Inkjet Insight is closely watching the challenging paper shortage in the U.S. market. Our team has covered different aspects of this topic from pulp trends to impacts to the supply chain:
Elizabeth Gooding discussed trends in pulp production, competition from growth markets, and the impact on paper availability in Pulp Fiction – Challenges Within the Paper Supply Chain–
Mary Schilling’s Inkjet Summit presentation talks about how the exit of key mills that supplied papers for inkjet printing has impacted the industry. See Key Trends in Inkjet Paper Development & Evaluation
Elizabeth Gooding addresses the reality of long lead times and offers strategies for print providers to ensure a ready supply of paper in Mitigating Risk in the Paper Supply Chain
Most recently, we have been interviewing subject matter experts throughout the paper supply chain to gain a holistic view of the market. It’s clear that the tight paper market is driving frustration and change and it’s incumbent on participants throughout the supply chain to consider how to solve this challenge. The story is familiar; combine reduced capacity over the years, with less demand from commodity segments, increased demand for pulp, recent mill closures, and regulatory actions, and you have a perfect storm impacting the price and availability of substrates including those targeted at the production inkjet market. As mentioned in Elizabeth’s post, Mitigating Risk in the Paper Supply Chain, production inkjet print providers are challenged to find a consistent supply of substrates (with lead times between 12 – 16 weeks) to fuel their customer demand and this is occurring at a time where adoption of inkjet presses continues, and print volumes are increasing.
Depending on how long it lasts, the disruptive nature of the current supply tightness may drive structural changes in this market. While we haven’t gamed out all of the scenarios, we are concerned that the on-demand model that ultimately seeded inkjet printing technology developments may be undermined by the reality that just-in-time manufacturing often relies on just-in-time material logistics. If there is a disruption in supply, then on-demand print providers will need to adapt or face lost opportunity and revenue.
Equally concerning are those print providers who are vertically integrated to provide a streamlined solution to specific industry segments. These print providers achieve competitive advantage through significant manufacturing efficiencies and standardization and often engage in long term contracts with their customers. A disruption in paper supply can result in a violation of their contracts and lead to lost business if not quickly corrected. Consider a printer focused on highly regulated business processes such as bills, statements, and notices. There may be significant penalties if these documents are not printed in the mandated time frame.
The balance between supply and demand will evolve and hopefully settle down, but the timing is still elusive and the fallout unclear. Everyone has a role to play in getting through this without driving print costs unsustainably higher. Therefore we suggest that paper take an elevated role in your strategic planning. Revisit buying relationships, inventory levels, lead times, investments in paper testing and paper-related contract language to mitigate risk.
Our next post will discuss recommendations for mills and paper merchants to help print providers navigate this difficult time.
Inkjet Insight is Here to Help
We 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. Get in touch if you need support.