One of the key reasons that businesses choose to transition from an in-plant to outsourcing is cost savings. The amount of capital needed to maintain and run these operations is becoming cost prohibitive. Even if volume declines, companies don’t see savings here, as the cost per piece actually increases. Outsourcing eliminates a lot of these immediately. PCI Group President and Owner Chris Kropac walked through these cost savings in the episode of Ask the Experts.
“The component of cost savings is the price per piece. In-plants have a fixed cost structure—plant property, equipment, people. Say you’re doing 100,000 pieces a month, and by electronic adoption, you go down to 75,000. In theory, you could save, but each piece now costs you more because you haven’t reduced these high costs,” Chris explained.
Moving to an outsource model clears the budget of these things. If the same scenario occurred in outsourcing, a business would truly save on the expenses of transactional print and mail. The prices stay the same at a per-piece rate. Companies reduce expenditures considerably through a provider’s ability to buy in high volume for materials. Also, those that practice Lean Manufacturing, like PCI, drive efficiency so that operations are optimal, eliminating waste that adds cost to the model.