Blog

Perspective
July 29, 2021 | by Paul Fillmore

PAUL’S PERSPECTIVE – QUANTUM’S 2021 THIRD QUARTER PAPER AND TREND ANALYSIS

The weather report typically gets sandwiched in the last or next-to-last segment on the 10 PM newscast, usually  following local sports. This begs the question-who watches the news nowadays when you’ve got a direct satellite feed beaming real-time on-demand into your pocket?

Weather has been leading in the headlines: storms, hurricanes, tornadoes, flooding, and wildfire smoke all have had a turn in 48 PT font. Paper has followed that same track.

What has been a last column calculation ordered the day before the job is scheduled to produce, is now top of mind before the job begins.  Causing buyers to scramble in order to secure supply in the face of daily disruption and rising prices.

In our First and Second Quarter Outlooks, we examined how and why we’ve arrived at this crucial moment. In this quarter’s Paper and Trend Analysis, we’ll discuss what we’re doing to cope with ever-changing conditions, and how we’re finding success.

Allocation, Allocation, Allocation

If you haven’t gotten a letter from your mill rep, your merchant rep or your print provider, be advised: We are currently in a state of allocation. The major mills are allotting a specific amount of tons to each merchant for each customer; differentiated by grade and based on previous year’s usage. Both major economy sheetfed lines (Flo, Anthem), almost all web coated stocks, and most other coated, uncoated and imported sheets are operating under some form of allocation.

Those that aren’t, soon will as Q3 ramps up. You’re seeing this reflected in the outside market as well. Lumber, consumer appliances, computer chips for cell phones and vehicles: all in high demand and short supply undergoing allocation as the price tag heads skyward.

My suggestion – ask for your allocation numbers. In some cases, allocation is use it or lose it. Excess allocation at the end of the month may be a smart inventory buy, especially as supply gets tighter.

The Importance of Forecast

If you were thinking ahead in March and April, your efforts will be rewarded. Knowing which products move at which times of year and then getting purchase orders and commitments against those items, has helped us gain security of supply. The sales staff has also gone above and beyond talking to clients about upcoming projects and giving Procurement a heads up when large orders appear on the radar. We’ve even had clients call to ask us what we were doing to secure supply. After pointing them to our previous Paper Trend analyses, we’ve thanked them for being proactive.

Whether you’re buying the ink on paper or you’re printing it, communication will be your best tool in today’s circumstances. The more you can plan for, the more prepared you will be for the inevitable turbulence you will encounter.

Spending for a Rainy Day

As the third and fourth quarter crunch approaches, the availability of paper and raw materials will become as significant, if not more significant, than the price of the job.  Printers are starting to carry more dollars of inventory on their floor in order to make sure they can service their best accounts, while remaining nimble enough to pick up the phone on a stormy Friday and rescue a drowning customer.

I’ve started to stock up myself when and where it makes sense. With some mill dates already heading out toward January, those few thousand extra sheets could return ten times its value in repeat business. If you’re the client, make sure to find out if your providers are doing the same. The further upstream you tackle this challenge, the less chance the project will be affected.

We know there’s rough weather ahead. The current paper situation can be summed up as a single concept – dynamic change. We’re seeing it all over the industry and economically – worldwide.

What have we done at Quantum?  We’ve taken the temperatures. We’ve looked at the almanacs. We’re made our predictions and charted our course. We plan to keep talking to everybody. Together we’ll get through it.

About the author:  Paul Fillmore is Supply Chain Manager at Quantum Group and has over 20 years of printing industry experience. Paul’s specialization is in sheetfed printing and he has master level experience in litho and digital print production, estimating, planning, purchasing, and process engineering.  Click here to learn more about Quantum Group’s printing solutions.



LinkedIn
Twitter
Facebook

← back to blog