Management service providers for paper, publishing and print
|Bridging the gap||Printweek: 14 March 2003|
Potential goldmine or crowded sector? Andy Scott finds out whether paper management can continue to pay off
Paper management is the new pulp buzzword. Unsurprisingly, its development can be compared to the early days of print management, when the market was dominated by a small number of specialists and bandwagon-jumpers, before Vesuvius erupted and the market was suddenly awash with middlemen.
Paper management services are developing in a similar fashion. Essentially, the market is split into two camps: fully independent start-ups and spin-off companies derived from the paper suppliers. Both are setting up shop in order to help print buyers with tricky paper-related tasks such as stock control, inventory analysis and waste management. All this comes at a price, of course, and with the number of new players on the block growing rapidly, the industry is eager to discover whether the market is deep enough to yield profits for all.
Independent service provider Publishing Paper Solutions is among the hopefuls. It is run by former paper industry professional Paul Venediger and counts VNU First City Media and Publishing Partners among its publishing clients. It has also established a joint venture business, Perfected Paper Solutions, alongside software developer Perfected Solutions. "With our dual service offers of management services and software provision, we are ideally placed to provide flexible and fit-for-purpose solutions to buyers who recognise the need for improved management and purchasing practices," explains Venediger.
For paper managers the problem lies in finding print buyers who recognise that need. A large part of the problem is the perceived threat to the person responsible for paper at the client. Many will see it as an attempt to cut them out of the process. "There is the impression that I can do a better job than the incumbent person. I'm therefore seen as a threat," says Venediger.
The truth of the matter is, he says, that the service saves publishers money by, for example, using better stock management, changing grammages, looking at printer waste levels or simply changing paper reel widths. "Every £10,000 saved on paper, is equivalent to £100,000 extra in a pub
Decades of service
Precision Publishing Papers has been supplying independently sourced paper to the print and publishing industry for nearly 20 years. The company was acquired by paper merchant The Howard Smith Paper Group in June 2000 from Ekman Cleave. Realising that an important niche needed to be addressed, it set about developing its paper management system.
"Not only was the system readily adopted by our existing customers, but potential new customers soon became interested in the concept of effectively outsourcing their paper procurement," says key account manager Colin Parker.
Pearson Education UK (Higher and Further Education) was one of the first customers on board, while just over two years ago Lexis Nexis Butterworths Tolley also moved to full paper management control of its thin printing paper requirements. These now rank among the 20-plus major publishers now using Precision's full paper inventory management.
Precision's service removes the need for the publisher to place paper orders. It also monitors deliveries and manages publisher-owned paper inventories based on the publishers' forward production schedules. But it is not only publishers that can benefit. Parker says papermakers can also benefit from the resultant longer-term relationships between publishing paper merchants and their customers.
One of the newcomers is Axios Management. It was established by former Salehurst Paper and Contract Paper business development manager Peter Georgiou. Axios won't buy and sell paper but will incorporate a print management facility, and offer what Georgiou refers to as a transparent management fee.
"We will work in partnership with mills acting on behalf of publishers, catalogue agencies, advertising agencies, and we aim to strengthen the end-user relationship," Georgiou says. Customers, he says, will be aware of all costs at all times.
Clients will benefit from a number of advantages, which Georgiou says will include a reduction in annual paper costs by buying direct from paper manufacturers; a wider range of qualities to choose from; and the ability to forward-budget future paper costs more accurately. "The next 12 months will be interesting to see how the industry changes to meet customers' needs," says Georgiou.
Another player is Kent-based independent paper merchant Denmaur Papers. Commercial director Nick Gee says the company sensed a potential demand for the service during the early '90s. "We established quickly that it appealed to publishers who hadn't previously paid much attention to wastage control and analysis," says Gee.
"With demands being so varied, we have always been flexible in our approach to paper management, and tend to offer an a la carte service menu to suit the client's needs," Gee states. This includes inventory and stock control, planning demand, wastage analysis and technical support.
It seems fairly clear then, that suppliers are queuing up to offer a paper management service, but is the demand from print buyers actually there? Mike Lamb, group production manager for Highbury House Communications has been using the paper management service provided by M-real UK since November 1992. "We were previously using merchants, who offered paper management services, but we felt we had grown to a size where we wanted to deal direct with a mill," he says. The company was faced with either taking someone on internally or using an external source. After using a freelance during an interim period, they went direct to M-real.
"We provide M-real with a rough forecast, which includes our print runs, pagination and schedule of when stocks need to go the printers," explains Lamb. M-real then raises the orders and delivers the paper when required, providing statements from the printers on under or over-usage.
Although the company sources its regular lightweight coated papers, including Galerie Brite from M-real, it fills in the gaps with improved newsprint and sheet stocks from merchants. Highbury has three main web printers - Wyndeham Heron, Polestar and Headley Brothers where it has group prices. The M-real service helps them keep their stocks down, and call-offs are not a problem.
"There is no problem with supply, it's not much of an issue at the moment," Lamb says, "but it is vital in times of paper shortage. We are very satisfied with the system. M-real controls everything and provides good reports and forecasts," he says.
Another customer is VNU. It uses Publishing Paper Solutions as its paper management service provider. Production director Joanne Hurst says it's for each individual print buyer to decide whether it needs management expertise.
"It much depends on a company's individual circumstances," says Hurst. If it's a publishing company that employs a senior production professional with considerable knowledge of paper grades, suppliers and market prices, then Hurst says no. "If a company has a single-paper-supplier arrangement, it makes sense for the paper supplier to provide a purchasing and stock management service," she says. When a company has several paper suppliers, but wants to retain close control of purchasing and stock management, and lacks internal resources to manage the process efficiently, this is when an independent paper management company might have something to offer, she says.
The real crux of it, says Hurst. is the messy area of stock management. Controlling stocks, dealing with claims for damage, rejected reels, printer claims for press downtime - all of these and more, she says are time consuming and labour intensive, even if the publisher has the staff to do the work. So does it free up hard-pressed production staff to do other more important work? "Sometimes. It can provide a short-term fix to help a publisher get on track with managing paper," she says.
Reed Business Information is currently working with UPM-Kymmene to develop a vendor-managed inventory programme. Operations director Martin Bloomfield says that the bottom line is printers will run presses better than publishers, and the same goes for paper and paper inventory management. "Publishers only need to manage price and specification, they shouldn't try and do something they are not good at," he says. After all, we are principally a media business.
There are, naturally, questions concerning the independence of many of the paper management players. However, given the current adverse conditions facing many publishers, most are happy to save any searching questions for another day. From the publishers' point of view, any savings that don't have a detrimental effect on the quality of the product are worth looking at, and some of the savings touted by the early movers seem a little too good to ignore. Whether they are too good to be true is another matter.