Rr Donnelley & Sons: the Digital Division
RR Donnelley & Sons: The Digital Division
I. Traditional vs. On-Demand Digital Printing
How do the characteristics of Donnelley's traditional printing business compare with the characteristics of on-demand digital printing?
R.R. Donnelley and Sons traditional printing business pricing varied depending on the number of pages in the print job. The prices per page decreased as the number of pages increased. The traditional print business consisted of high fixed costs and low variable costs. Offset presses cost approximately $12 million using film and plates with runs of 25,000 to 500,000. The gravure print was more expensive and used etched copper cylinders and would run 500,000 or more. The digital presses were more expensive and required skilled and dedicated operators. Donnelley felt they would need to develop and control four database systems to make their model work, adding extra costs. At the same time, Donnelley anticipated savings by eliminating inventory and warehousing costs. The cost per unit for print jobs with run lengths of 2,000 or less would be lower than the costs of the traditional offset print.
What do you have to do well to succeed in the two businesses? What do customers want?
Manufacturing and sales were the core functions of Donnelley. The traditional print business succeeded by employing a superior sales force of over 500 people. The salespeople had considerable customer knowledge to the point they were able to reduce inventory and shorten cycle time for the customer. They developed long term relationships with their customers. Donnelley was founded in 1864; being an early entrant company gave them a competitive advantaged, and allowed them to maintain a loyal customer base. Their strategy was to secure multi-year contracts worth tens of millions of dollars. 70% of business was from long term contracts of 3 to 10 years. Donnelley would build plants specific to the needs of their long term customers. A large
I. Traditional vs. On-Demand Digital Printing
How do the characteristics of Donnelley's traditional printing business compare with the characteristics of on-demand digital printing?
R.R. Donnelley and Sons traditional printing business pricing varied depending on the number of pages in the print job. The prices per page decreased as the number of pages increased. The traditional print business consisted of high fixed costs and low variable costs. Offset presses cost approximately $12 million using film and plates with runs of 25,000 to 500,000. The gravure print was more expensive and used etched copper cylinders and would run 500,000 or more. The digital presses were more expensive and required skilled and dedicated operators. Donnelley felt they would need to develop and control four database systems to make their model work, adding extra costs. At the same time, Donnelley anticipated savings by eliminating inventory and warehousing costs. The cost per unit for print jobs with run lengths of 2,000 or less would be lower than the costs of the traditional offset print.
What do you have to do well to succeed in the two businesses? What do customers want?
Manufacturing and sales were the core functions of Donnelley. The traditional print business succeeded by employing a superior sales force of over 500 people. The salespeople had considerable customer knowledge to the point they were able to reduce inventory and shorten cycle time for the customer. They developed long term relationships with their customers. Donnelley was founded in 1864; being an early entrant company gave them a competitive advantaged, and allowed them to maintain a loyal customer base. Their strategy was to secure multi-year contracts worth tens of millions of dollars. 70% of business was from long term contracts of 3 to 10 years. Donnelley would build plants specific to the needs of their long term customers. A large