Marketing Procurement

Paper procurement: Are you getting the best deal?

Passing the Buck

“We have recently seen a surprising number of instances where legitimate material cost increases have been passed onto the brand owners incorrectly, even where a solid contract is in place”

The last year has seen a seismic change in the availability of materials, putting pressure on many customers and suppliers to maintain supply. Brexit and Covid no doubt had their part to play as well as Mill closures, industrial action, and environmental demands, but regardless of the specific cause, the impact of this in many cases has been to significantly increase the cost of the material and compromise many buyers of print by either cancelling or changing the specification of a printed campaign or to find new suppliers who can meet the demand.

Blue Buffalo audit the print spend of many leading brands, we are fortunate to have partners in the business whose careers have included many years of buying paper for Printing Groups and Brand Owners, from both merchants and mills. Adding this experience to 16 years of running many large tenders in the UK and across the world, where materials are decoupled and highly visible, gives us a unique and independent insight into the spread of the prices paid for the material element of printed material.

We have recently seen a surprising number of instances where legitimate material cost increases have been passed onto the brand owners incorrectly, even where a solid contract is in place.

How does this affect you?

There is no better time to take control over the materials that you use and refresh thinking about the most appropriate ones to use going forward, this does not mean that you need to be the one buying it or managing the day-to-day production demands, although you should also review the benefit in doing so.

If your materials are bought by your printer or a print management company then you may have a secure route of supply, however this is not necessarily the case. The paper industry operates under insured limits for its customers and whilst it’s not something the paper company will necessarily say out loud, they would (in many cases) much prefer to have your brand as a customer than a printer or print manager, ultimately this depends on your financial state and behaviour as there are good and bad on both the customer and supplier side.

How good is your current supply?

Throughout our 16 years of auditing print contracts, we see that there is often a focus on a certain level of spend and then a large tail of uncontrolled spend. With outsource suppliers they may not even be decoupling the material element and placing it under their control, our experience shows that these contracts are not typically leveraged well and that most customers could significantly improve cost and volume under control.

The printing market is under a lot of pressure now and has been for some time, operating on slender margins whilst having considerable fixed costs so typically does not have the luxury of smooth cash flow, in fact the paper industry is quite often the barometer for failing print businesses as it is a significant outsourced cost for most. 

Unless a printer is making a significant profit from your paper purchase there is a compelling argument that they might benefit from you taking control over the supply of materials as it frees up more purchasing power from their insured limits. 

A positive consequence of this decoupling is that it creates a level playing field for printers bidding for your work and does not disadvantage those with less buying ability.

It is easier than you think!

The paper industry is typically run by merchants who have all the expertise that you need to ensure that the correct materials get to where they belong on time and that any issues are managed without the need to cause you concern, once you have been able to do a rigorous discovery of your usage then you can engage with them to pursue options.

You do not necessarily need to be principal in the purchasing, you could source the materials and have a contractual agreement whilst the print supplier manages everything else, however, having set up many of these types of scenarios I see little risk in being principal.

The objections that might be stated by print suppliers will range from an absolute refusal to allow supplied materials to ‘you will be entirely responsible when the machine breaks or the paper doesn’t turn up’ personally I cannot recall any time that this has happened to a customer of mine. 

This is not to say that purchasing your own paper requires no skill or understanding and there are some potential pitfalls.

As an exception you may produce a job with a supplier that is a bespoke size that cannot be used by another supplier should you wish to change.

Different printing processes demand different material specification such as reels instead of sheets, the size of the hole in the reel, sometimes special finishes to raw material to suit printing process, grain direction of material.

In most cases this information will be easily available and a simple risk assessment should suffice. 

How do you get started?

A review of materials might highlight a few opportunities to consider, quite often a creative agency might specify the material without necessarily knowing the impact of their choice on method of manufacture, cost, or supply market, this would obviously be dependent on the agency in question as the knowledge varies a lot.

The first thing to do is to understand what you buy, easier said than done because this information is rarely de-coupled in your regular information. We have been mining this information for 16 years and when it is found (which it always is!) and analysed it is always a major revelation in terms of erratic use of material, cost, and consumption.

It is always an opportunity to take control and save money without compromising quality and improving quality if desired.

Quite often there is no need to change the material you have used, and the benefit might come from aligning with the most appropriate print method, changing from sheet to reel, or buying pallets rather than ream wrapped. 

What about the planet?

The question of environmental is a hot topic, my experience of the paper industry is that it has had a firm grip of this over the years and education is often the missing ingredient.

With a review of all your materials you will enable your environmental credentials to be measured and improved and targets can be met by true demonstration of positive change and not just by offsetting.

In conclusion, by taking control over your materials you can be much more reactive to the ongoing changes of the market and environmental demands, whilst saving money and simplifying processes, why wouldn’t you?

Neil Smith is Director at Blue Buffalo Consulting.