Change Orders—Part 1: Assessing the hidden drain on your print budget
If you’re looking for a way to save money on print spending—and who isn’t?—reviewing your change orders on past projects would be a good place to start. You may be surprised at their cumulative cost.
Change orders are so common, especially for complex jobs, that you may treat them as routine and inevitable—something you can’t really do anything about. But they cost you a significant amount of money in several ways: They increase the cost of a job and, less obviously, they cost you in lost time and lost efficiency.
But you can do something about them. While change orders attached to complex projects may never be completely eliminated, you can significantly reduce the number—and handle the unavoidable ones much more smoothly and efficiently. We’ll focus on solutions in Part 2 of this blog. First, let’s take a closer look at some of the challenges posed by change orders.
Simple projects like business cards and envelopes usually don’t generate many changes. Writing and implementing the specs is fairly straightforward. But an elaborate, customized item—for instance, a direct mail package, a multiple-color marketing piece or a POP display—presents many opportunities for process glitches. These projects involve lots of specs and many steps or milestones, including revisions after proofing and press checks.
Up to 80% of these complex print buys end up requiring changes—which can add 10-20% (and sometimes more) to the final price.
The difference between simple and complex print projects is like building a cabin from a kit with standardized plans and stable specs. Versus building a large house with many rooms and custom features with specs evolving as you go along. On a custom-built house, changes can amount to significant additional costs. It’s the same with a custom-designed and custom-produced print product.
Change orders can be initiated by either the buyer or the supplier. These can arise from changes in specifications or requirements or from misunderstanding or miscommunication on either or both sides.
From the printer’s perspective, maybe a certain color or type of ink isn’t laying properly and needs to be substituted with something else. Or a buyer orders 10,000 brochures but there’s an issue with the press during the run and only 8,000 are printed.
The buyer may change size, quantity, delivery date, shipping location or something else. Or there could be an error or adjustments in the copy.
Printers often welcome change orders. A norm in the industry is that printers make their profits on change orders. For example, if an order is due next Friday, but the customer suddenly needs it the Monday before, the printer will work on the order the preceding weekend, incur overtime costs, and charge the customer for both the time and the extra service provided.
Dealing with change orders doesn’t have to be a zero-sum game for the print buyer. In Part 2, we’ll look at typical ways print buyers, vendors and accounting systems handle change orders—and discuss an exponentially better method from eLynxx Solutions software and service.