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Message From XPLOR: Simplify Production

Plain white processing plus Dynamic Envelope Creation add up to Big value

Last week the XPLOR Document University, which was held last week at the AIIM/ON Demand Exposition and Conference in Boston presented print/mailers with a good opportunity to catch up on the latest topics.

Predictably, the key word was “transpromo,” with a surprising number of attendees apparently hearing the term for the first time. A brisk walk on the show floor also revealed the vendor communities embrace of transpromo as a concept, selling point or industry re-invigorator. At several panels that I took part in or had the opportunity to attend, transpromo was variously touted as the next new thing or decried as an old thing with a new label.

For my part, I chaired a course called “Mail in the Middle” which is about how using the print/mail data center as the hub of activity for integrated customer communication makes business sense. Not many people saw my introductory presentation because I was scheduled opposite a keynote address by Patrick Buchanan. But I quoted the very fine Gartner CRM analyst Scott Nelson, who suggested that the integration should take place in a location that could influence the entire ecosystem. What better place is there than the one that drives the major channel of customer experience, the mail?

I thought that Mark Fallon did a tremendous job of showing how mapping the workflow can increase productivity and that Avi Greenfield and Roger Gimbel delivered great value in their presentations on using variable data in communications. Andy Perceval, the General Manager of Sureprint LLC, flew in from London to present on how the hybrid mail model can be a boon to data center managers. I think that Andy is on to something and that the future of mail depends on this kind of thinking. Last but not least, Pat McGrew, the transpromo evangelist from Kodak, and Karl Schumacher from Megaspirea, informed attendees about “Second Generation” transpromo which will utilize personalization enabled by dynamic enveloping and “onserting” instead of inserting.       

Karl Schumacher gave a very content rich presentation as part of another course, Operations: Improve Productivity and Reduce Costs, chaired by Terry Johnson. The presentation, Trends in Mail Finishing, proceeded from the theory that simplifying the mail—whether direct mail or transactional mail—is becoming a necessity these days because all the various shapes and sizes of mailpieces are driving the industry into the ground. Karl advanced a notion that he trademarked, called LCD Mail™ or Lowest Common Denominator Mail.

LCDMail reminds me of the constraints placed on marketers by a very successful mail operations executive with whom I served on a panel at a Mailcom a few years back. He had developed a world-class Automated Document Factory and did so by following three rules: a mail piece could be any color as long as it was white, black or an infinite shades of gray; it could be any size or shape as long as it fit into a number ten envelope; and, c) it could contain any content as long as said content was relevent to the recipient.

Based on what I have come to believe I wrote a piece a while back called “Advice to Mailers: Don’t Forget Your Mantra Simplify the Process, Reduce Complexity, Make Content the Only Variable” that can be found in the Outputlinks archives.

Karl Schumacher’s XPLOR presentation was built upon the same premise. Karl was more concrete: he had numbers and he explained them. And, since I believe that Schumacher’s presentation offered more value than many others that I attended, I’m going to reproduce the argument here for the benefit of my readers.

Madison Advisors was tasked by Megaspirea with examining the hidden costs of traditional inserting. They created a TCO analysis that examined the associated costs of using pre-manufactured envelopes and inserts. The study can be obtained by sending me an email at scottg@megaspirea.com.

The Madison Advisors study did not look at the purchase cost of materials and production but instead produced data that most operations most likely had not considered. The costs they looked at can be divided into four categories: Acquisition (Design and Procurement), Holding (Receiving and Storage), Usage (Staging and Handling) and Obsolescence. The study did not differentiate between envelopes and inserts, but certain sensible adjustments were made to normalize the results.

The Madison Advisors study indicated:

The per envelope cost is calculated at about $.0083. The largest expense - $.0068 - is the Usage Handling (insertion) and represents the actual labor in deploying items on traditional inserting systems.

“The aggregate hidden costs of printing, managing, storing and staging of traditional paper inserts and envelopes are significant,” said Kemal Carr, President of Madison Advisors, in a press release about the report. “The industry spends nearly a billion dollars a year on this process, a cost that could be eliminated by the Mailliner 100. Add in the additional production cost savings and the potential savings are huge.”

Karl Schumacher decided to do a little further research and provided a proof of concept for a potential client. I’m not at liberty to reproduce the name of the prospect or many of the other specifics, but the numbers nicely parallel those found in the report by Madison Advisors. In this case, however, Karl went a little deeper and added the cost of the envelope—a security envelope with a window shielded by a glassine plastic strip. 

A working estimate for the envelope, printed with one-color return address/logo, is $.018 per envelope bought in a quantity of 10,000,000 per year.

Karl further calculated the production per piece of an in-line printed envelope created dynamically on a system like the Mailliner 100:

- Envelope Paper (in roll)                        $.004

- Printer Click (including toner)                $.004

- Envelope Glue                                      $.0014

- Paper Trim Waste                                $.001

                                                            Total:    $.0104

Therefore, the envelope production cost savings is about $.0086.  Schumacher then went on to calculate the production costs involved in creating inserts, as opposed to creating an inline “onsert” directly on the statement. Plain white processing combined with dynamic enveloping eliminates envelope and insert processing. Therefore, the processing savings would be about  $.0166 per mailpiece in terms of “material logistics and handling” if it contained both envelope and insert.

The ROI on using dynamic enveloping as opposed to traditional inserting is compelling: for this particular mailer transforming two monthly applications, the cost saving was over $400K.

The conclusion is that migrating a mail operation to a plain white roll, black on white print, duplex and 2-up therefore eliminating inserts and pre-made envelopes, is that productivity gain far outweighs any other consideration. The fact that openability (and therefore customer response) metrics can be expected to grow using this method is a bonus. The business case for LCDMail or plain white mail or whatever you prefer to call it is easily made without bringing transpromo into the argument. Whatever the merits of transpromo, they are an additional benefit for those that have already improved their processes.