How AMI Cut Production Costs by 50 Percent
Automated workflows and software enhancements part of an ongoing process.
American Media, Inc. (AMI) and Michael Esposito, Senior Vice President of Operations and Digital Production, think they've hit upon a recipe that could work across the magazine industry for rationalizing print publishing costs and scaling up on digital platforms.
"We've seen more than a 30 percent gain in productivity, and that has been achieved by being able to do more processing with less people," Esposito explains. "The overall view is that the savings have been absolutely significant and we've reduced production-related costs by over 50% percent." He goes on to explain that while publishers may reduce headcount slightly by examining processes and implementing technology, at some point headcount will increase as those publishers add personnel to support growing digital and mobile media operations.
AMI has not only reduced costs for their own magazines, but also for the publishers for which it provides a menu of services, from production and circulation to sales and marketing. "The AMI team has worked closely with our team at Playboy to optimize process efficiencies and deploy new technologies. Our collaborative effort has created a more streamlined production process that has generated significant annual savings," says Scott Stephen, COO Playboy Enterprises.
"Our clients can tap into our systems and take advantage of the tools we've rolled out," Esposito explains, adding that AMI any continues to investigate future technology investments that will enable further efficiencies in all areas of print and digital publishing.
How AMI Did It
When Esposito was brought on board at AMI his mandate was clear: bring production services in-house, outsource where it made sense, engage cutting-edge automated technologies such as DALIM's suite of TWIST, ES, and DIALOGUE, and ensure a crisp production workflow for print and digital operations, while laying the groundwork to deploy content across mobile media platforms. "One of the real challenges of an operation like this is discovering how to reduce costs on existing processes, while finding the correct way to channel those savings into investments on emerging platforms," says Esposito, referring to mobile publishing applications.
This is not Esposito's first rodeo, as he had previously headed a similar effort at Hachette Filipacchi Media U.S., as vice president of operations, and that company had reported a 30 percent increase in production efficiency. In fact, when Esposito came to AMI in January of 2011, he bought four key members of his Hachette team along with him, as well as sourcing other personnel that understood the changing technological and cultural needs of the publishing production world. "Publishers today need to think in terms of a global workforce," Esposito explains. "With larger publishers having partners in Europe and Asia, you need people on board who understand how to deal with a virtual, global workforce."
Esposito also used much of the same technology at AMI that he first implemented at Hachette. DALIM technology is a critical part of the restructuring, allowing AMI to streamline its production process and manage cross media content, automating repetitive tasks and file creation, replacing hard-copy proofing with remote soft proofing, and driving online file approval and delivery.
However, having the proper team in place and having a familiarity with which software applications might help is not enough. "The key to doing something like this, with these kinds of extensive changes, is having top down support," says Esposito. "It has to start with the executive management team supporting this type of effort."
Esposito has that support. ""We have seen a lot at this company; the world is changing fast and is accelerating," says Rob O'Neill, Vice President of Manufacturing & Logistics, American Media, Inc. "We were aware that there were new and better technologies, but we needed a team to come in and size it up. Mike and his team, with their experience, have added tremendous value to our company."
Senior management is pleased with Esposito's progress to date. "Every publisher today is looking to reduce their cost," adds AMI Chairman David Pecker. "And being able to provide them with the production efficiencies we developed for AMI's publishing services business unit has created a new revenue stream for our company."
Three Months of Preparation
The first step in revamping AMI required examining the existing situation-the processes, responsibilities, and skill sets. "Then you have to introduce change," says Esposito. "You have to unfreeze processes that have been in place for many years."
Esposito began a three-month journey of mapping out the existing process within the organization. "We looked at how departments interacted with one another, how many steps a particular job takes, the time necessary for each function," says Esposito. From this data, a base measurement of productivity was established.
The team scrutinized the production operation to see how resources are being spent, both internally by AMI staff and externally with outside vendors. Working on writing different scripts for the various workflows, the team simulated functionality using TWIST. "If something took 12 touch points, for example, from receiving files, inspecting files, converting files, and then proofing and sending to the vendor, we would see where and when manual intervention was required. Then we would write a script that detailed which functions within the workflow can be automated using TWIST," Esposito remembers.
Esposito continues: "When brainstorming how to do this, we had to consider that each organization is very different. Because of the weekly nature of some of our brands, timeliness is everything-the high frequency levels make it a very non-forgiving environment. There is such urgency to meet schedules, so we have to continually move toward the target but make sure risk is maintained at a manageable level for everybody."
A large part of the process included examining the spend levels from outside vendors and the labor requirements to maintain the arrangements. "We compared time and money spent using outside vendors with having more automation and autonomy in-house using TWIST," says Esposito. "We still continue to use outside sources, but in the future we will be strategic in how we use them."
By first quarter 2012, AMI expects to build on the workflow infrastructure, based on TWIST and ES, for iPads and other emerging platforms. A key part of this will be the ability to tag data via a content management system. "Setting up a viable tagging taxonomy is essential to building an effective way to access content. It is critical to be able to retrieve content, as we migrate to other media platforms," says Esposito.
The process demands creativity, transparency and continuity. "We have to be creative in our solutions; we had to figure out where we wanted to be before we knew how it would work and then build workflows to get there," says Esposito. "We needed a transparent change management plan, with full buy-in from everyone; from management, to creative, to end users. Finally, we need to create an operation that delivers continuity that is sustainable and scalable. The real challenge is to scale this operation to meet the growing need of publishing content across platforms in a way that meets our company's business objectives."
On the advertising side, AMI has moved to SendMyAd, a portal system, deploying a digital workflow. The ad portal is delivering a 30 percent increase in productivity and has also contributed a significant cost reduction-all the work is currently being done in-house.
AMI is now in the final stages of getting the DALIM Suite in place: TWIST, ES, DIALOGUE and for editorial, the K4 Cross-Media Publishing Platform. Staff is being tested and trained in using DIALOGUE soft proofing technology, learning how to look at a soft proof on a screen-a big culture change from checking hard-copy proofs. "We are setting expectations for them, and making sure that they understand that there is a support system in place, so if there are any questions they know who to turn to," says Esposito.