DS Graphics: Where change and improvement are constant
By Nancy A. Hitchcock
With customer satisfaction as its primary goal, DS Graphics complies to customers’ requests — even when they don’t involve printing. After 30 years of following this principle, the Lowell, Mass., company now offers custom solutions that involve print, fulfillment, warehousing, and even manufacturing. Most recently, customers began to request variable data printing and direct mail, and for the first time, DS Graphics expanded its services by purchasing another company. In February 2006, DS Graphics acquired Fidelity Communications, a commercial sheetfed company specializing in personalized one-to-one direct mail marketing.

This philosophy of expanding has kept the company growing and improving for more than 30 years, with a double digit annual growth rate since the early 1990s, except for a few years in early 2000 when the economy took a hard hit.

“The company has grown because we are able to look at something new and consider it, rather than assuming that we only do one thing,’’ says Chief Executive Officer Jeff Pallis. “We don’t have the barriers that most companies have. We’re not just a printer. We’re not just a mailhouse. We’re not just a fulfillment house. We’re not a one-dimensional supplier.”

“We are a communications partner,” adds Jack McGrath, vice president of sales and marketing. “We cover a very wide spectrum of services to own that title. Printers just do printing. We don’t want to be just a printer today because that’s not a wide enough net to keep customers happy. They require more. They’re being told to do the same thing as every manufacturer today which is to do more for less costs, which means we need to do it more automated, more efficiently than competitors. Business is great when customers are making money and you’re making money.”

Acquiring a company
DS Graphics, a privately held company, caters primarily to New England area clients, printing annual reports, books, and brochures, for example, to end companies such as Volkswagen, Microsoft, Houghton Mifflin, and Harvard University Press. In its 140,000-square-foot facility, DS Graphics houses sheetfed and web presses, including an eight-color sheetfed press and web presses with the ability to print 640,000 pages per hour. It also offers in-line coating and six-color Hexachrome printing.

When customers started to inquire about variable data printing and direct mail, the company thought about adding more technology and presses to its digital printing department, but realized the many challenges it would face. Therefore, the company decided to purchase Fidelity Communications, a printer that already possessed expertise in variable data printing and data processing.

“Over the past five years, we’ve been down the road of purchasing companies about 10 times: we’ve dated 10 companies, so to speak, been down the aisle three times, but only got married once,” explains Pallis. “We tried to grow the business by acquiring something that’s worthwhile. Fidelity was the first no-brainer. There was no customer crossover. It was like putting two puzzle pieces together that fit together perfectly.”

“We both recognized that to remain independent and successful in this industry you do need to have a certain critical mass,” adds Bob Cipriani, previous president of Fidelity and current vice president of mailing services. “You do need to offer a variety of services because the customers demand it.”

The services that Fidelity offered augmented DS’ business because Fidelity’s on-demand printing was 80 percent variable and 20 percent static and DS Graphics produced 80 percent static work and 20 percent variable. With the two companies’ combined equipment in the digital printing department, DS Graphics greatly increased capacity and capabilities. It now operates six black-and-white digital printing devices instead of three, which can produce 425 pages per minute now. And with a Xerox iGen3 digital production press and a DocuColor 6060 press, it can produce variable images in color and color textbook covers, for instance. DS Graphics on any given day can produce in excess of 1 million digitally produced pages.

Although Fidelity had operated out of a 100,000 square-foot building in Everett, Mass., DS Graphics was able to integrate the company because in 2001, DS had added 80,000 square feet to its 55,000-square-foot facility. The company now has 152 employees with a six-person executive team: Jeff Pallis, CEO; Jay Pallis, CFO; Jack McGrath, vice president of sales and marketing; Paul Cresto, vice president of customer relations; Joel White, vice president of print operation; and Bob Cipriani, vice president of mailing services.

New management philosophies
In the humble beginnings of the company, Don and Sandy Cook operated a typesetting company where Jim Pallis worked at night running the press to help support a family of seven. In 1984, he acquired the business, retained the name DS (Don and Sandy) Graphics, and eventually hired a management team to help run the company. Under the new leadership, the company became very efficient and grew from $3 million to $7 million by 1992. “That was the year Jim died, so he died happy,” says Jeff Pallis. “We were making improvements. We brought the lead time from three weeks to two weeks and we started taking the jobs that other manufacturers didn’t want — the ones that had to be done over the weekends or the impossible jobs.”

In 1992, DS Graphics started growing at 10 to 20 percent a year as it brought in software manufacturing to accompany its main business of producing books and other print products.

The constant growth forced the company to once again look at its management structure.

“When we broke the $12 million mark, we realized we couldn’t manage the company the same as when it was a $6 or $7 million company,” says Pallis. “We started to look at our management process. At the time, ISO [International Organization for Standardization] was popular so we looked into it and decided to adapt the ISO process as our key management tool.”

Management system affects quality
Using ISO as its main management system encourages the organization to continuously improve its performance by defining processes and then constantly monitor and review them. Employees are encouraged to identify areas in the process needing perfecting, which has improved efficiency and upped employee ownership.

ISO, therefore, changed the culture of the company by empowering employees to make quality decisions and offer feedback about processes. “Our intention is to take the feedback and bring it back to where the problem originates and get some kind of creative potential alteration to the process,” says Cipriani. “Once presented with the facts, people react positively to it. They all want to provide solutions.”

As part of the quality measurement system, the company documents when jobs exceed budget. Production improved, for example, after management began informing employees of cost overruns. Because there are three shifts, employees often didn’t realize if mistakes occurred and the job needed to be reprinted. Therefore, when management began to show employees what it cost to produce overruns, they became proactive in correcting problems.

ISO has also focused the entire company on customer satisfaction. “All we want to do is have the customer be happy with their product at the end of the day,” explains McGrath. “ISO dictates that you ask your customer if they are satisfied. And then, whatever the customer says, you need to engineer the improvements into your process. It’s very ongoing.”

After the company conducted a focus group with some customers that included resellers and print brokers, for example, DS discovered that customers disliked how long it took to get quotes.

“We put a corrective action in and then looked at the process,” explains Pallis. “We had a 12-step process that included prices going from customer to sales person to estimator and so on. We went back and took the 12-step process and made it a four-step process. Based on feedback, we achieved the goal of getting quotations faster for this group. We achieved the goal of showing an improved process by making a faster turn time. Our estimates used to take 48 to 72 hours and we brought that down to 12 to 24 hours.”

In addition, ISO strengthens relationships with customers because it opens lines of communication and is a good tool for problem solving. “Problem solving is a collaborative exercise within the company, so naturally it becomes a collaborative exercise with the customer,” says Cipriani. “It’s not an adversarial situation. We have meaningful discussions with customers about what went well for them and what they’d like to see go better. It’s a relationship that transcends transactional business. It becomes more of an enterprise relationship where we’re sharing concepts with our customers. Together as a team we’re trying to improve the process. And that relationship allows our business to continue to grow.”

Expanding into distribution and manufacturing
Being ISO registered, and having a quality process in place, also attracted customers requiring the manufacture and distribution of their products. And when customers request a service, DS responds. In 1998, software companies turned to DS to distribute their products worldwide.

“We have partners in Ireland, the Netherlands, Mexico, and Brazil, and we have some potential partners in Asia,” says Pallis. “Our technology customers have always pushed us to do innovative things, such as getting involved in supply chain management.”

With some trade partners, the company provides financial printing, direct mail printing, annual reports, and training manuals, and for others it is providing traditional software business — procuring and assembling and manufacturing print portions of the software and fulfilling the jobs worldwide.

When one customer came on board to employ the fulfillment business, DS eventually brought the printing on board as well. The customer manufactures GPS devices and chose DS as their supplier to assemble and warehouse products. “The customer was using a lot of our resources, and we wound up picking up a whole portion of their print business,” says Pallis. “They turned into a turnkey customer. We’re always looking to expand the services to customers. We’re also manufacturing some of their product now.”

As a provider of custom solutions, DS often encounters interesting projects. When a well-respected Boston-based advertising agency, for instance, needed 250,000 promotional products, they turned to DS, which became a custom game manufacturer for this client. The ad agency needed to produce a game for a major car manufacturer, and they didn’t want to go to five or six different suppliers to create the project. DS was able to provide all the necessary services, including printing the box and some of the game pieces, assembling the game components on an assembly line, shrink wrapping the box, warehousing the product, and shipping it when necessary.

For another customer, DS is printing the packaging for a scanner, assembling the components of the scanner, and shipping the finished products to their customer sites.

Listening to customers and expanding to meet their needs is a major reason the company continues to grow. DS also thrives because it continuously improves efficiencies by implementing automation, for example. Throughout the plant, DS leverages technology to improve efficiencies, and then passes on those efficiencies to its customers by automating the entire workflow.

“In the last 5 years we’ve tried to automate as much as possible,” reports Pallis. “For example, four years ago we were a $15 million company with 180 employees. Last year with DS by itself we did about $21 million with about 110 employees. I’m pretty sure we doubled the page output per employee in that time period.”

One resource that’s been helpful in keeping DS Graphics on a growth path is PINE (Printing Industries of New England). Cipriani and Pallis appreciate the networking opportunities the organization provides and even met each other at a PINE event years ago. That meeting eventually led to the recent merger of the two companies. The organization not only educates members on industry specific issues relating to environmental regulations and human relations issues, Pallis says, but has even offered advice that resulted in monetary savings.

“Being a chairman of PINE was a great experience to open a lot of doors with people in the trade,” says Pallis. “I’ve gotten a lot of direct business through the organization and a lot of free advice. Every year PINE has a print management conference, and one year when we met in the White Mountains, one of the speakers was talking about strategies for staffing issues. We implemented the strategy discussed, and our profits increased 10 points. There are measurable financial benefits that we’ve gotten from the organization.”

Whether it’s by acquiring information from PINE or listening to its customers’ requests, DS continues to expand its operations. It now produces everything from custom games to high-quality short-run color college textbooks to customized travel itineraries.

“We have a very loyal customer base. Some customers have been with us for more than a decade,” concludes Pallis. “And they experience growth as well. We’ve never been in a position where a customer has outgrown us. We have to be ahead of their curve technologically. It’s our way of life. We’re a printing company, a fulfillment house, an outsourcing solution — a one-stop provider with multiple services.”

About the author: Nancy A. Hitchcock writes about the printing and graphic communications. She served for many years as a senior editor at Electronic Publishing. She can be reached at .