Automated Fulfillment Factory

Introduction

Fulfillment is typically slow, expensive, error prone and labor intensive in an offset press-driven environment.

The cost of producing the documents which actually go into fulfillment kits is only a tiny fraction of the real costs. Most of the costs are "hidden", like the labor to stock and manage the inventory of documents for these kits. In addition, the cost of waste and document obsolescence must be added in to arrive at a more realistic total. If an "out of stock" situation arises, it could have expensive legal implications or negate revenue generation.

The costs can be substantial to manually assemble the appropriate documents prior to distribution. This often requires movement of documents from department to department or between locations. For example, pick lists and variable data documents (like mailing address labels or invoices) may be shipped to the warehouse from the location where the inquiry was received. This assembly process can cause distribution delays. Delays can adversely affect business if there is a limited, specific time frame in which documents must arrive at the end customer.

The distribution costs may include postage on multiple mailings for a single transaction because variable data documents often need to arrive at the end customer's location at the same time as static documents stored in a remote warehouse. When the "opportunity cost" from not personalizing or customizing the fulfillment package is included, traditional fulfillment is unbelievably expensive.

Automated Alternative

A better solution is available called the "Automated Fulfillment Factory", or "AFF". AFF was developed by Xerox in partnership with Interleaf, Adobe and Sun. AFF has the following attributes:

• Entirely Automated
• Static Documents Are Stored in a Print Ready Format
• Output is completely Customized and includes Personal Data
• Triggered by Existing Variable Data
• Document Components electronically Merged into "Composite" Document
• Variable Data Elements
• Static Data Documents
• Customizing Pieces
• Simplified Process: Printed, Finished, Mailed

Cost Savings

It is nearly impossible to quantify what all of the different fulfillment activities cost, in order to compare the traditional (offset) process to the AFF approach. It's especially difficult if we are trying to relate the overall operation's costs to a per-document (or worse, per-page) cost. However, one element of the Distribution cost is relatively easy to quantify: postage. Postage is a logical element to focus on because:

• By definition, all fulfilled documents get mailed and therefore require postage;
• The cost of postage is easily tracked since most companies write checks to the US Postal service all the time!

We can use the Securities Industry to illustrate. Today, fulfillment of prospectuses, confirmations and related documents costs the securities industry $500M to $1B per year.

AFF saves money, just by eliminating the multiple mailings typical of mutual fund transactions. The following table compares the cost of traditional offset fulfillment with the AFF solution:

• Prospectus: Printed on 13# bond (both cases), 32 pages
• Postal class: Presorted (US)

Net Savings: $ .29 per transaction

AFF generates a single "composite prospectus" combining three traditionally separate documents: a personalized broker letter, trade confirmation report and the prospectus itself. In the traditional model, each of these documents gets mailed from separate locations such as: the letter from the brokerage firm, the confirmation from the clearing firm, and the prospectus from the warehouse.

The composite document in this example even falls within the same 3-ounce postage category as the prospectus alone, because AFF adds only one additional piece of paper (hence, the composite prospectus is a total of 36 pages).