An Interview with Jim Dunn, President of Heidelberg USA Part 2

By Cary Sherburne, Senior WTT Editor

Part 1

January 24, 2005 -- In Part Two of this exclusive WhatTheyThink executive interview, Heidelberg U.S. President Jim Dunn shares his thoughts on the challenges facing both Heidelberg and the industry in 2005 and the steps Heidelberg is taking to address those challenges.

WTT: What would you say are your top initiatives at Heidelberg for 2005?

JD: I look at 2005 in terms of three key focus points: First, customers; second, employees; and third, shareholders.

WTT: Tell us what you have on your plate from the customer perspective.

JD: For the customers, we are focusing our attention on continued improvement in the quality we deliver, and that falls into three key areas. The first, which we will announce in a more formal way, is high performance installations. How do we best leverage the long lead times prior to installation to deliver the best performance of the machine over time on the customer floor. This is a collaborative process designed with the customer well in advance of the install to define both physical installation requirements—the area we already know best—as well as performance expectations and how this new installation is going to affect his employees and customers. To me, this is the most exciting area. This is an area where we can really take what we already have from a technology standpoint in equipment and move toward a more holistic picture of the customer’s operation. Getting the technology in is a matter of spending money, but the application of the technology—transitioning into high-end performance—is the value added piece of it.

The second area of opportunity for improving customer service is improved service and parts deployment. In 2005, we will approach the whole area of dispatch of parts and service in quite a different way than today. One of the things I learned from listening to our people in the field is that our customers know what problem they have and who they want to talk to fix it. All they want to do is to be able to quickly reach the right person live without working their way through a complicated telephone menu. So what you will see is a complete reorganization of the dispatch of spare parts and service. We know it will take a lot of internal work to realign our internal operations to meet that external requirement.

The last element of customer-focused process improvement is to provide additional support for our field sales and service organization. We feel they did not have enough backup to be able to handle the needs in the field. Sales professionals are good consultants to our customers. I want to put them in a position to have more opportunity to act in that role, and add more capacity in people that can act in more of a customer support role.

So our customer focus is perfect installation, improved delivery of service and parts, and increased support for the sales organization.

WTT: How about employee initiatives?

JD: In order to do what I just talked about for our customers, we have to realign our internal processes to make them more efficient. In order to accomplish that, we need better personal development and training for our employees, and we have some large initiatives underway to do that. Also, I think as Americans, we are often guilty of a “not invented here” mentality. There is a lot we can learn from what is happening in other parts of the world where they are already doing things well. One of great joys of being part of the Heidelberg organization is that I can ring up my colleagues in various parts of the world and ask them what they are doing. They, in turn, encourage us to take these improvements to the next level, and two years later, they learn from us.

WTT: And your third focus area, shareholders?

JD: To me, being an accountant, I view shareholder satisfaction as the end game. That’s just the score. Shareholders expect consistent and reliable performance, but you can’t deliver that without executing your underlying business well.

WTT: In speaking with some of the print service provider executives recently, some have indicated that they feel that vendor implementation of JDF and computer integrated manufacturing is somewhat of a dog’s breakfast, with systems not yet being truly open and easy to integrate. Can you comment on Heidelberg’s position here?

JD: There is a natural progression as the industry transforms itself from an art or a trade into an industrialized process, both from the standpoint of print shop operators and the technology that is being deployed. We really looked at this back in the early to mid 1990s, and we engaged a group of very high performance customers from Germany, the U.S. and Canada. The question we had was simple: how much latent inefficiency exists in a print shop, and if that inefficiency were somehow defeated, how many fewer printing presses would be needed.

It was no big surprise that we found that there certainly is latent inefficiency, and it may indeed have a big impact on number of printing machines required by the market. But to the credit of Heidelberg and its Board, we determined that we needed to be leaders in the battle against inefficiency, even if it meant selling fewer printing machines, because this is the world that we are living in, the world of our customers, and if they fail to become efficient, then all of us fail together. We have been supporting JDF all along; it has been a focal point for us. The result has been a complete but open system we call Prinect, which is our package for workflow, color management and process management throughout print plant. I can tell you that I have been to printing plants in several parts of the country and a couple in Germany where the dream is being fulfilled. Prinect allows them to monitor jobs flowing through the plant, play what-if scenarios by plugging potential jobs into the workflow to see what it does to the production cycle, and we are absolutely there. We are all old i ron guys here, and quite honestly, silicon is a little suspect, but we have to admit that this is exciting stuff.

WTT: Though it is a bit out of your scope, can you share with us a bit about what Heidelberg is doing in China from both a sales and manufacturing perspective?

JD: We are in the development stage of building a small format finishing equipment plant in China that will be for the domestic Asian market. Based on the success of that, we will explore the ability to add different products and consider whether to sell those products outside of the Asian market. It is a step process.

WTT: What do you see as the top challenge in 2005 for Heidelberg? For the industry at large?

JD: I think for both Heidelberg and the industry, the key challenge is educating the market on the viability of print as a part of the business communications process in light of increased competition from non-print communications alternatives. There are a number of initiatives in place that are working to address this challenge, including the Print Council and the SAPPI initiative. You have to be able to tell the story. But you have to be able to deliver against that story. Our industry is 450 years old and continues to reinvent itself over time. I have enormous confidence that printers will continue to modify the way they approach their customers to continue to be communications experts.

WTT: Can you give us an example?

JD: One of the trends that was new to me coming back into the sales side of the business is outsourcing prepress. What printers mean by this is outsourcing responsibility and functionality in the prepress arena back upstream to the customer to give them more control and faster time to market. I was in a print shop in Connecticut a couple months ago that specializes in point-of-purchase support materials. I was there at 3:30 in the afternoon, and they still had 140 jobs representing several thousand shipments that would go out via FedEx that day. They ship point-of-purchase kits to individual stores within a retail chain that have all of the point-of-purchase collateral that is needed for planned promotions. Oftentimes, those materials were just created that day and need to be deployed for posting the next day to respond to fast-moving market conditions. This type of rapid response to market conditions doesn’t happen by accident. You can only do that through print.

WTT: Mr. Dunn, thanks for taking the time to speak with us today. As we close, do you have anything else you would like to add?

JD: On a personal note, I have been in the printing industry for a long time. I was in the printing business before I joined Heidelberg 27 years ago. I have been away from the customer-facing side, so it is great to be back. It is great fun to work with a professional sales and service team and to hear success stories four our customers. I am delighted to be back.

This Interview was conducted by Cary Sherburne. She can be reached via email at cary@sherburneassociates.com, online at www.sherburneassociates.com and by telephone at 603-430-5463.