Features | December 13, 2021
Supply Chain Disruption and Its Impact on the Printing Industry
The last two years have been trying for businesses and families alike. As the pandemic first swept through, no one could have anticipated that we would still be dealing with its ramifications today. It spawned a host of new challenges from how we interact with one another, our means of communication and how we obtain supplies.
Global Supply Chain Disruption
Every component within the printing industry has been affected by the pandemic and subsequent economic shutdown. Supply chain operators are having issues sourcing pulp, binding, adhesive glues and other materials. There is not a single cause to be blamed, but rather many that accumulated into a perfect storm for the printing industry.
In the pre-pandemic years, capacity was removed from the market. In 2020, demand for paper goods such as personal hygiene products (including PPE, personal protective equipment), packaging products, corrugated packaging and other paper-based materials soared to unprecedented numbers increasing demand for pulp. At the beginning of 2021, many businesses, that limited all marketing campaigns or outright stopped, wanted to reignite direct mail marketing efforts in attempts to regain customers lost during 2020. In turn, this has led to demand levels that exceeded pre-pandemic points.
It doesn’t help that mill inventories have experienced a consistent downward trend since April 2020. With the high rebound of demand and no time for inventory builds, paper mills are experiencing record low days of supply. Not to mention, idling imports. The economic shutdown and global shipping constraints caused by the pandemic forced uncoated free sheet imports to their lowest point in two decades. Meanwhile, the cost of logistics is rising. In part, this is due to the rapid price increases of raw materials and paper-making chemicals, as well as increased transportation costs, including rising gas prices.
The printing industry was not in a position to handle such a huge jolt in demand, given how much was previously converted or taken offline leading up to COVID-19.
In response to the increased demand, quite a few paper mills have moved to an allotment system. This is where mills will only sell a set amount to an individual printer. That allotment may be based on how much paper the shop purchased in previous years, as well as their relationship with the printer.
Ennis, Inc.'s Outlook
Wade Brewer, director of manufacturing at Ennis, Inc., said the advantage of Ennis is that "we have such a great relationship with our vendors; it is one of the things our CEO, Keith Walters, is most passionate about."
Ennis has a more than 24-year-long running partnership with its main paper provider and each general manager is expected to maintain their own vendor relations as well.
“Having 50 facilities is a huge benefit at the moment," Brewer says. "Our plants can help each other out. Say something tightens up on the East Coast and is hard to get, our other plants are ready to step up and help out."
Though times are still trying, Ennis has been able to avoid some of the pitfalls of supply chain disruption because most of their suppliers are domestic to North America. This is an edge over those that use imported materials and deal with the fluctuating tariffs, idling imports and shipping backlogs.
Things may appear bleak at the moment, but many see this demand increase as a good thing. These inventory challenges have arisen because businesses bounced back faster than anyone expected. While no one can predict the future with absolute certainty, supply chain experts forecast the current tight market to level out by the second quarter of 2022.
What Can Distributors Do?
In the meantime, distributors should not panic. Building up vendor relationships is important, but for those struggling to find enough paper, here are a few ideas experts have suggested:
- Look at different paper stocks. The more commoditized the paper grade, the more allocations that may be in place.
- Stick with your current supplier. Now is not the time to change manufacturers. Your current supplier most likely understands your printing needs far more than someone just coming on the scene could ever.
- Communicate your needs early, but don’t submit rush order after rush order in an attempt to stock up. This stock-piling will ultimately hurt everyone in the end, as it creates artificial high demand.
During these unprecedented times, Ennis has asked all distributors to order early and maintain communication with their respective plants. If there is anything we can do for you, please don’t hesitate to reach out to our customer service hotline at 800.972.1069.
Anna Frosch is a marketing and social media specialist for Ennis, Inc.
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