‘Lights-Out’ Systems Light Years Away?

Newspapers face the unenviable task of balancing advertisers’ demands against the current state of packaging-and-distribution technology, newspaper executives acknowledged.

While speakers disagreed on exactly when, if ever, a fully automated, "lights-out" mailroom will appear, one thing is certain. Advertisers want more customization, more flexible distribution alternatives, and more and more zones, said Jonathan H. Markey, president and chief operating officer of The Record in Hackensack, N.J.

The Washington Post's fourth and newest collator bumped back preprint deadlines for some advertisers by four days.

Markey cited a recent article about Kohl’s department stores, a new customer to his market, that listed as strategic desires daily preprint zoning by ZIP code, growth in paid-subscriber circulation rather than total-market-coverage offerings, and less time between preprint-copy delivery and run dates.

Such demands make putting out the paper more labor intensive, said Stan Richmond, vice president of operations for Cox Newspapers Inc. of Atlanta. "We need to find a way to automate the process," he said.

Although there’s been much hypothetical talk of a "lights-out" mailroom, most panelists agreed the industry is far from getting a completely automated mailroom—at least for the next five-to-10 years.

Blame the sheer complexity of newspapers’ preprint offerings, speakers said.

"There are so many different packages," observed Mark S. Mikolajczyk, vice president of production for Gannett Co. in Arlington, Va. "It’s different every day."

Add to the complexity of the task the shrinking number of vendors catering to the industry, and there’s even less incentive to develop innovations.

"We have few leaders and everyone follows, but they don’t take great steps forward," said Richmond. "If vendors go away, it’s hard to have competition to go forward."

In addition to automation, vendors need to find better ways to assemble the growing numbers of inserts in one fell swoop.

"We don’t have the equipment to put the products together," said Mikolajczyk. "[And] when we don’t have the equipment, we try to force it out to the field" by sending packs out ahead of time and relying on delivery people to put them together, he said.

Providing better service to readers and advertisers won’t be cheap, panelists agreed.

"It’s going to cost us more," said Mikolajczyk. But individual packages slow down production and increase costs, so gaining speed through machinery is essential, he said.

"If we don’t address machine speed, the economics won’t be there," agreed Larry Marbert, vice president of production and facilities for Knight Ridder in Miami.

But as the economy stumbles, many newspapers will be tempted to cut costs, people and processes; curtail services that customers have come to expect; and reduce investments in infrastructure needed to keep the industry competitive, Markey said.

This could have a particularly negative effect in the labor-intensive packaging and distribution area, he warned.

Instead, Markey urged attendees to "eliminate waste, not people" and educate employees by investing in the skills required to meet such needs.

His advice for facing the new millennium: Be adaptive, not reactive; be innovative, not fixated; and be enlightened, not frightened.  

On Sundays, Making Bigger Better

Newspapers are being asked to put out larger Sunday papers in shorter amounts of time, with more complex inserts ranging from sales circulars and coupons to difficult-to-package computer disks and grocery bags.

While a thicker Sunday product signals financial health for the newspaper, it puts stress on production, pushing machinery and employees to their limits.

"Trying to get out a 350-to-520-page product on a 20-plus-year-old machine is like expecting a weekly miracle," said Lee Jividen, packaging manager for the Quad-City Times in Davenport, Iowa.

The result, he said, was missed deadlines, excessive staff overtime, poor customer service and 160 percent turnover among part-time workers. "More people wouldn’t help," he said. "We needed a new way to do it."

The paper changed its strategy and invested in four distribution centers, allowing it to send half the Sunday package out on Wednesday night. Since making the switch, employee turnover has dropped to less than 40 percent, and the paper’s success rate at meeting deadlines has improved to 94 percent, Jividen said.

While the Quad-City Times found relief for its employees, The Washington Post has found relief from deadlines for its advertisers. The Post produces 1.1 million Sunday packages a week, often in 200 different versions zoned by ZIP code, said Olivier Girod, the Post’s manager of packaging and distribution. Most inserts are delivered Saturday afternoon wrapped in plastic; the rest of the paper is delivered Sunday.

To keep up with demand and give advertisers more leeway, the Post bought a new collator last summer. While collators are typically used by commercial printers, the Post has been using them since the mid-1980s. The paper now has four, giving it 250 feeding positions. Each collating line includes a gatherer, several hoppers, bagger, stacker, tie machine, buffer area and palletizer.

About 90 percent of the Sunday packages the Post produces contain more than 15 pieces, Girod said. "The collators allow us to build it in one pass," he said. "It’s easier to make sure the right piece gets to the right zone."

The result, he said, is shorter delivery deadlines. Before buying the fourth collator, advertisers had to get their inserts to the Post 10 days prior to the issue date. Now food, electronic and home-improvement advertisers get four extra days.

In Texas, the Austin American-Statesman recently tripled its number of hoppers to keep up with more than 30 insert zones, said James E. Mikulenka, the paper’s packaging manager.

With 32-plus hoppers now in use, the challenge is keeping the equipment running. "The minutes add up quickly when the machine stops," he said.

Mikulenka found most stops happen downstream as the product leaves the hopper, so the paper worked with GMA Inc. of Bethlehem, Pa., to develop a triple-drop option that allows the mailroom to divert papers to a third stacker when problems occur.

Despite these case-by-case fixes, newspapers need more packaging solutions for complex Sunday products, said David Preisser, vice president of production for The Cincinnati Enquirer, noting the lack of technological progress in the mailroom. "We’ve gone from hand inserting, to machine inserting, to bigger machine inserting," he said. "We need to push further. Advertisers are demanding it."

The Enquirer is working with Remmele Engineering of St. Paul to design new machinery concepts. One idea under investigation, according to Preisser, is developing seals that can be placed at the end of the product to keep inserts from falling out. The seal would peel off without damaging the paper and could potentially be used for advertiser coupons.

"Look outside the box," he said. "We need a big leap, not just 10 percent here."  

Taking Aim at Targeting

Commonly referred to as "microzoning" when the concept seemed unattainable, targeting is now a reality thanks to advances in technology, panelists said.

Underlying targeted advertising is the concept of consumer-relationship marketing, "the ability to hit the right people at the right time with the right vehicle," said Larry Berg, vice president for newspaper sales and purchasing for Valassis Communications Inc. of Livonia, Mich.

Philadelphia Newspapers Inc.'s StreetSmart program uses a combination of daily and weekly newspapers, shoppers and direct mail to reach entire neighborhoods without unnecessary duplication.

Comprehensive databases profiling a market household by household allow Valassis to identify where an advertising message should go and to whom, Berg said. Using himself as an example, Berg related that his family food shops once a week at one store; some of his kinfolk, on the other hand, visit four or five grocers a week.

"Do you think it’s important for retailers to understand that?" he asked. "You bet."

Berg noted that preprinted inserts are rapidly replacing ROP ads simply because they can be distributed in a targeted way.

"Targeted inserts are here, targeted distributions are here, tomorrow it grows more," he said.

Illustrating this growth is Detroit Newspapers, which publishes the Detroit Free Press and Detroit News under a joint operating agreement.

In 1991, the papers’ Sunday circulation was 1.2 million; today, five years after a debilitating strike, it’s nudging 800,000, said Michael F. Quinn, the agency’s vice president for production. Despite the decline in circulation, the Detroit papers distribute more than 1 billion inserts a year—more than ever. Between 1991 and today, the number of insert placements doubled from less than 2,000 to more than 3,900 a year, he said.

Quinn cited improved facilities, equipment and productivity as one reason for growth. In 1991, for instance, inserters could handle 1,200 pieces per hour; today, the figure is more than 2,600 an hour. Moreover, advertisers have smaller zones into which they can place a message, and the papers now produce as many as 225 versions of their Sunday comics packages, he said.

"You have to become small to get big," Quinn said.

Philadelphia Newspapers Inc. used database technology and the services of inserter supplier GMA Inc. of Bethlehem, Pa., to create a distribution system to deliver targeted messages at the household level—without duplication, and with a lower cost-per-thousand than otherwise possible.

Called StreetSmart, the program marries a database of addresses to product tracking and GMA’s high-speed inserting equipment in Allentown, Pa., enabling PNI to reach every house in a given neighborhood through either the Inquirer, direct mail, or a weekly newspaper or shopper owned by PNI.

Kirk Trautman, PNI’s director of total-market coverage operations and database-marketing services, called the process "selective insertion" because with StreetSmart, adjacent households could get the same message from one advertiser, or each could get totally different preprint packages, depending on their demographics and consumer preferences.

One household could get a particular ad in a home-delivered copy of the Inquirer, a second would see it in the weekly community newspaper, and a third would get it in the mail.

In addition to using newspaper carriers to deliver preprints at a relatively low cost, PNI’s direct-mail operation provides targeted delivery at saturation-mail rates, the same rates that shared-mail packages use—but without duplicate delivery of the same ad.

"They get exactly who they want," Trautman said.

In Colorado, The Denver Post united with direct-mail juggernaut Advo of Windsor, Conn., to create a service similar to PNI’s. The Post had been losing money on its TMC, explained Howard Small, the paper’s retail and sales advertising manager, but moved into the black with Advo by combining preprint delivery through paid circulation and direct mail.

Every week, a six-county area gets a million packages, 270,000 of them in the Post and 730,000 in the mail, Small said. Called ShopWi$e, the program provides TMC saturation with no duplication, saving both companies money while reaching 98 percent of nonsubscribers, up from 85 percent penetration before Advo, he said.

Establishing the program took considerable time and effort, as the Post had existing distribution patterns that had to be remapped to match Advo’s zones, especially to put carrier routes strictly within one ZIP code or another.

Distribution had to be coordinated through two packaging facilities operated by the Post and Advo. And databases are continually updated to ensure that current subscribers are separated from nonsubscribers, newcomers are listed, and duplication is prevented.

With lower mailing costs, assured distribution and targeted delivery, Small said, "now the package is full."  

Efficiency Costs Time, Money

An effective packaging and distribution operation will save money, but requires the expenditure of time, energy, goodwill—and yes, cash.

The keys, said several executives describing their own operations, are a prepared and involved staff, never-ending attention to detail, introduction of new processes, and adoption of new technologies, including such automated gear as carts and robots.

The Washington Post has developed a comprehensive monitoring program to track the quality, quantity and disposition of millions of preprints, said John Zarbough, the paper’s material-handling superintendent. The program started in 1986, when materials handling gained a full-time role in the mailroom. In 1988, in-house books began to be weighed upon delivery, ending chronic shortages.

An inventory-control system followed in 1990. Every arriving pallet was weighed, providing a time cushion during which advertisers and printers could be notified of shortages and make corrections. In 1997, the Post introduced AIMS—the Accurate Insert Management System, a computer application that replaced spreadsheets and provided enormous amounts of data about the 110,000 pallets of preprints the paper handles every year.

Zarbough outlined the range of problems preprints suffer in transit—spilled pallets, shrink-wrap bundling that damaged the goods, and curled or dog-eared copies. Supervisors can pick-and-click from a computerized catalog of flaws to detail problems for printers. The Post plans to contact or visit the 600-plus commercial printers who ship the paper preprints to apprise them of problems and seek remedies, Zarbough said.

The Herald-Sun Newspapers in Durham, N.C., achieved greater efficiency by adopting the distribution-center concept, said Chuck Friend, home-delivery manager for the 50,696-circulation daily. Only 17 percent of papers with circulations between 30,000 and 50,000 use distribution centers, but Friend said the transition to DCs, as he called them, was well worth it.

The Star Tribune in Minneapolis found equipment to apply Post-it Notes at press speeds, avoiding costly press slowdowns.

All departments had to become involved in the conversion, Friend said. One consequence has been better communications within the company; another is that "each driver has more ownership" of his role in moving papers from the production plant out to the DCs.

Efficiencies included press runs with fewer extra copies, which used to be printed to accommodate circulation’s needs; better preprint management; improved service for both customers and carriers; and a revitalized attitude among employees.

In Omaha, the World-Herald is hoping to gain efficiency through its $125 million Freedom Center, its first new facility since 1948. The new plant will more than double available space to 350,000 square feet, in part by building up, not out, said Terry Kroeger, vice president of operations and administration. Newsprint and inserts will be stored in one place, an 11-level-high area with glass walls through which the public can see robots moving reels and pallets automatically, meaning less likelihood of material damage.

When the facility goes live in September, materials will move from storage to the press area through a tunnel under 13th Street, Kroeger explained—again, using robots and automated processes that add a measure of certainty to what could be a chaotic scene.

"What we really like about this technology is that it’s not bleeding edge," Kroeger said. With it, the paper will be able to program activities on Saturday in preparation for the Sunday paper with almost no manpower, he added.