MANY ORGANIZATIONS that start a marketing-literature management program make decisions based primarily on unit costs. After all, the easiest way to judge different print vendors side by side during the proposal process is through a comparison of their quantity pricing for printing various types of literature. And when a supplier is chosen and the print purchases finally are made, the traditional approach has been to buy in large volumes since companies get the best unit cost this way.
In theory this may create lower overall expense, but the reality is very different. Many companies are finding that choosing vendors and making purchases with an eye solely on unit pricing is a mistake. In most instances, unit price is just one of several factors that contribute to the overall cost of literature management.
Ultimately, total cost of ownership determines value in a literature management program, and this total cost takes into account not only unit costs, but also the costs of cash, inventory, transportation, excess and obsolescence. In pursuing the lowest unit prices at the expense of all else, companies tend to ignore these other factors, which often have great impact on the bottom line.
THE DANGERS OF FORECASTING
When companies purchase a large quantity of printed material to save on unit costs, it’s usually done based on a forecast of how much of those materials will be used. But most projections are little more than educated guesses, and buying in this way generally results in inventory.
Holding inventory costs money
