Value – What Does it "Really" Mean
By Daryl P. Collins,
Vice President National Sales & Regional Operations
Wikoff Color Corp.
What is value and how does a printer measure it when it comes to evaluating printing ink suppliers? What can be gleaned from a price list or a proposal or even trial runs?
Value, what does it mean? Most of us learned the meaning of the value of a dollar early in life. Weekly allowances had to be earned, saved and spent wisely. As a kid, I recall pondering whether I should buy the bubble gum that might include a coveted Mickey Mantle or Sandy Koufax baseball card – or the jawbreakers.
Through trial and error, we also learned the value of doing things the right way rather than cutting corners and doing a job “on the cheap.” The nursery tale of the “Three Little Pigs” certainly illustrated the misfortune of the two lazy pigs who built their homes of straw and sticks. The big bad wolf huffed and puffed, and well, you know the rest of the story.
The experts tell us the equation for value is “perceived benefit divided by perceived price.” Most of us don’t consciously use the equation when we make a purchase, but we instinctively know when we’ve gotten our money’s worth in a purchase or a business deal. Likewise, we know how we feel when we took a chance on a deal that was too good to be true.
For printing ink, printers are bargaining for much more than the ink in the can. Printers depend on their ink supplier for responsive service and support, problem solving, consulting and more.
The problem is that all too often, purchasing decisions are made independent of the manufacturing and production managers’ input and it’s the production managers who are left trying to make a bad agreement good. If the purchase decision is made strictly on a price per pound basis, this can be a very costly decision.
Not All Ink Companies
Provide the Same Value
In business circles you hear the tired old phrase, service and quality are a given – all that matters now is price. Clever line; but it simply is not true. Service and quality may be expected, but it is definitely not a given or even the same among ink companies. Technical service, responsiveness and the quality they provide are the biggest differences among ink companies. True value will be determined when what is promised in a sales presentation and what is executed in the pressroom is tested.
Without printing ink, printers would have nothing to sell – just plain paper and certainly no differentiation among their peers.
Printing ink is the only consumable in a pressroom that directly affects both the revenue and cost lines on a printer’s income statement. This is a critical point.
First and foremost, the print job and the printer are judged on the graphic quality of the printed piece. Do the graphics fairly represent the original art of the graphic design? In the case of a package printer, will the finished product inspire a consumer to purchase the product? The printers who print the best consistently capture the best accounts and typically command a higher price for their work. To control graphic reproduction, a printer attempts to control density, dot gain and trap in the process area and color density and color accuracy for spot colors. Inks used for tonal reproduction may be stronger than ones used for large solids. With screen work, you want a minimal ink film thickness; this allows for sharper dots and a much cleaner image. When dealing with solids, you would choose a slightly weaker formulation to reduce the chances of hickeys and picking.
Often times, in addition to the graphic reproduction of the print job, there is a functional property the ink must perform – particularly on packaging. These properties include high rub resistance, COF, low odor, fade resistance, moisture or heat resistance and special chemical resistance. Fade resistance of inks can range anywhere from 12 hours (or less) to 500 hours. The cost of these pigments increases significantly as the level of fade resistance increases.
Now that we have addressed the revenue side of the printer’s income statement, let’s take at look at the cost side. Certainly there is price per pound and mileage to consider and I will talk about them later. Of more consequence, however, are the pressroom efficiencies that are influenced by the quality and formulation of the ink. Ink represents less than 5 percent of the cost of a printed job but it can have a tremendous impact on the bottom line. Press speed, ink related downtime and waste are affected by the ink formula.
An experienced formulator who has a good understanding of the press, pressroom conditions and substrate to be printed can formulate a product using quality raw materials to maximize press speed and reduce or eliminate downtime and waste.
Let’s take the example of a printer with two sheetfed presses assigned an hourly rate of $300 running 24/7 with a production efficiency rate of 70 percent. Let’s assume the account purchases $400,000 annually in inks and generates printing sales of $12,000,000 per year. He has just received a business proposal which promises to save him 20 percent in ink costs, or $80,000 annually.
We interrupt this article to listen in on a conversation between Dick and Jane at ABC Litho…
DICK: “Jane, with these new inks our usage is up over 15 percent on average and they are piling on the blankets. As a result, we are stopping to do a blanket wash every 45 minutes. Besides that, the dot gains are anywhere from 5 to 15 points higher than the inks we were using.”
JANE: “Now Dick, settle down. I got a great deal on these inks and you will just have to try and make it work so we can save money.
DICK: “Save money? Even if you ignore the fact that our ink usage is way up, the extra downtime and waste is killing us. Please tell me how we’re going to explain this ‘savings’ to the press operators?”
Sorry for the interruption -- back to our example…
Based on the two presses and the $300 hourly rate, if ABC Litho suffers a mere 5 percent reduction in press speed, that translates into $181,690 on an annual basis. If ink-related downtime goes up 3 percent, this equates to $155,736. With a sales volume of $12,000,000, if waste were to increase 0.5 percent, this would add up to $60,000 per year (if one only considers materials, then the figure may be more like $40,000). Our example illustrates that very small changes in pressroom efficiencies can have a significant impact on the bottom line and an apparent $80,000 savings in ink costs can be quickly squandered in this case – costing the customer $397,426 even before we consider mileage.
Now let’s address the mileage issue, which has a direct impact on the price per pound that one pays for ink. Let’s state the obvious. In general, the stronger the ink the better the mileage (other factors can influence mileage). The more pigment in the ink formula (stronger); the more costly the ink. It is not uncommon in offset printing to see significant (sometimes over 25 percent) differences in ink mileage. In the case of ABC Litho, a 10 percent mileage difference is equal to $40,000. A cheaper ink may not yield any savings due to less mileage.
A weak ink can create problems on the press, namely ink and water balance problems. Push more ink to get color density – need more water. Cheap tires get poor mileage and so does cheap ink.
At the end of the day for ABC Litho, the new ink with potential savings cost the printer more in reduced pressroom efficiencies and reduced ink mileage.
The Importance of Quality
Certainly the flip side of this argument and the moral of the story is that buying quality inks formulated with the proper raw materials designed for the press and considering the end-use requirements can help us (the ink supplier) do our job – which is to help the printer make money in the pressroom with inks that print great, get good mileage and increase press speed -- while reducing downtime and waste.
So, if purchasing strictly on a price-per-pound basis is risky, then the printer’s management, production, purchasing and sales teams need to really do their homework to make sure they are making the right decision.
Next, let’s assume you get four quotes for a strong Reflex Blue color to be printed as a spot color with heavy coverage of $7.82, $8.33, $11.34 and $7.25. Which is the best buy? If you choose the lowest price, this ink is 10 percent weaker than the other three and it is not coatable or heat resistant – the highest priced ink is full strength, coatable and heat resistant– while the other inks priced in the middle range have two out of three of these properties. So in this example, the best value and choice depends on the job requirements. Aqueous and UV coatings both react with amine sensitive pigments causing them to discolor (commonly called burnout). Rhodamine, Reflex Blue, Violet, Purple and Warm Red pigments should be replaced to reduce this risk. The substitute pigments are considerably more expensive.
This is the reason an unsolicited general price list must be viewed with caution. Don’t get me wrong. I agree that price negotiations are a necessary component of buying and selling and I do not advocate using expensive ingredients in ink unnecessarily. But, have you ever been told, “I have to charge more than the price list that I gave you because I did not know you were going to UV coat the job (need extra rub resistance, foil stamp, heat seal, laminate, and so on)?”
Remarkably, the experienced formulator and his/her ability to custom manufacture the ink for the press, substrate and end use is still only part of the story.
The value of a great printing ink and coating supplier is the ongoing technical support that the local branch provides, led by a professional technical sales consultant. It is this resource that can have the most impact on helping the customer run an efficient press room – giving the kind of sound advice that can maximize print quality and prevent problems. When there are problems, and there will be, remember this is the printing business; quick response and a solution to correct the problems is critical to the printer.
One last piece of the puzzle is a sound R&D team that backs up the efforts of the local branch in applications research and new product development.
To conclude, if you choose the right suppliers who are going to help you build a strong company, you just might be able to keep the big bad wolf from blowing your printing plant down.
Daryl Collins is the vice president – national sales & regional operations, Wikoff Color Corporation (WCC), and works at WCC’s corporate office in Fort Mill, SC. He joined the company in 1997 and has held this position since May 2001. He began his career in packaging sales with Owens-Illinois. The knowledge of packaging and substrates he gained during his tenure with Owens-Illinois was invaluable as he spent the next decade in sales and management positions within the ink and graphic arts industries.
Mr. Collins is a native of Charlotte, NC, and in 1977 received a bachelor of science degree in biology from the University of North Carolina at Charlotte.In 1988, he earned his MBA from this same university. He has been married for more than 20 years and he and wife, Renee, have a son, Philip.