t handle even with a fleet of digital toner equipment.
“We couldn’t even look at some profitable work opportunities due to concerns around intense SLAs, deliverability, time frames, etc. We just weren’t confident we had the capacity to meet demands. When that happens enough times, it hits you between the eyes.”
Now, with the fast speed, enhanced productivity, and workflow efficiencies of the VarioPrint i300, Goodway Group can confidently commit to even demanding deadlines.
“Without inkjet we would have had to say ‘no’ to this very demanding but very profitable opportunity. But we didn’t even blink and ended up looking like a rock star.” Mike Janowski
To prove the point, Janowski shared an impressive customer success story. A national pharmaceutical company called Goodway Group at 10 a.m. one morning. The company had just received FDA approval for a new drug. They needed 4,500 copies of a 28-page four-color brochure printed and shipped to their sales reps around the country for the product launch the following day.
“Without inkjet,” Janowski said, “we would have had to say ‘no’ to this very demanding but very profitable opportunity. But we didn’t even blink and ended up looking like a rock star.”
Other Key Considerations
Other considerations, beyond opportunity costs, also factored into the company’s decision to add inkjet. Paper was one of the biggest concerns. Goodway Group did not want to buy pretreated paper for inkjet production, preferring to stick with the substrates regularly used on its current digital presses and simply migrate the jobs from toner to inkjet.
“As we got closer to a decision, Canon actually tested the papers we use on a regular basis for our existing clients,” Janowski said. “They were able to demonstrate clearly there were no issues with the vast majority of those substrates, coated and uncoated.”
Then there was the reliability and uptime.
“We had no experience beyond offset and toner, so when someone told us the VarioPrint i300 could operate at a 95-plus dependency percentage, we didn’t believe it,” Janowski said. “We thought it was just a sales pitch. But we were wrong. I can honestly say after a year and a half, I don’t even know what the Canon Service tech looks like. Among reasons to switch to inkjet, this is one of the most compelling. We have no fear of the machine going down when we’re jam-packed with print. It’s great technology.”
Labor is another huge part of overall investment costs for print service providers bringing in new technology and equipment. With the addition of the VarioPrint i300, Goodway Group was able to make small adjustments and use its labor force to maximum capacity.
“Our operators were very excited to operate some of the most advanced equipment in the industry,” Janowski said. “They were able to master it and quickly become proficient. One key operator can run the i300 and two or three other digital devices at the same time, so we didn’t need to hire extra staff to run it. Then, when the pandemic struck, we were able to meet customer demand with reduced labor because of the press’s ease, uptime, capacity, and consistent quality.”
Compelling Results from the Inkjet Decision
With the addition of production inkjet capabilities, Goodway Group can now confidently commit to even the most demanding SLAs. Customer retention and loyalty have increased. Employee morale and productivity have increased. And the company is bullishly pursuing more high-value opportunities such as web-to-print storefronts for their customers.
“We’re now considered the go-to resource when it’s crunch time. If you have that, it’s the best sales enabler ever.” Mike Janowski
“Now with inkjet, Goodway Group is in a fantastic competitive position,” Janowski said. “The Canon VarioPrint i300 is a ‘gamechanger,’ helping us to not only gain market share with new clients but also grow more business with existing clients. We don’t need to say ‘no’ anymore. We’re now considered the go-to resource when it’s crunch time. If you have that, it’s the best sales enabler ever.”
How to Build Your Case for Inkjet
If you’re weighing a decision whether or not to make an investment in production inkjet, calculating the potential ROI for your business will require a cost-benefit analysis that goes beyond traditional factors to include the cost of lost opportunities. Janowski offered this advice to PSPs:
“Do your homework. Do your research and due diligence. Reach out to other PSPs for education and collaboration. The thINK Canon users conference is one opportunity you don’t want to miss. It’s probably the largest venue Goodway Group used to learn about inkjet and talk with peers about their experiences and the potential profit opportunities with this innovative technology.”
Did you know?
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