Reducing cycle time is a powerful business strategy. Here are two examples from the newspaper industry that demonstrate how outsourcing was the only way these companies could take advantage of a great opportunity.
Outsourcing Handles The Death of Diana
When Princess Diana died suddenly in a car crash, the world virtually stopped. People all over the planet wanted to hear the latest details. In England, people who only got their news from the telly waited for the newspapers to appear on the newsstand. And they didn't buy just one copy.
Keith Taylor swung into action. His outsourcing company supplies the labor for the British newspaper industry. The day before Princess Diana died, his company had 600 pressmen a day at work. Until the day after the funeral, that number swelled to 1,000.
"Production took an uphill climb," says the chief executive officer of the business process outsourcing (BPO) vendor in Banbury, England. "The newspaper owners were glad they had outsourced the labor to us because they could never have found enough trained employees in time to meet the demand. You can't sell today's newspaper tomorrow."
Taylor says outsourcing was the only way his buyers could take advantage of this once-in-a-lifetime market opportunity because he was able to pull pressmen from other less pressing jobs. He had the skilled labor available because an outsourcing vendor services multiple clients with differing needs. He had the stable of stable employees he could reshuffle to take advantage of this opportunity.
Taylor adds he has good working relations with his staff, so he was able to convince many to work late into the night and on weekends to get the papers out.
San Francisco Examiner Changes Owners
For the last 30 years, the San Francisco Examiner and the San Francisco Chronicle had a joint venture agreement. The Chronicle, the afternoon paper, handled all business arrangements for the two papers. The Examiner, the Hearst Corporation's flagship and the city's morning paper, just had a newsroom.
When Hearst purchased the Chronicle, Ted Fang, a San Francisco business executive, purchased the Examiner on July 26, 2000. A clause in the sales contract said the new owners had to take over publication of the paper in just 120 days after the ink was dry. "There was no way we were going to stop publication," even though the paper needed a circulation department, a sales staff, a marketing and promotion team as well as a printing press, says Bob McCray, vice president and general manager of the Examiner.
McCray says the four executives of the paper met in Phoenix and listed every job required to publish a daily newspaper. All tasks had to be done cost effectively yet with a high level of customer service. "We asked ourselves, 'What made sense to do internally?" he reports.
The paper had no interest in building and staffing a call center, so it outsourced its customer service department to Media Venture in Louisville, Kentucky, an outsourcing provider specializing in newspapers.
Then they decided to use an agent system to deliver the newspaper. They hired a full-service advertising agency for marketing and promotion. It outsourced its database management and Web site. "We knew we couldn't build a newspaper printing plant in four months, so we outsourced that, too," says the executive. The Examiner uses San Francisco Offset Printing in Redwood City, California.
The paper kept its newsroom staff of 50; the old newsroom numbered 200. The current staff is lean because the Examiner relies on CBS's Market Watch news and the Web weather pages for their information. "We try to produce a paper with a lot less overhead," says McCray.
The executives also put its advertising sales group of 15 on its payroll. The executives felt it would be difficult to generate local leads and build long term relationships if they outsourced this function.
McCray believes the Examiner could not have put out its first paper on November 26 if it hadn't decided to outsource. Media Venture, for example, "concentrated on us for that 90 days. If we would have done that in house, we would have been scattered," he says. The company already had its computer system in place, important if your business plan has a short fuse. Its circulation company was already delivering USA Today and the Wall Street Journal, so it was intimately familiar with the Bay area.
Outsourcing also saved the owners money. McCray says a newspaper with the Examiner's circulation should have a staff of about 500 people. Currently there are 85 people on its roster.
And the quality is higher than if the paper had time to do everything internally. The Examiner outsourced to a commercial printer, the color reproduction equals that of a magazine. "The quality is better than we ever anticipated," says McCray. Media Venture "can respond quicker than we could internally," he adds.
"We couldn't have met our deadline without outsourcing, given our time frame and our required level of service," concludes McCray.