Digital Full-Color Output (DFCO)

An Opportunity for Profit

Digital full-color output (DFCO) certainly is a buzzword that most of us have come across in the past few years. The real question is, what does it mean—and more important, what does it mean to our industry?

In this article, we will attempt to define the term and outline its pros and cons. From this basis, we can determine the advantages and opportunities available to companies with this capability.

With the advent of technology, there continues to be crossover and therefore there are no absolutes or pure categories. However, we will consider DFCO as a process that is derived directly from an output device driven by a computer that embodies the following components:

  • Few or preferably no secondary post-processing steps
  • Few or no physical setup components other than computer software manipulation
  • Outputs in full color – typically with a YMCK process color technology
  • Requires less labor but can require a more technically skilled labor force
  • 80 percent of finished goods cost usually is contained in raw material/equipment cost with the 20 percent balance of finished goods cost in labor and overheads
  • Higher cost of entry with capital equipment
  • Relatively new technology with less competition
  • Typically cost-effective and efficient for sampling, short and medium runs

Examples would be Ink Jet, Ink-Jet Dye Sublimation, Direct Dye Diffusion, Dye Diffusion Retransfer, Thermal Resin Vinyl Printers.

As with all industries that mature, the balance between manufacturing capacity and product demand shifts resulting in increased competition. Often this means not only more competitors but also heavy price competition, which leads to eroding margins. This is more evident in economic times such as we have been experiencing during the past 18 months. Therefore, if you have digital full-color output capabilities or are considering adding to your company's capabilities, it is vitally important to understand where DFCO's advantages and opportunities lie. This should be considered from both a strategic company perspective and a financial perspective.

A. Product flexibility

Many DFCO products relate to its file data. For instance, a photograph, a full-color logo and various graphical images are all examples of this file data. Most process color applications are printed on white substrates, and the multiple colors achieved are contained in the file, not as a result of different substrate colors. Therefore, the variety of products contained digitally in files coupled with the constants of YMCK color output and white substrates leads to unlimited product flexibility with true just-in-time (JIT) inventory needs.

B. Turnaround times

With an on-site DFCO device, vastly improved lead times are apparent, especially for the short run or sampling applications. When compared to other processes, when you don't have to create a screen or a die the turnaround time is increased dramatically.

C. Increased customer servicing to land the purchase order

When faced with a request for a quote from a potential customer, we can compare the answer from company "A" with a DFCO device and company "B" using traditional processes. Company "A" can answer, "Yes, we can make that for you. If you can e-mail a file in this format, we can get you a sample for approval later today or tomorrow at the latest." Company "B" would answer, "Yes, we can make that for you. If you would like a sample, it requires a two-week lead time." Which company is likely to get the order?

D. Proactive outbound marketing

Marketing is many faceted. However, two of the most crucial elements are focus and execution. With digital color capability, the option to create unique personalized samples at an economically feasible price point is possible. Remember that actual samples will get the potential customer's attention; custom samples with a name and/or color logo will ensure a sale.

E. Profitability

As with all processes, when the market matures (as it has with inkjet and dye sublimation), margins also are squeezed. However, there are a tremendous number of new output devices that offer the capabilities of new product ideas and innovations. Invariably these products are unique, stunning and graphically very appealing. These are very profitable products, and companies with these new concepts should be careful not to leave "money on the table" and price the product too low at the outset. The willingness to pay a reasonable premium for high quality, unique products always has been a constant in any industry.

The computer has had a huge impact on each individual's expectation level for color within communication and products of all kinds. Since anyone with only a minimal knowledge of a computer can create graphics and images on-screen, the desire to achieve similar color and looks in all aspects continues to grow. One only has to be exposed to the Internet, a retail environment or business-to-business communication to see the evidence of this proliferation. Those companies that can fulfill this need on an economically sound basis will succeed in the years to come, not only in our industry but also in the overall economy.