What is Order Management REALLY Costing You? You'll be surprised...

Ty Barho

Ty Barho

I grew up in a small sign shop from age 12 and went on to co-found BuildASign.com from scratch to $100M+ and one of the largest sign retailers in the country. I now help shops grow efficiently.

In print, order management is something we deal with every single day.  In fact, in a lot of ways, it's the CORE of our day.

Think about your staff.  Let's say you have 6 people:

2 Designers / Sales people
1 Production Manager
2 Production People
and You.  

How many of them interact with an Order (Work Order, Job Ticket, Job Board) at some point in the order's lifetime?

If you guessed "all of them" you're right.

Order management is at the center of the print business (and every other type of business, for that matter).  It's what most of us work on all day, every day.

  • Creating an order (selling, designing, etc)
  • Producing an order (prepress, production, finishing)
  • Shipping an order (will call, packaging)
  • Accounting an order (bookkeeping, end-of reports)

We spend most of our work lives in the process of keeping orders coming in and going out.

But have you ever taken the time to look at the REAL COST of that process?

Order Management has a TRUE cost… and it's more than you think.

If you're like most people, as you work through the orders each day, you never really sit down and think about what all that order processing is costing you.

And I'm not talking about things like opportunity cost, theoretical time, years of your life in stress, or the like.

I'm talking about REAL, HARD DOLLARS & CENTS.

There is a true, hard labor cost to processing an order, and the worst part is… it's a variable cost.

Which means it can skyrocket… if it's not controlled.

Learning to find the true cost

Flash-back to the early BuildASign days.

We were ignorant post-grads with little to no business experience, who decided to try to start a print shop.

Stupid, right?

But because we had no money, and were struggling so much to be profitable, we became OBSESSED about every single penny that came in and went out of the business.

And not just the ones we could see.  

We were even more obsessive about the ones we couldn't see.

That's right… hiding in every single process of your business are dollars going outthat you can't see.

They're called Labor Inefficiencies.

Every process in every business has them, but because we were so poor, we became crazed over eliminating as many of them as we possibly could.  Where's the first place we looked for them?

Order Management.

In most shops, Order Management is chock-full of Labor Inefficiencies

If you've been in business a while, you're probably pretty decent with the numbers, right?  You have to be if you want to stay in business

You can probably tell me your run rate, P&L numbers, and take really good stab at average Net Margin across your business.

But let me ask you this…

  • What's your annual cost of exporting and attaching proofs to email?
  • What's your annual cost of people walking to and from the production floor?
  • What's your annual cost of data re-entry?

Labor Inefficiencies exist in every process.  Some of them are worth solving today, and some aren't.

And, if you're a deranged penny-finder like we were, it's your job to discover which they are, and where they are…

The 2 Types of Order Management

In my opinion, there are really only 2 fundamental types of Order Management:  Paper, and Not Paper.

You're either still running on paper, or you've gone digital.  Depending on who you are, there are actually merits in both.

The Merits of Paper

In a digital age, its easy to say being on paper is ridiculous.

I humbly disagree.

I can see the merits of a paper process.  To me the big merits of paper are this… it's cheap & flexible.

If you're a small shop, you can get 500 triplicate forms for about $100.  Roll in the cost to fill them out, and at the surface, paper only costs about $0.96 per order to process.

That's cheap by any standard.  And I'm never going to judge someone for saving a buck.

Paper also gives you the ability to write.  You're not limited by preset fields on a screen, you can write whatever you want.

And for the most part, odds are, your staff can read each others chicken scratch.

But let's really examine it…

As an exercise, let's take a first pass at walking the lifecycle of a paper work order…

1.  Order gets handwritten on a form
2.  Form goes in a slip and to design
3.  Design gets done, form goes to prepress
4.  Order is ready for print, Form goes to production
5.  Production is finished, Form goes to front office
6.  Form gets filed & entered in to book-keeping

Pretty tidy right?  But, wait… is that what usually happens?  Let's try what an ACTUAL paper work order looks like, with your obsessive penny-pincher glasses on

1.  Order gets handwritten on a form
2.  Form goes in a slip and to design
3.  Design opens slip, can't read (or doesnt understand) requirements
4.  Design goes back to sales and has a 2 minute conversation + 5 minutes of chit-chat
5.  Issue solved.  Design gets done, form goes to prepress
6.  Prepress opens slip, doesn't understand what to produce
7.  Prepress goes back to design, who directs them back to sales
8.  Prepress has a 2 minute conversation + 5 minutes of chit-chat
9.  Issue solved.  Form goes to production
10.  Production opens slip, doesnt have material
11.  Production goes to Manager, requests material + 5 minutes of chit-chat
12.  Manager fills out a PO & submits order
13.  Form sits in a box for 2 days
14.  Material arrives, production is finished.  Form goes to front office.
15.  Form gets filed
16.  Accounting pulls form.  Can't read price.
17.  Accounting goes to sales to clarify + 5 minutes of chit-chat
18.  Account re-types form into accounting software

Wow.

Think about the all of the real, VARIABLE, labor costs in that process.  What if it's not 5 minutes of chit-chat?  What if it's closer to 15 minutes?

The opportunities for inefficiencies with a paper process are outrageous.

Even if you're only a 2 person shop, these inefficiencies have a dramatic impact on how much work you can get through.  The fundamental is…

Labor Inefficiencies put a cap on your throughput

And paper is a breeding ground for labor inefficiencies.  It's built right into the system.

So my first recommendation?  Get off paper.  Go digital.  Not paper.

Let's Talk Digital…

Switching to digital order management is the first step in solving your labor inefficiency problem.  If you haven't already, get your shop off paper.  Do it today, and without looking back!

Good shop software (even if you're small) can go a very long way to removing the cap on your throughput, and eliminating labor inefficiencies.

And there are certainly lots of options out there.  But…

There's a HUGE problem most order management software…

It completely misses the point.  The point of getting your shop on to software is to eliminate (or reduce) labor inefficiencies, right?  You want to be leaner, faster, and more productive, right?

Would you be surprised to know that most of the options on the market today actually make you slower?

These software applications are designed with inefficiencies (penny losers) built right into the package, that you can NEVER get away from, once you sign up.

Let's take a look at a few…

Penny Loser #1:  Proofs

How often does this happen at your shop…

- Customer needs a proof
- Designer opens design file
- Exports a JPG that won't choke the email
- Opens emails
- Finds the customer thread
- Attaches file
- Sends

If you're like most shops, it's happing many, many times each day.  This is a huge time cost for almost anyone that prints almost anything.

Yet most shop management programs don't help you with this... at all

A good portion of the programs out there don't even let you upload files.

Imagine... a PRINT management application that doesn't handle design?!

Manually shrinking files for email is a HUGE labor inefficiency, and it's completely missed by most software providers today.

Penny Loser #2: Order Entry

Over the years, I've seen my fair share of Order Management systems, and I constantly see one thing I can't understand:  Complex Pricing Matrices.

And I've seen a lot of them.  Complex 75 point forms that you have to have a PhD in Physics to fill out.

All just so you can be sure you've covered every single theoretical material cost.

And they bill this "Pricing Matrix" as a feature

I'll let you in on a little secret.  Your marginal costs (ink, materials, labor, setup) are about the easiest numbers in your business to figure.  You can do it on a spreadsheet in less than a minute for any item in your book.

And yet, time and time again, I see shops completely sold on software, just because it claims to help you Price & Estimate.

But if it takes 20 minutes to fill out every invoice, what is the program really gaining you?

Put that in perspective… if it takes a $30k / year employee 10 minutes to fill out a work order, that's costing you $2.40 for every single invoice and estimate filled out… even if you don't get the business!

On top of that, most of these companies require that you spend 15 to 45 days building these forms in the first place.

To me, that's Labor Inefficiency at a new level.

Penny Loser #3:  Finding Information

The print business is hard.  There's a lot to do, and not much time to do it.

You're trying to work fast.  You have a lot of irons in the fire, and your team needs to be able to get to the info quickly.

Why is it, then, that most shop software programs make you crawl through a labyrinth of screens just to see a simple status?

We live in the information age.  Uber exists.  I can open an app, see 20 cars around me, and have one at my feet in 7 minutes.

Getting to information quickly, in software, should not be difficult.

Yet, most order management systems for print shops look like they were built in 1989.

Every screen has 22 tabs, 14 panels in each tab, and 6pt Terminal font everywhere.

The more you have to click through screens, views, and forms to get to the information you need, the more that software is costing you.

To put it another way… if it takes me 20 seconds to get to a screen, that's 8 cents each time.  How many times is your team doing that per day?

You're paying people to click that stuff, right?  Shouldn't they have to click as little as possible?

Penny Loser #4: Communication

Communication in your shop is a HUGE cost.  Think about it…

You and your entire team is communicating about orders, with customers, and with each other all day every day.  Communication is one of your biggest costs.

Shouldn't your Order Management software help make that more efficient?

It's such a HUGE issue, that I've written an entire article about it here: https://blog.take2.co/think-youve-nailed-your-direct-costs-heres-what-youve-missed/

If a software system isn't actively trying to help you Communicate more efficiently, it shouldn't be a serious contender for your Order Management process.

The Key to Fixing Your Labor Inefficiencies - Order Management

As I mentioned before, you're not going to solve every single Labor Inefficiency in your business.  And you don't need to.

Tackling your Order Management process with your crazed penny-pincher glasses on is a great way to earn back some serious profit fast, especially if you're on paper, or bad software.

If you're on paper… get off paper.

That's your first step.  Paper is a breeding ground for Labor Inefficiencies.

Find software that can fit your business and your processes.  When you're evaluating software, look for a few things…

- Can you enter orders quickly?
- Is information fast to find & easy to read?
- Does it help you with Penny Losers?
- Does it help you reduce Labor Inefficiencies?

Because the point of the software isn't to have 5 million features on as many screens, is it?

The point to increase your throughput, and earn more profit.  Profit.  That's why you're in business, right?

Take2 was built for exactly this purpose.  To help you earn more profit.  

If you're interested in seeing how we can help you reduce the costs of processing orders and communication and improve your bottom line, get in touch with us today!