Build Your Business: Management

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October 2, 2014

The idea of contract printing can be appealing. After all, you don’t have to invest in inventory and your costs beyond shop overhead basically come down to labor and materials, making for good cash flow. However, there is much more to it than that.

While contract printing jobs don’t necessitate you buying the goods, the profit margins are lower than for custom work, where you’re also providing and making money on the garment. That means your profit for contract printing lies in volume, which can have far-reaching repercussions throughout your shop — impacting art, quality control, pricing, scheduling and other areas.

As with any type of screen printing, there are pros and cons to contract work. The key to making it pay is being aware of what they are and gearing your operation to meet the challenges.

In the 35 years that screen printing has been the main focus of my company, Anderson Studio, contract work has gone from being less than 10% to close to 90% of its business. Through much of the 1980s, we were still doing mostly custom jobs along with a few contract jobs, which were too good to pass up.

But the balance shifted as T-shirt manufacturers and distributors started selling directly to customers and we recognized the need to grow our contract business. We began developing more accounts in the ad specialty and music markets, where contract printing was the rule. By 2001, we had picked up several major contract accounts.

For us, the transition to contract printing was a good move. But there was a learning curve, and knowing some things upfront can help boost your chances of success.

If you’re thinking about getting into contract work, I’d recommend is first taking a close look at what your shop currently is doing in terms of types and sizes of jobs, clients and sales numbers. Then, explore the possibilities that exist in the marketplace for contract work in areas that would be a good fit for your operation.

If there are one or two types of printing you do especially well or that people come to you for, try looking for a niche where there is a demand for them. Build on your existing reputation. Also, try networking by letting consultants, suppliers and customers for other types of work you do know that you’re seeking contract business.

My company actually got its start in contract printing when a client for whom I’d done airbrush work began doing tour merchandising for country music artist Kenny Rogers. I had been experimenting with four-color process printing for several years, using it to reproduce artwork on T-shirts for a few clients. Not many people were doing this type of work at the time, which positioned us to get the job printing Kenny’s full-color portrait on garments.

You also may decide to use sales representatives to grow your contract business. This is a marketing decision that will involve factors like whether you already use salespeople and whether you plan to pursue other types of business.

EFFICIENCY IS KEY
The secret to success in contract printing is keeping the presses running. The bottom line is if this isn’t happening, you’re not making money. Bringing in the business is just the start. You may not have to add equipment like we did (our first contract job required buying our first automatic press), but you likely will have to ramp up your efficiency throughout the shop, both with respect to general procedures and in the specific context of contract work.

As in any type of operation, standardization plays a big role in maximizing contract printing efficiency. If you haven’t already done so, develop and document standard systems and procedures. In our shop, the particulars of the artwork, screen tension, squeegees, flood bars, inks, press setup, flash times, dryer temperatures and technical data for every job are clearly and concisely written down, and filed for quick and easy reference. That way, there are no issues that can slow things down.

Because everything is standardized, everybody knows what is going on and what needs to be done. Standardizing also ensures consistency, predictability and “repeatability” (master printer Mark Coudray’s “CPR” approach), which also are key in minimizing rejects and keeping contract clients happy. This doesn’t mean there’s no room for fine-tuning; it just ensures that everyone understands the expectations and doesn’t waste valuable production time.

Standardization also enables quicker training. Everyone on our staff is cross-trained. They all know how to scrape ink, clean screens, etc. This adds to our efficiency by focusing everyone’s full effort where it’s needed. It also allows individuals to swap out for breaks and lunch without losing momentum. Training is critical — and our expectations and how we do things have to be constantly reinforced — but it pays off.

It’s really important that your staff understands the expectations when it comes to the big orders typically associated with contract printing. For our staff, we try to lay out what we need to do each day and during each week, and what it is going to take to make it happen.

It’s also important to explain certain things to your staff that are unique to the volume associated with contract printing. For example, if the presses are running 100-dozen shirts an hour and your press operators are missing two or three pallets every time when loading, they’re netting fewer shirts at the end of the hour than if they’d slow it down, not rush and hit each pallet. So efficiency isn’t defined by how fast the press runs; rather, it’s how many shirts get put on every pallet on a rotation on a big-volume run.

One great thing about contract jobs is that once you get a design worked out, eliminate the bugs and get the client to sign off on it, you’re rolling. That means you can start making money. Unlike custom jobs, you’re not faced with downtime from constantly having to stop to figure out the quirks of the print or image.

On the flip side, you especially have to be ready and able to deal with quick changeovers. In my shop, there are times when we have to stop in the middle of a run because, for example, a music merchandising customer calls and says an artist on tour has run out of a size. This may necessitate taking down the job we’re running, setting up the rush order, and printing and shipping it red label.

To minimize the impact of this on our production schedule, we have to be able to set up a job, take it down and get it back up and running with minimal downtime — particularly since we’re working with just two automatic presses. Thanks to our cross training, when a changeover is required, usually three or four people are taking down all 12 colors on the press, then getting a screen for the next job and setting it up. This enables us to tear down one 12-color job, set up another and register it, and be up and running in less than 10 minutes.

Production scheduling for contract printing also is different than for custom jobs. In addition to equipment, staffing and supplies, there are other variables to consider. In our shop, we begin by determining what we have to do with the artwork. How many proofs, samples and thumbnails will the customer need to see? How long will it take for us to get approvals?

Then, we figure out how much time will be involved in making the separations and screens, running samples and getting them approved. We do a printout from our scheduling system and put the schedule on a board for everyone to see. But it’s a process, with jobs being moved to other slots as needed.

Sometimes timing is such that we have to go back to a customer and ask which job should take priority. Occasionally, we have to explain that we can get him a certain number of shirts for one of the jobs, but not the full order. When this happens, we stop the job we’re running, set up the other job and run part of it, then go back and complete the first job.

Typically, this solves the problem. Usually, we have adjusted things so we’re comfortably ahead and can satisfy the customer and don’t have to outsource the work to another shop. After spending the past 36 years developing the shop’s reputation, we don’t want to risk having work that we’ve subcontracted not being at the quality level associated with our name.

QUALITY AND PRICING
Maintaining quality is a top priority for us. It’s who we are and what brings in and keeps our customers. Working with customer-supplied artwork can be frustrating in this regard. We let them know upfront if art quality is likely to impact the print. If there isn’t a better file available, our artists do what they can to ensure the best possible results.

In production, everyone is trained on what to look for. By doing samples, the printers know how each piece they are pulling off the press on each rotation should look. The catchers also know, and one or two of us usually float around the press all day watching the print. There are multiple quality checks throughout the run, with our most senior-level staff doing the final inspection at the end. Thanks to their training and conscientiousness, our reject rate is less than one-quarter of 1%.

Pricing also plays an important role in contract printing profitability. You have to understand what it costs to run your operation and where your numbers need to be. This means considering the big picture, including things like seasonal variations in your printing volume that relate to the markets you’re serving.

If you’re not operating at peak volume 12 months of the year, the three months you’re not busy can eat up the profit you made from the other nine months. This also has to be factored into staffing and marketing decisions.

Minimums also are a consideration. Our contract orders range from 144 to 600,000 pieces. It’s important to keep the presses running, but if it means you’re doing a lot of changeovers, you need to allow for that downtime in your pricing.

The same is true for charges related to repeatedly setting up larger orders. You may only break even the first couple of times you run a job and not start seeing real returns on it until the third or fourth run. Some jobs are like an investment. Contract pricing can be an art and a science. A lot of critical decision making is involved.

Usually, when we finish a big job, we take a day or two and knock out our smaller and custom orders before going back to the volume work. It not only makes sense from a scheduling standpoint, but it’s good for morale. Staff is a key factor in any shop’s productivity and profitability.

We try to maintain a casual atmosphere that’s efficient. We treat our employees well and reward them in various ways. If they hit really good numbers, we may even close early, even in the middle of a big run. We also give unannounced bonuses when they’re merited by output and attitude. Most important of all, however, is that there is no absentee owner who sits back in an office while the rest of the staff does the work. Everyone is involved.

Andy Anderson is the owner of Nashville, Tenn.-based Anderson Studio. Since its founding in 1976 as a custom screen printing shop, the company has built on its reputation for quality and innovation to become a much-sought-after contract printer. For more information or to comment on this article, email Andy at andy@andersonstudioinc.com or visit andersonstudioinc.com.