Media Industry

eProcurement Takes On Production

Folio: The Magazine for Magazine Management, Sept 1, 2001 by Bert N. Langford

Automating the paperwork associated with print buying can cut time, costs and paper from the whole process--but only when printing a magazine's ancillary products.

The Internet has created a great opportunity for third-party eProcurement vendors who help speed production for publishers by automating the print procurement process via electronic request-for-pricing forms, invoices, purchase orders, and so-on. Serving as the electronic middlemen of print buying, these vendors can free employees to work on other, less-clerical tasks, and eliminate much of the pesky and arduous production paperwork that litters the desks of both printers and magazine publishers.

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At the moment, however, there aren't any dot-com business models advanced enough to handle the typically detailed price schedule required of a major contract printer for the production of a standard magazine. But this does not mean eProcurement is not for publishers. It is proving cost-effective for many magazines' simple or single-component printing--such as promotional brochures, pamphlets, rate cards, media kits, magazine inserts, ancillary products, and even standard office supplies such as business cards and letterhead. And many eProduction dot-coins are pursuing the market for Fortune 500 companies' corporate publishing requirements. Each year, these companies make sizable investments in such ancillary work as annual reports, house periodicals and office supplies. One major weekly publication, for example, spends over $30 million per year on such materials, including inserts.

eProcurement dot-coms consider printers their "customers." Printers, in turn, may transfer the fairly minimal cost of working with eProcurement dot-coins to their own customers. (Some eProcurement vendors initially attempted to levy an extra surcharge on printers by charging them a percent fee, e.g., 1 to 2 percent, but customer reactions have since forced them to nix this billing system.)

The best offerings are the ones based on subscription or, separately, transaction fees. A flat subscription fee, however, can only approximate the cost to the dot-com for work required of it; there is the strong possibility that some customers are subsidizing other customers who use the service more. I prefer a transaction fee calculated by the time spent on the dot-com's server, since this allows all parties to accurately evaluate the service against its monetary benefits.

Is it for you?

eProcurement isn't for every magazine. Whether eProcurement works for a publisher depends on two factors:

1. The complexity of the work. The more complicated the current print-procurement procedure, the more sense it makes for a magazine to use an eProcurement vendor. In fact, for some publishers, there is an added step in the process-purchase requisitions must be tendered to a centralized purchasing department. A publisher should ask himself how many steps are involved in (a) requesting and receiving quotes; (b) internally setting a budget and getting approvals for sending out the purchase order; then (c) transacting the purchase to final product and delivery. If eProcurement means cutting substantial amounts of paperwork, labor and/or time from these steps, then it may be the answer.

2. Whether eProcurement will ultimately speed up the magazine's existing system. Take the time to compare eProcurement to your existing system; it should be faster than the handwritten system. For example, the electronic forms you fill out to execute a request for quotation or purchase order should not be encumbered by unnecessary "required" fields that force you to spend too long on the screen.

If you decide that eProcurement is a real option for you, the next step is to discuss it with your printer. (Larger printers might even have their own offerings.) Be careful, however, not to sign on and otherwise become committed to a non-core business service with a printer. You do not want to be locked into a printer on the basis of administrative "hooks" that divert your attention from the more pressing issues of the price, quality and service of the printing arrangement itself.

Bert Langford (bertnl@aol.com) is president of New York-based Bert N. Langford and Associates.

HIGH-PROFILE ePROCUREMENT VENDORS

Noosh, Inc.

Palo Alto, California

www.noosh.com

of 650-320-6000

printCafe Systems Inc.

Pittsburgh

www.printcafe.com

412-456-1141

printChannel.com Inc.

San Francisco