Partner, Inkjet Insight
My last post, Paper Supply and Strategic Planning, continued our coverage of paper shortage in the U.S. market. This post offers suggestions to mills and paper merchants on how they can help print providers navigate this difficult time.
As we continue to interview and survey market participants, we are learning that there are many in-plant operations and print service providers who feel that paper supply issues in the U.S. are nearing crisis levels. As noted in previous posts, there are many contributors to the current situation, many of which are not controlled by paper suppliers. Paper buyers do not necessarily understand this right now. Buyers just want their paper, and they want it at their convenience without major price increases. So, what are paper suppliers supposed to do about this?
Mills are probably a bit conflicted right now. After years of contracting demand and an imbalance between supply and demand, tightness in the market equates to a stronger pricing position. This is offset by uncertainty in pulp prices and logistics issues that put pressure on profits, but still, some mills are operating at a profit for the first time in years.
On the other hand, Mills also have to take into account managing their brand reputation and addressing dissatisfaction from print providers and print buyers. Mills don’t have a direct relationship with most print providers, with the exception of the largest printers in the country. So, shortages and delays may be causing damage to their reputation that will have a longer-term impact than the current profit increase.
The obvious answer to reducing shortage is to add more capacity, but that’s not easy to do especially as mills look at the trend line of decades long declining demand for printing papers. While we’d like to believe that mills will react to the shortage by bringing online mothballed machines, we suspect that any near-term increase in supply will come from overseas.
We have heard from multiple print providers that they are actively developing contingency plans including multiple sourcing strategies to ensure there is are backup papers which are tested and approved in their client contracts.
We also anticipate more capacity to be transitioned and targeted at inkjet print providers over time through both domestic and foreign suppliers.
What Can Mills Do to Help
If major increases in capacity are off the table, the next thing the mills need is an excellent communications program.
- Step up and clearly communicate what they are doing to address variables outside of their direct control
- Set proper expectations regarding lead times, moratoriums, and allocation and update this information frequently and prominently with customers (web, email, customer service personnel)
- Standardize the language used to describe products to make it easier to determine reasonable substitutes.
Mills should also work in concert with merchant partners to expand the buying programs often reserved for the largest printers. These types of programs would guarantee predictable supply. It may not be in the mills best interest to lock in these types of agreements. On the other hand, there is significant risk to the mills with competing papers being imported from competitors wanting to disrupt the U.S. market. Expanding buying programs to a wider array of print customers could mitigate the risk of permanently losing customers to other suppliers.
Of course mills also run the risk of losing traction with their merchant partners if they don’t communicate effectively with them.
Paper merchants also need to be concerned about their brand reputation. We interviewed one print provider who said, “There’s no availability. Tell the merchants to do their jobs and provide papers.” This printer explained that lack of inventory has impacted their ability to run jobs about 10% of the time. Buyers are frustrated and looking for someone to blame.
What Can Merchants Do to Help?
- In this tight market, stocking papers is easier said than done, but merchants need to fight for inventory of inkjet stocks and buffer the fluctuations in supply for their customers as much as possible.
- Merchants, with the help of their mill partners should also communication overall market trends, scheduling that may impact paper availability and add predictability to lead times.
- Merchants are in the best position to recommend substitute stocks. Making sure that products are described using standardized language is a big first step.
Strong communication between the mills, paper merchants and print buyers can help to predict demand and ensure proper allocation to loyal customers. It may not be a crisis yet, but the rules of crisis communications still apply.
My next post will discuss the role of printing equipment manufacturers in helping print providers to adapt to paper supply issues. In the meantime, the Inkjet Insight Paper Finder is a great resource to identify papers that may serve as a good alternative to those which are hard to find.
The Inkjet Insight Team is Here to Help
The Inkjet Insight team will continue to track developments in the paper market and share our insights with our members. We have deep expertise in testing papers, helping to find alternative grades, running cost analysis on the total print process, and working with planners to develop strategies to address market changes.