Logo srl Supply Chain Management Paper

Executive Summary Logo srl is an innovative Italian enterprise specialized in digital printing. Starting as a small photocopy shop, the company was able to profit from the new opportunities offered by technological change. Since the transition from offset printing to digital printing implies a major paradigm shift in the industry production system, the study of Logo srl business case is very interesting for students of supply chain and logistics. In the present work, first, we are going to describe the company location sites, transportation methods, machinery and equipment, software solutions, inventory management, and supply chain, in order to understand the sources of its competitive advantage. Finally, we will try to identify future challenges, both risks and opportunities, in Logo srl business activities, and suggest possible improvements.

Students Laura Alzapiedi Valeria Brunetti Tomislav Dugandžić Amar Festic Stefano Tombolini

Instructor Ken Cutright

Professor of Operations Management Ohio University Business College Associate Dean

Exam Supply Chain and Logistics

International Economics and Business Università Politecnica delle Marche AY 2012/2013

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The Company and its Competitive Advantage

Logo srl is an advanced Italian typography located in Borgoricco (Veneto region) and

specialized in digital printing.

Starting as an ordinary photocopy shop, both the offset and the digital business have

gradually grown. Initially, the managers were skeptical about higher volume production, but,

eventually, invested in additional capacity to meet increasing demand.

Even if services also include large print runs of magazines and catalogs, instruction

manuals are the most successful and distinctive Logo srl products.

Since it was founded, the company has embraced digital printing, a major technological

breakthrough that revolutionized the typographic industry. Modern digital printing and

postpress technologies allow for good enough quality at very competitive prices.

Digital printing made it possible to shift from the push production system typical of

traditional offset printing to a pull production system.

In fact, pre­press process times are dramatically reduced, if not eliminated, thanks to

digital technology. As a consequence, running small and frequent printing batches on

demand became economically feasible.

Inventory levels are a critical issue for the industry, since information contained in printed

materials tends to become more and more obsolete with time. Cutting down inventory

levels not only increases throughput today, but also avoids write­downs tomorrow.

Digital technology is especially suited for mass customization: variable data can be

automatically read from a database provided by the customer, inserted in the document

layout, and printed without incurring in additional setup costs and longer process times.

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Therefore, it is not surprising that Logo srl found its main revenue source in the production

of instruction manuals: this kind of documents contain many technical data and product

codes, which need to be updated frequently and/or customized on an individual basis.

On demand and mass customized production can save significant amounts of money to

companies with large product portfolios, since they do not need anymore to run high

volume print batches and stock voluminous copies of technical documentation, which will

quickly become outdated, in their warehousing facilities.

However, Logo srl competitive advantage rests not only on digital printing, but also on

additional services specifically conceived and created, in part with the help and know­how

of acquired companies, viz. Doculab srl, expert in technical document design and visual

communication, and Gloman srl, specialized in packaging.

Thank to investments in information technology, Logo srl is able to offer to its customers a

number of web­based tools that simplify the funnel process and speed order fulfillment.

Logo srl has achieved a perfect integration of the instruction manuals supply chain: it can

assemble them, package them with additional components and materials (e.g. screws,

nuts, bolts, warranties, barcodes, etc.), and, finally, stock them in its own warehousing

facilities on behalf of the customer.

Location and Transportation

In 1999, Roberto Vettorel started the business in the back of a small photocopy shop in

Borgoricco, a small town near Padua (Veneto region, North­Eastern Italy). Today, Logo srl

is still located in Borgoricco, but its production/warehousing facilities spread over 6,000

square meters (3,000­square­meter offset printing facility, 1,300­square­meter digital

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printing facility, and 1,700­square­meter logistics facility).

The location site is very favorable since Veneto and the adjacent regions (Lombardia,

Emilia Romagna, Friuli­Venezia Giulia, Trentino­Alto Adige) are economically rich and

dynamic.

Most Logo srl customers are located in Triveneto (Veneto, Friuli­Venezia Giulia,

Trentino­Alto Adige) and Lombardia. In fact, these parts of Italy are very well­developed

and industrialized, thanks to the presence of many manufacturing companies, in particular

small and medium enterprises.

Since Logo srl does not have its own transportation fleet (vans, trucks, etc.), it entered into

shipping agreements with specialized on­board couriers. Usually, the company delivers an

order with a maximum lead time of three working days after receiving the digital material

from the customer.

In Triveneto and Lombardia, Logo srl relies on a trusted courier and often delivers within 24

hours. If, for example, the company receives an urgent order of a reasonable size at 12

AM, it is able to set up the printing process within an hour. So, at around 7 PM, the express

courier takes in charge the finished product and delivers it to the customer on the next

morning.

Customers and Suppliers

Logo srl broad product lines target a number of different customer segments:

Clothing companies (labels, tags, catalogs, barcodes) such as Diesel and Replay;

Local governments (administrative material, communication material, leaflets,

posters, brochures, books);

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Educational institutions (teaching material, communication material, administrative

material);

Publishing houses;

Manufacturing companies (instructions manuals, production cards, documental kits

with variable data) such as Ansaldo, Electrolux, De Longhi, and Riello.

Quality and price are not always the most important or only supplier choice criteria.

Technical flexibility, shared values, and solid relationships are even more critical for a

company like Logo srl:

Xerox, the American multinational document management corporation, is the

supplier of printing equipment and machinery. Logo srl is member of Xerox Premier

Partner Community, a worldwide network of digital printing companies, with 730

members in 48 countries on six continents.

Forgraf srl, the official distributor of Horizon, Morgana, and Schneider Senator in

Italy, is the supplier of post­press finishing equipment and machinery. Logo srl relies

on Forgraf srl flexibility in finding and suggesting technical solutions, and

appreciates the distributor portfolio because of the robustness and user­friendliness

of the products. Thanks to touchscreen interfaces, Logo srl workers can easily and

quickly switch among many different types of work orders (paper sizes, colors vs.

B&W, etc.), which reduces setup costs and times.

Logo srl purchases only ecological paper, and only from FSC (Forest Stewardship

Council) certified suppliers. The main supplier of paper is the Portuguese

Soporcel, a pioneer company in the production of ecological paper from eucalyptus

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pulp from fully certified facilities, raw materials, and processes.

Technology: equipment, machinery, and IT solutions

Logo srl equipment and machinery reflect the specialization of the company in digital

printing. However, back in the small photocopy shop days, the first industrial machine

purchased was an offset printer.

In 2007, Logo srl invested in post­press finishing machinery in order to meet increasing

demand:

Horizon AFC­544AKTSC folding machine;

Horizon StitchLiner 5500 collating and saddle­stitching machine;

Horizon BQ­270 binding machine;

Morgana AutoCreaser Pro 50 creasing machine.

In fact, post­press finishing processes are sequential and require a few different types of

machinery. Low capacity at these stages could create bottlenecks for the entire production

system, a serious issue undermining the fast production and delivery times required to stay

competitive in the digital printing business.

In 2009, the company further enlarged and upgraded its post­press finishing machinery and

equipment:

Schneider Senator E­Line 78 paper cutting machine;

Horizon BQ­470 binding machine (as a replacement for Horizon BQ­270 binding

machine);

Morgana Digicoater 13 UV and primer painting machine;

Morgana 8000 Feeder paper feeding machine (used in conjunction with Morgana

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Digicoater 13 UV and primer painting machine, mainly).

In the following years, Logo srl continued investing in both printing and post­press finishing

technologies. In particular, the company purchased a Xerox paper roll digital printing

machine that allows for medium print runs of very good quality.

Unfortunately, in 2012, Morgana Digicoater 13 had to be dismissed because customers

did not judge paint a satisfactory alternative to more resistant plastic film, despite logistic

and ecological advantages.

Logo srl invested heavily not only in machinery and equipment, but also in IT solutions for

its customers:

T­Page System is a digital and paper book creator powered by an automatic layout

engine and offering related services, such as print on demand and web marketing;

DocXML Platform is an XML­based software platform that enables the

development of automatic and dynamic layout applications;

Chalco Image Manager allows customers to send and receive digital files, even

large ones, through an easy and secure web interface;

Web Price List is a web­based application designed for the variable data printing

catalog needs.

Inventory management

Logo srl supplier classification system is not based exclusively on raw performance

metrics such as price or average lead time, it also takes into account reliability, flexibility,

and “familiarity”.

In fact, if possible, the company prefers to place high volume orders to few suppliers, not so

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much because of discount prices, but to build and maintain good relationships, which

usually translate into more flexible contractual terms.

Even if MRP (Material Requirements Planning) modules implemented in ERP

(Enterprise Resource Planning) software are used by purchase managers for planning

purposes or to order few simple purchased products, actual production is implemented

through kanban cards.

Since final products are very customized, work orders often need to be reprocessed

because of changing customer requirements, while process and lead times show high

variability. As a consequence, it is difficult to make accurate forecasts, so lean production

methods suit company needs better than traditional push systems.

However, production managers acknowledge difficulties in implementing a pure pull

production system, in particular because of long and/or variable lead times for purchased

parts, and would rather describe Logo srl production system as an hybrid one.

Future challenges

A major future challenge for the company is achieving an increasingly smooth integration of

the document flow between the customer and Logo srl, which increases throughput and

reduces delivery times.

Presently, the company offers web­based applications to its customers, but smoother

document flow could be achieved through integration with customers own internal

information system, whether by providing their developers with APIs (Application

Programming Interfaces) or directly offering integration services on commission.

Overall, Logo srl seems very well­positioned in a segment experiencing fast growth: the

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deep crisis of traditional paper publishing may mark a turning point for the entire industry,

and provide an incentive for publishing houses and groups to experiment with business

models based on leaner production methods.

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References

Logo fa ricco il business del manuale, “Corriere del Veneto”, 05/26/2007

(available on www.logosrl.com).

Logo, stampa digitale ad alta qualità, “Rassegna Grafica”, 06/2007 (available on

www.logosrl.com).

Logo si rinnova ampliando il dopo stampa, “Rassegna Grafica”, 02/2009

(available on www.logosrl.com).

Correspondence and conversations with Giorgio Venturini, Logo srl vice president,

and Alessandro Osto, Logo srl plant manager.

Services brochures and glossary available on www.logosrl.com/supporto.aspx.

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