Survey of the RR Donnelleys Inventories - Case Study Example

The future of printing industry is likely to be affected with the advancement in technology. The demand for printed media such as magazines will fall significantly as a result of the introduction of personal computers. In connection with this, digital printing is likely to replace the lithographic printing. This change will result to loss of many jobs as well as creation of other types of jobs to the experts. The use of color printing is also likely to increase significantly. Additionally, RR Donnelley is likely to succeed in future because its inventory storage is below its sells. As a way of overcoming marketing challenges, RR Donnelley is likely to form alliances with other printing companies. The company will also be forced to allocate more funds to the technological devices so as to compete effectively in the printing industry. Table of contents Section pages I. Executive summary …………………………………….4-6 II. Introduction …………………………………………….7 III. RR Donnelley …………………………………………...9 i. Background information ………………………………..9-11 ii. The target market of RR Donnelley ……………………11 iii. RR Donnelley capitalizes on e-books format …………..11 iv. RR Donnelley’s strategic alliance with All Printing & Graphics…11-12 v. RR Donnelley advancing to other fields other than printing …13 vi. RR Donnelley’s closing of unproductive plants ……………..14 vii. Survey of the RR Donnelley’s inventories …………………..14-15 IV. Conclusion/Recommendations ……………………………….16 i. Education …………………………………………………….16 ii. Purchase of new technology …………………………………16 iii. Allocation of funds to issues related to technology ………….16 iv. Creation of customer awareness ……………………………16-17 v. Formation of alliances ………………………………………..17 Executive summary The study was carried out to examine the future of the printing industry in the current technology-depended-society. This is in connection with the fact that new technology is being employed in almost every field including the printing industry. Majority of the innovations in the current world are often associated with the application of electronic techniques instead of mechanical equipment. For instance, high-speed phototypesetting machines, video display terminals, as well as computerized typesetting are some of the technologies that have significantly impacted the printing industry. When researching on the future of the printing industry, it was necessary to identify the challenges that were to take place in the industry as well as to the people. For instance, it is evident that employment in areas associated with letterpress and hot-metal typesetting in the printing industry has been declining significantly (Peterson 1). In connection with this assertion, I tried to find out what has replaced the old typesetting and found out that printing associated with photographic techniques has become dominant in the printing industry. I also looked at the technological changes that have hampered with labor requirements in the printing press because of the rise in dependence on computers. As a result of this, I recommended training programs as the only mechanisms of embracing change in the printing industry. Additionally, I also advocated the introducing and familiarizing employees with skills correlated with new technology. Provision of history on the printing history was also very significant in expounding the changes that have taken place in the printing industry. For instance, I found out that the output in the printing industry was very significant between 1960 and 1981. The output by then was increasing at annual rate of approximately 3.4 percent. However, the rate of increase was higher between 1960 and 1967 (averaged 5.4 percent) than between 1967 and 1980 (averaged 2.6 percent). The decline in output expansion is very significant in the newspapers than other areas in the printing industry. In connection with this, I found out that the capital expenditure rose exponentially from 1960 to 1967 but declined after that. In my research, I found out that the industry employed approximately 1.3 million people in 1981. However, my findings showed that the employment grew at a low pace, increasing at a rate of 1.5 percent each year between 1960 and 1981. In connection with this, I learned that newspapers and commercial printers are the key employers, each providing jobs for approximately one-third of the entire industry workforce. However, the study showed that technological changes are occurring in all sectors of the printing as well as the publishing industry. The pace of change has also been very fast in composition and typesetting. Many technological developments such as the use of computers for typesetting and phototypesetting machines have been incorporated to form an electronic composition that is very effective. As a result of this, demand for typesetting skills has increased as well as employment for other professionals have been created. On the contrary of this assertion, the study showed that the employment of typesetting craft workers is likely to decline exponentially because of the embracement of technology in the printing industry. This is in connection with the fact that periodical publishers, reporters, and editors use video terminals instead of typewriters in entering materials into computer systems (Jet Magazine 14). Currently, electronic scanners are used in color printing leading to the extinction of the use time-consuming handwork that involved manual application of the colors. Data is also transmitted electronically for printing and not manually as it used to be in the past. Web-offset printing is also becoming very common in the daily newspapers, and it is likely to advance to other areas such as commercial printing. Such diversion is likely to increase the demand for lithographic craft workers but decrease employment in letter-press-related occupations. Ultimately, the study showed that a lot of changes will take place in the printing industry, and as a result of this, the future of the printing industry is likely to change significantly. Either the changes will lead to the creation of different types of employments or lead to loss of many sources of income if the future generation relies almost entirely on technology (United States. Bureau of Labor Statistics 1). The production of prints, however, is likely to increase exponentially because of the speed associated with technological devices. Although type-writing will disappear, it is evident that other media related to type-printing will be introduced. For instance, digital printing is likely to overtake lithography in the coming few years. Introduction The aim of this paper is to determine how the future of the printing industry is likely to change in the future. Currently, the extensive advancement in technology has led to the decline in demand of some of the printing industry’s products. Retrieved from http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/03/graphs-of-the-day-two-terrifying-charts-for-newspapers/ The above graph shows that the future of the printing industry specifically the newspaper industry is under threat. As portrayed on the graph, it is evident that the demand for the newspapers was increasing significantly as from 1950s to around 2000s. The decline in the collected revenue is probably as a result of the advancement in technology. When I try to compare the fall of newspaper industry with the rise of Google as provided by the graph below, I find out that the printing industry falls at a very high rate compared to the rise of Google. Retrieved from http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/03/graphs-of-the-day-two-terrifying-charts-for-newspapers/ The argument provided by the above graph is that, since 2004, the decline of newspaper advertising revenues has significantly outpaced the crop of Google’s ad revenues. For sure, the information provided by the graph is astonishing. From the graph, one can deduce that the future of the newspaper industry is in jeopardy. Despite the threats provided by the above graphs, it is evident that the print industry impacts businesses from every niche. The average office carries out many print activities every day. This activity plays a significant role in determining the facilities required for the print project. For instance, the U.S. alone consumes approximately 30% of all papers in the world. A large portion of these papers is in printing business reports, financial records, account materials as well as client documents. However, businesses as well as companies all over the world are looking for advanced techniques that are related to printing. They are also working extensively in order to transform the print needs. This is in connection with the fact that efficient tasks in any office have the potential to increase productivity, as well as profitability. However, there is the possibility of the digital printing to overtake lithography dependence in few years from now. This is evidenced by the fact that digital is the one that holds approximately a half of the print market share today (Lieber and Meltzer 227). Since 1998, the lithography market share has been decreasing with the rise of digital print and value-added services market share. In connection with this assertion, the market share for the lithography was 89% whereas that of digital was 8% in 1998. By 2012, the market share of lithography had reduced to 51% whereas that of the digital rose to 45%. In tandem with this result, majority of the analyst believe the digital print is likely to increase by another 50% by 2016. Majority of the print professionals also claim that the top priority of their investment over the next 2 years is digital infrastructure, servers, and workstations. The shift from the use of lithography to digital print is in connection with the fact that migration to the digital printing reduces a print shop’s client costs by approximately 30%. It also increases their profits in addition to improving customer acquisition and retention. Additionally, it is evident that Xerox digital print technology increases print speeds by approximately 50% paving way for many jobs to run within a short time (The Future of Print, 2011). RR Donnelley Background information RR Donnelley is a public printing company located in the U.S. It was started by Robert Donnelley in 1864 in a city referred to as Chicago. Currently, “RR Donnelley is the largest commercial printer in the United States and a major printing supplier in the United Kingdom. Apart from advancing its technology regularly, the company has also benefitted extensively from such high-profile customers like Microsoft as it continues to provide more traditional catalog, as well as magazine and newspaper printing services. The company marked its 150th anniversary in October 2014. Throughout each of the 150 years, the company has proved successful in almost all its activities. Despite extensive changes in the world as a result of advancement, the management of the company claim that their core values have not changed. In connection with this assertion, RR Donnelley is claimed to have always stood for the highest level of integrity, sustainability as well as ethics. It is also argued that the company has always stood for integration, innovation in addition to dedication to its customers. From this assertion, one can deduce that the company is proud of its pasts, and it is looking forward to remarkable things in the future. In addition to providing print, digital, industry, and supply chain solutions, RR Donnelley is also a global provider of diverse forms of communications. In tandem with this assertion, the company is specialized in providing digital services, direct mail services, financial printing and services, logistics, in-store marketing, magazine solutions, and book solutions. Despite its successes as claimed above, it is evident that RR Donnelley has faced some difficulties. For instance, the company experienced some challenges in 1993 when Sears stopped its mail-order catalogs. The floundering of the Stream International, its publishing arm, as a result of the introduction and release of Windows 95 also posed a great challenge to the company. In 1996, the company was also hit with lawsuits that associated it with discrimination on the basis of race and age. The discrimination issue was sorted almost a decade later (October 2004) for $15 million. RR Donnelley made a big loss that year despite selling sales of approximately $6.6 billion (Pasiuk 91). RR Donnelley continued to attract new investors through forming alliances in 1999. The company paired up with PostX Express so that it communicates with its customers through their e-mail delivery service. Additionally, RR Donnelley formed an alliance with a specific web designer firm referred to as Multimedia Live, as a way of enhancing its strategy in e-commerce (International LabourOrganisation 20). The target market of RR Donnelley The target markets of RR Donnelley include publishers, companies in the advertising, and technology industries. Its customers also include financial services, healthcare as well as retail industries. Although the carries its business mainly in the US, it is evident that it has started to expand the business to Europe, Asia, and regions in Latin America. Strategies employed by RR Donnelley RR Donnelley capitalizes on e-books format With extensive advancement in technology, the use of materials such as books has reduced significantly. Such reduction contributes to the production of books by printing industry such as RR Donnelley in low volumes. In other words, technological advancement has affected the printing of books by RR Donnelley. In connection with this challenge, RR Donnelley has worked extensively with the intention of placing itself in a good position so that it can capitalize on the e-books format. For instance, this is evidenced by the existence of the Red Rover Digital, that is an online division; a brand of RR Donnelley (Pasiuk 92). RR Donnelley’s strategic alliance with All Printing & Graphics RR Donnelley agreed to unite with All Printing & Graphics with the aim of the All Printing & Graphics serving as “RR Donnelley’s tier one supplier for print stationery, corporate identity and other products” (Jet Magazine 32). From this assertion, one can deduce that the company markets itself through the aid of other companies with which it forms an alliance. Additionally, the involvement of All Printing & Graphics, Inc in the massive production of print services such as press, label printing, and envelope manufacturing makes RR Donnelley to be renowned as one of the successive printing industries in the world (The Future of Print 1). This assertion is in connection with the fact that All Printing & Graphics is a small organization that is regarded as a Minority Business Enterprise. Thus, most of the successes of All Printing & Graphics are believed to be as a result of the RR Donnelley’s support. RR Donnelley advancing to other fields other than printing To avoid extinction as a result of drop in demand in some of its printing products, RR Donnelley has advanced to other fields; currently, the company is working on not only commercializing bendable RFID antennas, but also on sensors in addition to ultra-thin batteries (Vault Editors 464). Retrieved from http://seekingalpha.com/article/2445445-r-r-donnelley-the-future-of-printable-electronics From the above graph, one can deduce that the strategies employed by RR Donnelley contribute significantly to its success as a printing company. For instance, it is evident that the stock of the company returned nearly 13 percent within 3 months. The challenges that affect the future of RR Donnelley RR Donnelley’s closing of unproductive plants To understand the current situation of the RR Donnelley, I analyzed many different interviews that were made regarding the closure of some plants by RR Donnelley and their respective implications for the public and the company itself. In connection with my analysis, I found out that RR Donnelley closes some of its plants in order to minimize costs associated with production of printing materials as well as minimizing losses as a result of running unproductive plants. For instance, it is evident that RR Donnelley closed Nashville plant recently so that it can minimize production costs. Its closure led to the loss of approximately 200 jobs. The company is also remembered for closing the Jefferson City plant in October 2013 rendering approximately 400 people jobless (Famuliner 1). In late 2014, also shut down the Argentina plant, leading to the loss of about 400 jobs. From these closures of plants, one can predict the future of RR Donnelley by associating it with failure. It is evident that some analysts may use the current occurrence in the field to explain what is likely to happen in the near future. However, the closure of the plants is not enough reason for predicting the future of a company. There is a possibility of a company closing some of its plants in order to minimize the chances of failing in the future as a result of loss of resources. It is as a result of this that I carried out the survey of the RR Donnelley’s inventories through the assistance of the research that was carried out by Set Jayson. Survey of the RR Donnelley’s inventories According to Jayson (1), the sitting of products on shelves for too long is a portrayal of a big problem in a given company. This is in tandem with the fact that stale inventory are often sold at a very low price, affecting profitability. Thus, a simple rule of thumb aided significantly in analyzing the future of RR Donnelley. According to the rule, increase in inventory correlates with a decrease in sales. In studying the relationship between inventory growth and sale growth of the company, Jayson found out that RR Donnelley’s revenue increased by 5.9% whereas the inventory decreased by 8.9%. After some period (months), Jayson further learned that the company’s revenue grew by 1.4% whereas its inventory dropped by 10.7% (Jayson 1). Retrieved from http://www.dailyfinance.com/2012/02/27/see-the-future-for-rr-donnelley--sons-by-checking/ The decrease in finished goods in the above chart is an indication of the movement of products after their production. The increase in raw materials is also as a result of the rise in demand of the finished products. Thus, one can learn from the above graph that RR Donnelley is likely to continue expanding in the future despite challenges in the media printing industry (Jayson 1). Conclusion/Recommendations As a result of advancement in technology, it is important for RR Donnelley to employ some mechanism that will enhance the understanding, as well as familiarization of the new technology by its employees and the management. RR Donnelley ought to come up with some strategies that will enhance it to compete effectively in the current printing industry. It is also crucial for the organization to embrace technology. Among the things the company will do in order to achieve this include educating its employees and the management, purchasing new technological devices, allocating enough funds to technology issues, informing the public about their products and their usage, and forming alliances with other printing companies. Education Educating the employees, as well as the management about the new technology and its usage will not only increase productivity, but also reduce errors associated with unfamiliarity with new devices in the working environment. Education will also make employees become courageous and more effective in their daily responsibilities. Purchase of new technology RR Donnelley will only compete effectively in this technological world by possessing the technological devices that associated with increasing productivity and quality. The purchase of the devices will also enable it to retain its customers because of the reduction of wastage of time as a result of using new technology in production of goods and services. For instance, the purchase of assistive devices, devices that will be operated by persons with disabilities, will enable the company increase the number of its customers because the devices will enable persons with disabilities access products and services like other people. Allocation of funds to issues related to technology The purchase and the learning process of technology are capital oriented. As a result of this, it is recommendable for RR Donnelley to locate enough funds to technology so as to avoid complications in the working environment. Creation of customer awareness Majority of the RR Donnelley customers consist of the analogue users. Thus, the change in the production of materials as a result of advancement in technology will lead to customer confusion. It is crucial for the company to teach its customers about the products of the new technology so as to reduce such incident from taking place. Formation of alliances Success in the current market calls for togetherness in production and selling of services. RR Donnelley needs to form alliances with other companies so that it can have the opportunity to learn new ideas as well as to sell its goods and services through the aid of the other companies. In connection with this assertion, it is advisable for RR Donnelley to form alliance with IntraLinks, the one of the leading provider of virtual data that is used by the mergers and acquisition industry so that it can manage to offer online services to thousands of its clients worldwide. Works Cited Famuliner, Ryan. RR Donnelley in Jefferson City to close, 470+ jobs gone. 2013. Web. 11 Feb. 2015. http://kbia.org/post/rr-donnelley-jefferson-city-close-470-jobs-gone International LabourOrganisation.Sectoral Activities Programme.Security of Employment and Income in the Light of Structural and Technological Change in the Printing and Allied Trades, Having Regard to Other Media: Third Tripartite Technical Meeting for Printing and Allied Trades, Geneva, 1990. New York: International Labour Organization, 1990. Jayson, Seth. See the Future for R.R. Donnelley & Sons by Checking This. 2012. Web. 11 Feb. 2015. http://www.dailyfinance.com/2012/02/27/see-the-future-for-rr-donnelley--sons-by- checking/ Jet Magazine. The weekly source of African American political and entertainment news. New York: Johnson Publishing Company. 1996. Lieber, Ron and Meltzer, Tom. Best Entry-Level Jobs, 2005-2006. New York: The Princeton Review, 2005. Pasiuk, Laurie. Vault Guide to the Top Business Services Employers. New York: Vault Inc., 2006. Peterson, Wayne. What is the Future of Print? 2014. Web. 11 Feb. 2015. http://whattheythink.com/articles/69797-what-future-print/ The Future of Print: Trends Transforming the Industry. 2011. Web. 11 Feb. 2015. http://www.xerox.com/digital-printing/future-of-print/enus.html United States. Bureau of Labor Statistics.The Impact of technology on labor in five industries: printing and publishing/water transportation, copper ore mining/fabricated structural metal, intercity trucking. New York: U.S. Dept. of Labor, Bureau of Labor Statistics, 1982. Vault Editors. Vault/Inroads Guide to Diversity Internship, Co-op and Entry-level Programs Vault career library. New York: Vault Inc., 2005. Read More