final xerox reconfiguration presentation

Xerox Copy Center Renewal Proposal

PresentationProposed Options

Mark PudlitzkeNovember 05, 2004

2 File Number- 2

Goal and Objective

• Reduce overall document management expenses.• Reduce number of off-site vended jobs.• Anticipate and Plan for future growth• Improve performance in production center.• Improve overall cycle time (work-flow)/tracking

process.• Improve communication to Honeywell on print job

status and turn around time (TAT) of high priority, time sensitive jobs.

Reduce overall costs while increasing productivity

3 File Number- 3

Today’s Situation

• Over Capacity and Increased costs.- DC6060P color equipment is at 247% Utilization

- Without adding new equipment, level of vended jobs will remain high for color print.

- Vended color jobs would add an additional 1224% utilization rate to the DC6060P if included with the Copy Center jobs.

- Lean Document Production (LDP) study found up to 63 jobs in WIP at any given time.

• Limited In-House Capabilities.- 40% of Production Staff were over 100% Utilization.

- LDP showed there was as many as 301 jobs representing 50 job types. (Over time period of Mar 26-04 to Apr 27-04)

• Manual Order, Fulfillment, and Tracking process.


4 File Number- 4

How Did We Get Here?

• Right Sized operation March 2003 per current black&white/color volumes.- Annual spend reduction of $500,000.

• Indirect Sourcing lead brought color volume in house to recognize cost savings.


5 File Number- 5

Monthly YTD vended color print demand


Jan 04 Sum of Impressions Apr 04 Sum of Impressions

Requestor Total % total Requestor Total % total

Georgia Thomas 130,090 89.4% Georgia Thomas 649,320 70.9%

Justin McCurnin 12,100 8.3% Justin McCurnin 266,000 29.1%

Kathy Cullen 1,600 1.1% Grand Total 915,320 100.0%

Requestor 1,200 0.8%

Audra Biesterfeld 560 0.4%

Audra / Georgia 25 0.0% May 04 Sum of Impressions

Grand Total 145,575 100.0% Requestor Total % total

Camille Gallagher 322,900 47.1%

Georgia Thomas 314,000 45.8%

Feb 04 Sum of Impressions Shari Paul 24,000 3.5%

Requestor Total % total Audra Biesterfeld 24,000 3.5%

Sally Spires 34,000 32.3% Grand Total 684,900 100.0%

(blank) 17,610 16.7%

Shari Paul 17,400 16.5% Jun 04 Sum of Impressions

Pam Enstad 16,000 15.2% Requestor Total % total

Georgia Thomas 14,200 13.5% Georgia Thomas 328,000 40.5%

Kathy Cullen 5,600 5.3% Jim Cordaro 210,000 25.9%

Audra Biesterfeld 500 0.5% Audra Biesterfeld 139,000 17.2%

Grand Total 105,310 100.0% Camille Gallagher 54,600 6.7%

Regina LeMere 40,450 5.0%

Shari Paul 24,000 3.0%

Mar 04 Sum of Impressions David Stacey 12,000 1.5%

Requestor Total % total Linda DeFranco 1,208 0.1%

Georgia Thomas 581,600 69.0% Grand Total 809,258 100.0%

Audra Biesterfeld 122,080 14.5%

Justin McCurnin 90,000 10.7%

Shari Paul 49,000 5.8%

Grand Total 842,680 100.0%

Monthly Summary of Off site Color Impression Processing by Xerox

By Month of Year

6 File Number- 6

MARCOMM 2004 Initiative of Web based POD

• Current Situation:

- Literature printed in mass quantities to reach price point. (2-5 year supplies)

- Planning Process: Literature printed, shipped to LDC, stored @ LDC, ordered, packaged

@ LDC, shipped to customer. 6 steps- (2 week lead time)

- Cost of $66,000 a year in pick charges. $2.75 pick/pack charge per literature fulfillment order. (any quantity)

- Collateral deliveries often damaged.

- Homes-only literature: $715,000 in LDC inventory. Of which 35% is obsolete. (Revision changes and outdated)

- Current literature inventory takes up entire row/column at the LDC today.


7 File Number- 7

MARCOMM 2004 Initiative of Web based POD

• Goals:- Reduce investments in:

literature administration, printing, storage, fulfillment, shipping/handling waste.

- Improve cycle time and cost per order.

- Increase level of service and capabilities to customer.

- Turn printing into a profit center via the merchant account process.

- Reduce administrative involvement.

- Change from a Push to Pull Demand Replenishment System.

- Elimination of the clerical management of literature in Customer Care database.


8 File Number- 8

MARCOMM Requirements & POD ROI


BENEFIT 1 2 3 4

Revenue Increase

Increased revenue per sales rep

(contractor, distributor, internal)

Increased Sales rep. retention

Cycle time improvement (Time To Market)

Total Revenue Increase $0.00 $0.00 $0.00 $0.00

Cost Reduction

Outside Print reduction $297,416.25 $297,416.25 $297,416.25 $297,416.25

Distribution reduction

Order processing reduction(Admin) $0.00 $0.00 $0.00 $0.00

Marketing Management coordination

reduction $0.00 $0.00 $0.00 $0.00

Avg. Reduction in waste from obsolescence $29,741.63 $29,741.63 $29,741.63 $29,741.63

LDC line (order) charge (Storage and

inventory reduction) $65,755.25 $65,755.25 $65,755.25 $65,755.25

Total Cost Reduction $392,913.13 $392,913.13 $392,913.13 $392,913.13

TOTAL BENEFIT $392,913.13 $392,913.13 $392,913.13 $392,913.13

COST 1 2 3 4

Development $25,000.00 $0.00 $0.00 $0.00

Hosting Fee $34,879.44 $34,879.44 $34,879.44 $34,879.44

On Site Print Center Distribution Charges

On Site Print Center Click Charges $225,376.00 $176,466.98 $176,466.98 $176,466.98

TOTAL COST $250,376.00 $176,466.98 $176,466.98 $176,466.98

GAIN / LOSS - Realized per Year $142,537.13 $216,446.15 $216,446.15 $216,446.15

GAIN / LOSS - Cummulative $142,537.13 $358,983.28 $575,429.43 $791,875.58

Months to obtain return on investment 8

Year

9 File Number- 9

MARCOMM Requirements & Merchant Account


Estimated Monthly Chargeable Volume to Users218,952 x $.13 = $28,463.76

(Includes contractors and distributors)

Estimated Monthly Chargeable Volume to Marcomm218,952 x $.062 = $13,575.02

(Includes contractors and distributors)

Estimated Monthly revenue $14,888.74

Estimated Annual revenue$178,664.88

10 File Number- 10



Volume Validation 1 million impressions Probability 90%- 95%

Elements of 1 million Print Volume 50% LDC

35% Marcomm Launch's. (New products, Trade Show s)

15% Office (Misc)

Additional Volume (Marcomm) Product Launch 15% 45,000

Trade Show s 10% 30,000Direct Mail 5% 15,000AD-Slicks 15% 45,000Brochures 30% 90,000Sale Sheets 20% 60,000Tech Pubs 5% 15,000

100% 300,000

11 File Number- 11



FORMS DOCUMENTDESIGN &

RE-DESIGNCOMMERCIAL

PRINTCOPY

CENTER

PRODUCTIONTRANSACTION

OFFICE FLEET

POD/DIGITAL DOCUMENTS

WAREHOUSE

&

DISTRIBUTION

DATA CENTER

Documentation and Manuals

Internal and External Forms

E-Forms & I-Form Design

POD

Imaging

Translation

Scanning

Digital Archiving

Purchase & Source

Envelopes

Posters

Brochures

Direct Mail

Offset/ Web/ LetterPress and Digital Press

Statement / Invoice Printing

Policy Printing

Personalized/ 1:1

Electronic Kiting

Production Optimization

Lean Document Production

Documentation & Manual Production

Inventory Management

Kiting

Inventory Reporting

Document Usage Data

ACS current Annual spend = $10 Million. Xerox Guaranteed savings of 10-25%

Document Advisor Office Sponsor: Dan Harrison

12 File Number- 12

Available Options

• Option 1 (Renewal) iGen3 & 3 x 5 Labor- Maximum Cost Savings ($412,411) over the 3 year period.

- Digitalization (Hardware/ Software Upgrades)

- Satisfies current volume requirements and positions for future growth. iGen3 capable of supporting monthly volumes from 200,000

impressions per month to and exceeding 1.2 million prints per month.

- Co-Terminous with current production color configuration, including ECC Marcomm web based solution.

- This option does meet the requirements outlined in the Lean Six Sigma “Voice of the Customer”

- See Projected Cash flow expenditure worksheet for detail validation.


13 File Number- 13

Option 1 Cash FlowProject Cash Flow Analysis iGen Renewal+Labor 3X5Term: 36 Months Coterminous with other contracts come Due Sept 2007

Print Center Capacity level of 80%

6060 1.5 x 5 Jun-04

6060 1.5 x 5 Jul-04

6060 1.5 x 5 Aug-04

iGen 3 x 5

Sept-04 Yr 2004 (7 Mon)

Yr 2005 (12 Mon)

Yr 2006 (12 Mon)

Yr 2007 ( 9 Mon)

Actual Projected Projected Projected Projected Projected Projected Projected

7000539 B/W Equip (Min) 27,525$ 27,525$ 27,525$ 26,525$ 188,677$ 318,304$ 318,304$ 238,728$

7000539 Labor (Min) 39,927$ 42,235$ 42,235$ 55,120$ 344,877$ 661,440$ 661,440$ 496,080$

7006505

Color Equip 6060 (Min) w /bookletmaker 10,450$ 10,450$ 10,450$ 10,450$ 73,150$ 125,400$ 125,400$ 94,050$

New iGen Color Equipment 49,361$ 197,444$ 592,332$ 592,332$ 444,249$

Sub-Total (Fixed Cost) 77,902$ 80,210$ 80,210$ 141,456$ 804,148$ 1,697,476$ 1,697,476$ 1,273,107$

* B/W Impress count 916,760 1,111,646 1,111,646 1,111,646 7,586,636 13,339,752 13,339,752 10,004,814

* Color Impress count 958,632 1,000,000 1,000,000 1,000,000 6,958,632 12,000,000 12,000,000 9,000,000 B/W Impression $.0037 (Min 1.2M) -$ -$ -$ -$ -$ -$ -$ -$ B/W Impression on Color Machine $.020 23$ 26$ 26$ 26$ 179$ 312$ 312$ 234$

New Color Impression $.062 (In House)

Color Impression Current $.089 (In House) 13,294$ 17,800$ 17,800$ 24,800$ 151,694$ 312,000$ 312,000$ 234,000$

New Color Impression $.062 (Vended Outside)

Color Impression Current $.089 (Vended Outside) 72,024$ 71,200$ 71,200$ 6,200$ 240,124$ 78,000$ 78,000$ 58,500$ Misc chgs Vended Jobs 834$ $ 12,202 $ 12,202 $ 500 27,238$ 6,000$ 6,000$ 4,500$

Sub-Total (Variable Cost) 86,176$ 101,228$ 101,228$ 31,526$ 419,236$ 396,312$ 396,312$ 297,234$ Supplies In House $ 10,278 $ 10,278 $ 10,278 $ 31,738 157,785$ 380,856$ 380,856$ 285,642$ Supplies Vended $ 29,738 $ 29,738 $ 29,738 $ 5,278 110,326$ 63,336$ 63,336$ 47,502$

Sub-Total (Supply Costs) 40,016$ 40,016$ 40,016$ 37,016$ 268,112$ 444,192$ 444,192$ 333,144$

Add iGen/ Labor (3 shifts x 5 days)

Cotermious Grand Total Summary 204,093$ 221,454$ 221,454$ 209,998$ 1,491,495$ 2,537,980$ 2,537,980$ 1,903,485$ No Change to Equip

& Labor Grand Total Summary 204,093$ 221,454$ 221,454$ 221,454$ 1,532,818$ 2,672,096$ 2,702,235$ 2,038,297$

(11,456)$ (41,323)$ (134,116)$ (164,256)$ (134,812)$

(137,470)

(412,411)

Cost savings greater because

current contract has labor escalator.

Cost Savings Comparison to Existing Contract x 36 months

Monthly Fixed Costs

Variable Cost

Cost Savings Comparison to Existing Contract

Annual Cost Savings over Current Contract x 12 months

14 File Number- 14

Available Options

• Option 2 (iGen3 Add Only)- Cost Savings ($135,535) over the 3 year period.

- Digitalization (Hardware/ Software Upgrades)

- Satisfies current volume requirements and positions for future growth.

- Co-Terminous with current production color configuration, including ECC Marcomm web based solution.

- This option does meet the requirements outlined in the Lean Six Sigma “Voice of the Customer”



15 File Number- 15

Option 2 Cash FlowProject Cash Flow Analysis iGen+ 3 x 5 Add on36 Month Separate add-on Contract

Print Center Capacity level of 80%

6060 1.5 x 5 Jun-04 Jul-04 Aug-04

iGen Only 3 x 5

Sept-04 Yr 2004 Yr 2005 Yr 2006 Yr 2007Actual Projected Projected Projected Projected Projected Projected Projected

7000539 B/W Equip (Min) 27,525$ 27,525$ 27,525$ 26,525$ 188,677$ 318,304$ 318,304$ 238,728$

7000539 Labor (Min) 39,927$ 42,235$ 42,235$ 56,611$ 350,841$ 679,332$ 679,332$ 509,499$

7006505


New iGen Color Equipment 49,361$ 197,444$ 592,332$ 592,332$ 444,249$

Sub-Total (Fixed Cost) 77,902$ 80,210$ 80,210$ 142,947$ 810,112$ 1,715,368$ 1,715,368$ 842,277$

* B/W Impress count 916,760 1,111,646 1,111,646 1,111,646 7,586,636 13,339,752 13,339,752 10,004,814

* Color Impress count 958,632 1,000,000 1,000,000 1,000,000 6,958,632 12,000,000 12,000,000 9,000,000

B/W Impression $.0037 (Min 1.2M) -$ -$ -$ -$ -$ -$ -$ -$

B/W Impression on Color Machine $.020 23$ 26$ 26$ 26$ 179$ 312$ 312$ 234$

New pricing $.062 with 500K min included

Color Impression $.089 (In House) 13,294$ 17,800$ 17,800$ 18,600$ 123,294$ 223,200$ 223,200$ 167,400$


Color Impression $.089 (Vended) 72,024$ 71,200$ 71,200$ 18,600$ 288,824$ 223,200$ 223,200$ 167,400$

Misc chgs Vended Jobs 834$ $ 12,202 $ 12,202 $ 500 27,238$ 6,000$ 6,000$ 4,500$



Grand Total 204,093$ 221,454$ 221,454$ 217,689$ 1,517,759$ 2,612,272$ 2,612,272$ 1,959,204$ No Change to Equip &

Labor Grand Total Summary 204,093$ 221,454$ 221,454$ 221,454$ 1,532,818$ 2,672,096$ 2,702,235$ 2,038,297$ (3,765)$ (15,059)$ (59,824)$ (89,964)$ (79,093)$

(45,178)

(135,535) Cost Savings over Term Contract Cotermious x 36 Mon

Monthly Fixed Costs

Variable Cost

Cost Savings Comparison to Existing Contract

Annual Cost Savings over current Contract x 12 Mon

16 File Number- 16

Available Options

• Option 3 (6060 Equipment & 3 x 5 Labor)- Cost Increase $84,805 over the 3 year period.

- Limited increase in capacity.

- This option does not meet the current volume capacity requirements due to technological limitations.

- This option does not meet the Lean Six Sigma “Voice of the Customer”.



17 File Number- 17

Option 3 Cash Flow

Project Cash Flow Analysis with 6060+ 3X5 Labor Add on36 Month Separate add-on Contract

Print Center Capacity over 100%

6060 1.5 x 5 Jun-04 Jul-04 Aug-04

6060 Only 3 x 7

Sept-04 Yr 2004 (7 Mon)

Yr 2005 (12 Mon)

Yr 2006 (12 Mon)

Yr 2007 (9 Mon)


7000539 B/W Equip (Min) 27,525$ 27,525$ 27,525$ 26,525$ 188,676$ 318,300$ 318,300$ 238,725$

7000539 Labor (Min) 39,927$ 42,235$ 42,235$ 56,611$ 378,939$ 791,724$ 791,724$ 593,793$

7006505


New New 6060 Equipment 10,450$ 41,800$ 125,400$ 125,400$ 94,050$


* B/W Impress count 916,760 1,111,646 1,111,646 1,111,646 7,586,636 13,339,752 13,339,752 10,004,814








Misc chgs Vended Jobs 834$ $ 12,202 $ 12,202 $ 12,220 74,118$ 146,640$ 146,640$ 109,980$



-$


Labor Grand Total Summary 204,093$ 221,454$ 221,454$ 221,454$ 1,532,818$ 2,672,096$ 2,702,235$ 2,038,297$ 2,356$

28,268

84,805 Cost Savings over Term Contract Cotermious x 36 Mon

Monthly Fixed Costs

Variable Cost

Cost Increase Comparison to Existing Contract

Annual Cost Increae over current Contract x 12 Mon

18 File Number- 18

Available Options

• Option 4 (6060 Equipment & 3 x 7 Labor)- Cost Increase $106,621 over the 3 year period.

- Limited increase in capacity.

- This option does not meet the current volume capacity requirements due to technological limitations.

- This option does not meet the Lean Six Sigma “Voice of the Customer”.



19 File Number- 19

Option 4 Cash Flow

Project Cash Flow Analysis with 6060+ 3 x 7 Labor Add on36 Month Separate add-on Contract

Print Center Capacity over 100%

6060 1.5 x 5 Jun-04 Jul-04 Aug-04

6060 Only 3 x 7

Sept-04 Yr 2004 (7 Mon)

Yr 2005 (12 Mon)

Yr 2006 (12 Mon)

Yr 2007 (9 Mon)


7000539 B/W Equip (Min) 27,525$ 27,525$ 27,525$ 26,525$ 188,676$ 318,300$ 318,300$ 238,725$

7000539 Labor (Min) 39,927$ 42,235$ 42,235$ 65,977$ 388,305$ 791,724$ 791,724$ 593,793$

7006505


New New 6060 Equipment 38,202$ 152,808$ 458,424$ 458,424$ 343,818$


* B/W Impress count 916,760 1,111,646 1,111,646 1,111,646 7,586,636 13,339,752 13,339,752 10,004,814








Misc chgs Vended Jobs 834$ $ 12,202 $ 12,202 $ 12,220 74,118$ 146,640$ 146,640$ 109,980$




Labor Grand Total Summary 204,093$ 221,454$ 221,454$ 221,454$ 1,532,818$ 2,672,096$ 2,702,235$ 2,038,297$ 2,962$

35,540

106,621 Cost Savings over Term Contract Cotermious x 36 Mon

Monthly Fixed Costs

Variable Cost

Cost Increase Comparison to Existing Contract

Annual Cost Increae over current Contract x 12 Mon

20 File Number- 20

Recommendation

• Move forward with the Renewal Proposal of Option 1 with Xerox. (Add the iGen3 & 3 X 5 Labor configuration)

- Resulting Benefits: Maximizes over all production center costs savings & improved profitability. Increases in-house managed capacity for internal customers requirements. Increases efficiency/labor utilization. Decrease the number of late and vended jobs. Anticipates for future growth with added capacity and Digital Equipment

Technology Improves communication on status of print jobs and turnaround time of high

priority, time sensitive jobs. Supports additional color demand driven by the MARCOM 2004 Initiatives

of POD and DAO.

www.honeywell.com

final xerox reconfiguration presentation

Documents

total benefit

total cost reduction

totalrequestor total

overall costs

sum of impressionsgrand

total camille gallagher

time sensitive jobs

vended color jobs