How to reduce your print costs with a multi-year contract

Some people think that it is important to be able to get rid of your supplier.Many buyers like flexibility these days.  In the constantly changing print environment, they don’t want to risk being stuck with the wrong printer.  Sticking with the same printer is often seen as mis-placed loyalty.

But multi-year contacts can have a lot of advantages

Print and Procurement business group

Print-buyers who use multi-year contracts often have more control over their print spend.  They have this control because they have a longer term plan in place.  The plan will have stable print costs.  And with stability in place, these print buyers find it easier to achieve their print buying goals.  They also have better relationships with print sales people.

Print buyers who don’t use multi-year contracts often find it difficult to establish good relationships with print sellers.  They lack control as they are constantly changing their plans.  And this constant change means that they do not find it easy to achieve their print buying goals.

Reducing last minute change is just one advantage of multi-year contracts.  Here are three other advantages of these contracts:

Multi-year contracts reduce buying costs

If you need to put a new contract in place every year, you need a lot of buying resource.  Every year, each contract needs to be researched and tendered.  And the time spent on these short contracts could be better spent doing something else.

One other thing you could be doing is developing better relationships with your suppliers.

Multi-year contracts allow better partnerships

A single year contract does not encourage either party to put much effort into the relationship.  The first few months of the contract are spent making sure that everything is working correctly.  And the last few months are spent wondering if the partnership will survive the next tender.

So there is little time when buyer and supplier can sit down together with a real will to build a proper partnership.  Both sides see the relationship on a short-term basis.

But what is the point of a partnership?  A worthwhile partnership should encourage cost reduction.

Multi-year contracts promote cost reduction

When both sides have the time to focus on working together, they can create projects with effective results.  These projects should focus on cost reduction.  (Note that I said cost reduction, not price reduction).

Cost reduction projects are a way of bring very real long-term benefits to both sides.

Here’s an example of these benefits

I have been working on subscription voucher booklets with a national newspaper and a printer recently.  Because there is commitment to the relationship, both sides are seeing gains.  The printer and the client sit down together regularly to discuss the project.

These project meetings have resulted in some impressive savings:

• A review of the schedule has allowed post to be changed to a slower service.  This has achieved a very worthwhile cost reduction for the client.  But the new schedule also allows the printer more manufacturing flexibility.

• The printer has carried out tests on different perforations.  The tests have allowed a reduction in paper weight and an improved product.

But these improvements would not have happened if the printer was busy wondering if they would be ditched soon.  This is why a multi-year contract can bring true benefits.

However, do make sure multi-year contracts are flexible

Multi-year contracts should be designed to give security to both parties.  But it is important that the agreement gives the buyer peace of mind.  The buyer must be able to adjust volumes if business dictates.  The buyer must also ensure that the termination clauses for poor performance are very clearly set out.  And either party must be able to end the agreement if a company comes under new ownership or has other major changes.

But these safeguards need not often be carried out.  The contract really should reflect the intention to work together for a long term.

Here are three steps to start planning a multi-year contract

1. Work out which areas of your work can be contracted
2. Consider if changes may happen to this work over a longer period
3. Start planning a tender for this work

And, remember, a longer term relationship can be beneficial.  A one-year contract may not offer you as many advantages as you thought.

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P.S.  If you have found this article useful, you may also be interested in Print & Procurement’s practical purchasing workshops.  Click here to find out more about our practical purchasing workshop.