Supplier Cost Drivers – Print Example

Administration20%

• Head-office• Accounts• Invoicing• Admin• Transport

Paper50%

Profit 10%

Paper accounts for around 50% of the total cost.

Plate production, Ink, Labour set up, Labour printing, Labour folding, Labour finishing, Packing-box and label, Depreciation, Stock, Distribution

Profit element, amalgamated into % mark up on the print element of the price

Printers’ operating costs

Various cost elements

20%

Agree on common national specifications

Reduce the format of prints to use less paper

Reduce the weight (from 80 grs to 75 grs for example)

Don’t use branded paper with watermarks

Don’t use colour paper

Buy the paper straight from a paper merchant

Combine print paper with paper for office printers

RecommendationsTypical cost breakdown shows that the supplier’s main cost driver is paper

By reviewing the specifications and negotiate wider deals on paper, the organisation could reduce their print costs

Example Product Cost Drivers