Creating a Competitive Edge
of the distributors comprising BFL&S’ 2005 Top 100 ranking, 47 have some type of production capabilities. Sun Coast Forms & Systems, Sarasota, Fla., and MACORP Print Group, North Wales, Pa., explained that it is a natural compliment to their distributorships—a way to work smarter and serve customers. What it is not, is an attempt to compete with manufacturers. In fact, manufacturer partners benefit by increased jobs entering the independent supply channel due to these enterprising distributors’ efforts, and their presses are not bogged down with less profitable jobs.
“My manufacturers know they’ll always get camera-ready artwork from us and we can print short-runs of samples for them, which is a big help and ensures quality,” said Dave Donnelly, president and co-owner of Sun Coast Forms & Systems with his wife, Barbara. “Believe me, when they’re in town, they take me to lunch.”
Plus, his sales staff is more effective in the field because of direct knowledge of paper, inks and various technical issues. MACORP Print Group’s CEO, David C. Magagna, agreed that any time sales reps can say they are direct manufacturers, there is a confidence that underlies their sales skills. “Sales professionals are also attracted to the new opportunities production equipment creates for the company,” he added.
The executives who spoke with BFL&S from both companies acknowledged that they personally have no experience operating a press, nor do they have the stress large manufacturers face in keeping equipment constantly running. As distributors, their priorities continue to be securing order activity that might otherwise be lost, meeting seemingly impossible delivery expectations and standing out from the competition in ways that profitably serve their particular markets.
For example, MACORP Print Group, led by David and his brother, President John P. Magagna, is in the process of rolling out a state-of-the-art digital printing initiative to support direct mail products and services. Donnelly, on the other hand, specializes in short-runs and quick turnarounds of more traditional products. “I like to be on the trailing edge of technology, where it is economically viable,” said Donnelly. “Besides, there are half a dozen printers around here who have digital equipment that I can go to.”
Donnelly pointed out that Sun Coast Forms & Systems’ printing capabilities allow him to fulfill a niche below major manufacturers’ levels. “They aren’t interested in two-day delivery of a couple thousand payroll checks,” he said. A 40-year industry veteran, Donnelly left Moore Business Forms to establish his own company in 1979. “Customers were increasingly demanding tomorrow delivery and none of the factories would do it except for a gigantic cost,” he recalled. “So, I purchased a pack-to-pack press, a collator and a MICR encoder and hired someone to run jobs.”
Today, 4,000 sq. ft. of Sun Coast Forms & Systems' 20,000 sq. ft. facility accommodate three Ryobi presses (one with a thermotype thermography attachment); a Toko two-color T-head; an Omni 171⁄2 ", 221⁄2" two-color perfecter and a two-color jet envelope press, as well as a full bindery operation, perfing equipment, a numbering machine, two MICR encoders and a booklet maker. Four press operators and three bindery workers run the jobs, which include checks, continuous and laser forms, laser perfs, continuous pack-to-pack labels and envelopes. Donnelly estimated that his production capabilities generate 12 percent of sales.
“Obviously, we can’t do everything, and running pack-to-pack continuous is not as cost effective as a full-service manufacturer feeding rolls,” he said. “Our niche is short-run, quick turnaround which works to enhance my volume with large manufacturers. If someone orders 100,000 payroll checks on Wednesday and needs delivery by Friday, I’m able to deliver at least 5,000 or 10,000, while the big boys handle the rest.”
Like Donnelly, the Magagna brothers mainly established production capabilities to help customers looking for next-day delivery out of a jam, and save them a few hundred dollars in rush charges. During the golden age of forms in the early 80s when the company was first established, it was common to get an order for 100,000 three-part NCR unit sets, requiring a 2,000 piece next-day partial delivery. The Magagna brothers had two Ryobi 11x17" two-up presses, as well as a four-up AB Dick offset press duplicator. “We were the guys who could save the day and hold customers over while the large run was being produced,” recalled John.”
However, the growth markets were clearly becoming commercial printing and direct mail, and to better position themselves for the future, the Magagna brothers sold their equipment and relocated to a new building five years ago, where they already manage a successful pick-and-pack operation, and are gearing up to embrace the digital revolution, including HVAC upgrades for necessary climate controls. “We decided to take the funds that we were allocating for the production area and invest in new client expansion, digital equipment, a Web redesign and human resources to operate specialty softwares,” David explained.
“On-demand digital printing capabilities will help keep the pick-and-pack operation on track and allow us to variable print direct mail," said John. “Direct mail is where it’s at, and you have to be able to solve the entire package from start to finish, which involves designing, printing, mailing and Web back up or a Web ordering interface.” He also observed that digital equipment costs are coming down, noting that the
DocuColor 240/250 has the same technology as the very expensive Xerox iGen, only in a smaller box and with a smaller foot print. David added that the company’s total outlay for its digital printing capabilities will be approximately $150 thousand.
But, with their focus on direct mail, digital is where the Magagna brothers know they need to be, whether it is to facilitate the new Web-driven interface that helps get products out there or to do variable printing, which a lot of manufacturers still don’t offer. “And of course, everything is print on-demand today,” said John. “And, when customers say on-demand, they
really do demand it.”