I had a ball last week, comparing press sheets printed on the new NewPage Sterling Premium
stock to domestic #1 grade competitors. I won’t say it was superior across all aspects, but the paper definitely belongs in the consideration set.
My NewPage rep came by to share details of the rationalization of the Sterling, Productolith, and Centura sheet grades in favor of the new 94-bright Sterling Premium. The company’s reasoning was that the current delineation of grade lines is out of date and out of touch.
NewPage is about a decade late, but I’m glad it has hopped on the train.
My overall reaction was that of profound relief. At last, a major domestic mill has recognized the profound changes to the competitive landscape; changes prompted by the importation of high-brightness European and Asian sheets. Denial and litigation have finally given way to product line enhancements that will better compete in today’s market.
In this quadrennial season, the Olympic hendiatris
comes to mind: “Citius, Altius, Fortius,” which, as everyone knows, means “Faster, Better, Stronger.” So goes the paper market.
“Faster, better, stronger” will also describe the supply chain if the overall paper market rationalizes SKUs in a similarly thoughtful, customer-focused way. For many categories of paper, the total days of inventory within the system can be mind-blowing. Coated freesheet, for example, often has 50 or so days of mill inventory, plus 30-45 days of merchant stock, and a couple of weeks worth of inventory on the printer’s floor. The total cost is massive.
Order variance drives the need for so much buffer stock. But what if the number of SKUs were reduced? With fewer options, demand would be more predictable (lower variance), and less buffer stock of fewer items would be required. Reduced inventory—and subsequent lower costs—across the supply chain would strengthen economic sustainability, something we can all appreciate.
Given this economic argument for fewer SKUs, I got to wondering about additional grade rationalizations that might make sense. So here is my list of grades and SKUs that, if rationalized, wouldn’t stop the world from turning:1) 96-Bright Opaque Offset
In my opinion, the big mills ate their own heads on this grade when they bumped up the offset brightness to 94 and made the stock more opaque. 2) 8-pt. Matte and Gloss Cover
If you have 7- and 9-pt., do you really need to warehouse 8-pt. in multiple locations? While I’m at it, why do the board manufacturers make 8-pt. and 10-pt., but not 7-pt. or 9-pt.?
3) The Coated 3.5 Grade
If you couldn’t print on an 83 bright sheet, you would move up or down, but you wouldn’t lose your mind. Scrap it.4) Multiple Sheets of the Same Grade from the Same Mill
Enough of the charade. We know when it’s the same stuff, and you don’t need to call it something different to price discriminate. Kill it, reduce your inventory and your cost structure, and become more competitive on substance, not on fake distinctions among parity products or markets.
5) “Green” Grades
These were hot in 2007, but went down the drain with the great recession. Are the domestic mills clubbing baby seals in their free time or harvesting trees from Aboriginal lands? I didn’t think so (but let me know if they are). Let’s free up some warehouse space and leave the green market to the truly committed niche players that provide a valuable alternative to the mass market.
I’m sure valid applications exist for all of these grades, but I don’t think any of them needs to be stocked in today’s market. Of course, with properly sized making orders, they needn’t be on their way to the taxidermist to be hung in a museum. In an industry that has already massively consolidated, but continues to struggle with profitability, perhaps it’s time to eliminate some grade redundancy and get more comfortable with substitutions.
NewPage has taken a nice first step with Sterling Premium; it will be very interesting to see if Sappi follows suit with products that have stronger brand equity.
What do you think they should do? What do you think of my suggestions? Do you have any suggestions of your own? Share your thoughts by posting a Comment.