How many "garbage sheets" are there in the printing circle?

What is a "garbage list"? According to the author's understanding, is basically unprofitable orders.

Of course, for enterprises, an order to make money or not, there are different considerations. Different angles may lead to different conclusions. That's the rest of the story. We'll talk more about it.

Why did you think of saying "garbage list"? It's about a message we got backstage the other day.

In "Zhongrong's IPO is about to raise more than 1.2 billion yuan! From Yutong, Jihong, Global, to Tianyuan, Alu, New Jufeng... how much money did these 17 printing companies get?" After one article, the boss is not welcome to leave a message said: make a bunch of inaccurate data take the reason for example to put the facts, never say which enterprise business team ability is strong, business can not receive a beautiful decent order everything is floating clouds......

He also named several well-known companies, including milk, express delivery and bottled drinking water, and more than one of them was a big buyer of the printing circle, the author said. And bluntly, like this kind of garbage orders without making money without profit, do more die faster! Resources are occupied by garbage orders, where there is energy to develop good orders of cowhide?

I often talk about data, there are enterprises, there are industries. However, to say shame, three good can only ensure that these data sources, sources, but dare not say accurate or not.

In particular, the revenue and profit statements of enterprises have certain flexibility and adjustable space. It is difficult to say what is completely accurate.

Anyway, the author still believe that the enterprise formal disclosure of financial results, at least after audit.

As for, like milk giants, express giants, drinking water brands and other enterprise orders, are not profitable no profit, I do not know. But I feel that the boss is like a carton maker, should be talking about the carton orders of these enterprises.

In the scope of the author's vision, for Yili do carton enterprises successfully made on the market. For example, Gihong Shares. Also for Mengniu do carton enterprises really broke production. For example, once listed on the New Third Board of gorgeous packaging.

However, the bankruptcy of gorgeous packaging should have little to do with Mengniu carton: one is that it has bigger customers than Mengniu; Second, its bankruptcy is more related to the funds occupied by related parties and unable to repay.

Nevertheless, the message touched me deeply. Because more than one boss has a similar complaint with Sanhao: many big customers' orders are not actually profitable.

Some bosses put it a little more seriously, but it's actually a "garbage list."

Not long ago, the boss of another well-known company in the field said that he had made up his mind to cut a number of unprofitable orders, involving mobile phone cases, wine cases and other products, the annual revenue scale may be one or two million yuan.

How many "garbage sheets" are there in the printing circle? Honestly, I don't know. However, we can be sure that the "garbage list" generally has the following four characteristics:

First, the order volume is very large. Because only a large order, it is easy to let the boss refuse to welcome.

Second, the origin and volume of customers are generally large. Because only with a certain volume of large customers, to get a large enough order.

Third, the price of the order is generally very low, close to the cost line of the enterprise. For one thing, customers come from a large number, large volume, large order volume, it is easy to control the pricing initiative; Two big customers generally pay more attention to cost control, accounts are clear.

I vaguely remember that the boss had complained that the bill of domestic mobile phone manufacturers' packaging boxes was better than that of the printing plant, and generally only left ten points of gross profit for the printing plant.

Fourth, the technical content of the products is not too high, and the substitutability of the suppliers is very strong. For example, to Yili, Mengniu carton, the profit margin may not be high, but to them to do aseptic packaging? For now, at least, they're pretty good.

Why the difference? In essence, the technical content of the two types of products is not the same, the number of available suppliers is not the same, and the pricing power held by Yili and Mengniu is not the same.

Why do people still make garbage lists?

Do business, do business, which boss is not running to make more money? However, does not seem to make money "garbage", why is someone still doing?

There are two possibilities here.

The first is a "junk bill" that some bosses see as unprofitable, while others can make money.

This is mainly because: also engaged in printing, the production and operating costs of various enterprises may be not small differences. If a business can reduce production costs by 5 per cent, it is possible to make a profit of 5 points on someone else's unprofitable order.

The second is the above mentioned: an order to make money or not, there are different aspects of consideration. Different angles may lead to different conclusions.

What most bosses call unprofitable "garbage bills" are usually broken down.

For example, if you add in the cost of raw materials, labor, rent, depreciation of equipment, etc., the final conclusion is: no money.

But for a given firm, the workers are already there, the rent is fixed, the equipment is already there, the work is done more or less, and the cost is almost always there.

Therefore, some orders may not make money as a small account, but rough accounts can share the fixed costs of the enterprise. In the words of some bosses, a "marginal" contribution.

To put it more simply, some orders may have no net profit but a gross profit.

For the boss, there is a choice: it may not make money on its own, but it does contribute to the overall profitability of the business. To do, or not to do?

For some companies, the problem may still be: do lose money, do not lose more.

In that case, what would the bosses do? This question is not difficult to answer.

If there are a lot of profitable orders, the boss will not want to look at these "chicken" orders. The reason is very simple, if you can get the order of Apple's mobile phone case, who want to play with some domestic manufacturers?

But what if the bosses don't have many orders on hand and the machine doesn't work? If forced, some orders with no net profit but gross profit may have to be made. After all, a marginal contribution is a contribution, and a little loss is better than a good thing.

Moreover, a company is not afraid to make occasional or small orders with only marginal contribution. Fear is fear, as the owner of the message said: resources are occupied by unprofitable junk orders, there is no energy to develop good orders.

In any case, I believe one thing: those orders that have no gross profit or marginal contribution must be done by no boss.

Just think about it. It's a charity, not a business. Why should bosses bother to do it?

Of course, sometimes it is possible for bosses to use below-cost pricing on occasion because they want to expand their market or beat rivals. That's a whole other level of concern for another day.

What to do in a low-margin market?

Why does the printing circle have "garbage sheet"? The idea is simple.

The income of printing enterprises is actually the cost of customers. It is reasonable for any company to optimize its costs as much as possible.

In this sense, it is not fair to call some customers' orders "junk orders". It is better to call them low-margin orders.

Which products have such low margins that printing companies find it tasteless and a pity to discard?

The author has heard before is mainly milk cartons, domestic mobile phone boxes, express noodles, etc. Some time ago and listen to some bosses in the discussion of mooncake box.

The main problem with mooncake box orders is not necessarily low gross margins. But because such products are very seasonal, customers do not sell well, the completed mooncake boxes are easy to become inventory, some mooncake manufacturers take a long time to pay the payment cycle, and even use mooncake or mooncake coupons on a proportional basis.

At this point, I recall that some orders are called "junk orders" because the payment period is too long. Like, five, six months, maybe even longer.

Faced with low-margin products, what can bosses do? If you have a choice, you will do what you can not do, and do what makes money.

But what if bosses are dealing with a low-margin market? There are only two ways: one is to strive to transition, as soon as possible out of the "pit"; The second is to think of their own ways, from the cost efficiency of the article, strive for the profit space to do more than the peers.

To open the gap between cost efficiency and peers, not only can obtain relatively high gross profit, but also easier to do large-scale, through the scale effect to improve the overall profit level of the enterprise.

For example, in 2019, before the outbreak of COVID-19, when I attended a conference in the field of bill printing, I heard a boss lament that it was difficult for companies to make express bills, but there were two companies that could make money.

Among them, one is currently listed Tianyuan shares, another is listed fold halident Jiuheng bar code.

One thing the two companies have in common is that they are big. In 2019, Tianyuan's revenue reached 1.04 billion yuan, while Jiuheng Bar Code's was 1.493 billion yuan.

Normally, to achieve such a large scale, in the procurement of raw materials and other aspects of the general can obtain other enterprises do not have the price advantage, so as to thicken their profit space.

In 2019, the net profit of the two enterprises was 82.5443 million yuan and 68.030 million yuan respectively.

From the industry level, the reason why there are many orders with low gross profit in the printing circle is essentially due to the relatively low entry threshold, which leads to the imbalance between supply and demand or overcapacity.

If there is a relatively high technical threshold in a field, which restricts the influx of latecomers and keeps the order and capacity in a relatively balanced state, even if it is a large customer and a large order, it is afraid that printing enterprises will not easily submit to accept orders with gross profit and no net profit against their will.

Again: why are dairy giants strong when it comes to carton factories but so meek when it comes to aseptic packaging companies such as Tetra Pak?

However, there are not many products with technical threshold in the printing circle, and there are still too few enterprises based on technology.

If bosses choose the easiest door to enter, they will accept more competition from within. Is that right?

Turning away is another option. However, this can often be difficult.

So much for that. Finally, good luck to your bosses.