23. Profitability This procedure needs more understanding and more cooperation with every customer and we have agreed that it’s the right way going forward. Developing the relations with your existing customer is the right thing to do. Sure, you won’t have twice as many clients in the future. But you will have a great power and ability to be twice as big within your existing customer base. Develop each customer with the possibilities from your new “toolbox”. The value of your services will then go up and your profit will grow as you scale. How your sales team works with the customer is crucial and so is the tight cooperation with the project leader, a person who must see all the new possibilities for each customer and create new solutions. The production manager has one priority in every step of the transformation: filling all the buckets equally 1, 2, 3, or 4 shifts! If the production manager instead of seeing the possibilities starts thinking too much about the run length and hard breakeven point per job, he or she will lose focus pondering if this shall go analog or digital and is doomed. The fixed costs are the biggest ones. The machine operator plus other fixed costs per shift stays for around 50% of the total running cost. If you only fill half a shift, it will instead increase to 75% of the cost per job. And don’t forget the number of jobs going through digital compared to analogue; it’s a factor 10 to 1, or 100 to 1, maybe 1,000 to 1 with e-business. Digital gives you the power to increase your profit with really small volumes compared to analog. With the new business plan (more on that later in the book), we view and estimate the cost from the digital and now count the cost per time instead of per job, which also includes longer conventional runs. When you give the CFO or the bank the facts of how the Return on Investment (ROI) will look like, there are a few cornerstones you can build your argument on. If the digital packaging investment in hardware and software can cost EUR 25,000 per month for a narrow web, to around twice for wide web or sheet fed B2 solution per month, savings come through less staffing with digital and will be at least 30% per volume EUR in turnover. Over 5 years, based on one shift, both analog and digital, real cases today from label and commercials (those already transformed) show, if based on an investment around EUR 25,000 per month (EUR 1,000,000 investment), that the ROI can be as high as 25% = EUR 75,000 per year on the bottom line. You shall see that as a hint, not a guarantee. With our own “Smartplan”, a calculator that will support you with your own personalized ROI, you’ll get a calculated plan just for you.
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