Turn this challenge into an occasion for change
June 16, 2022 By Bob Dale and Gordon Griffiths
Much has been written about the paper supply chain issues and shortages, but are there aspects of the situation that can actually be turned into an advantage? Let’s explore the situation, and identify some opportunities.
Here is a summary of the current situation:
- not enough paper available to produce orders for clients;
- printers are forced to pick and choose which customer’s work is produced with the paper available;
- some customers are more accepting of material price increases, and understand the need for paper price escalation clauses;
- some government and institutional buyers still have not grasped the challenges of the situation, and demand fixed price quotes that are valid for extended periods;
- paper buyers and key staff are spending a lot of time sourcing paper;
- owners are willing to sell their company due to the constant challenge of sourcing paper;
- printers with good supplier payment history with merchants fair better than printers who delay payments;
- sales reps are reducing sales activity due to an inability to produce orders; and
- some printers have stopped marketing activities because it is difficult to secure paper for future customers.
- customer conversations are moving away from “best price” wins;
- customers are willing to have detailed discussions with print providers regarding paper availability, price increases, and this can lead to better discussions on project planning;
- there’s an opportunity to learn about customer goals and objectives and how the printed product helps, so alternatives can be explored;
- some printers have prospective clients calling them to do work since their current suppliers are unable to get paper; and
- clients have offered the incentive of doing all their work, in return for secure paper supply.
A lot of time is required for companies to secure paper, substrate or boxboards and provide options for clients (e.g. split runs, reduced weight, substitute uncoated for coated and alternate substrate). Here are some other considerations.
While customers may accept price increase temporarily, this won’t last. Other efficiencies to control cost increases will be necessary. Since many customers are buying the ‘benefits of print’ rather than the printed product, consider marketing and communication alternatives. Mail post cards instead of letters. Combine print with digital marketing solutions or use QR codes to link to online information to reduce size of printed piece.
Customers need to understand there is a ‘shared risk’ due to price increases. Paper is only one cost element. Even with a paper escalation clause, there are other cost factors the printer tends to absorb. Think about the cost increase for corrugate for cartons, inks, plates, skids, transport etc. Many of these costs cannot be passed onto the client.
Things to stop doing:
- work for unprofitable customers or customers who do not pay according to agreed terms; and
- be proactive–stop focusing only on the ‘crisis at hand’ and continue to plan for the future.
Things to continue doing:
- implement operational and workflow efficiencies to lower operating costs;
- develop sales–meet prospects and current customers, understand needs, build relationships, explore how you can help and have wider discussion beyond transactional relationship;
- increase marketing activity today to support sales efforts in three months;
- develop programs for current clients that help to secure materials and orders that go beyond the current supply challenge (i.e. six to 12 months out); and
- create positive relationships with paper and consumable suppliers.
Things to start doing:
- offering alternatives to printed products; and
- utilizing production technology that has better economics for lower volume runs.
While there are a number of options to work on to address paper supply issues, please use this time to make improvements with your business relationships that are of mutual benefit for you and your customers.
Bob Dale and Gord Griffiths are with Connecting for Results, the premier management consulting company focused on the graphics communications industry. They can be reached at email@example.com.
An edited version of this article originally appeared in the May/June 2022 issue of PrintAction.
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