Coping Strategies — Rising Cost Of Commodities
Prices for paper and the wood pulp used to make paper have grown at a rate less than the CPI. Most prices rise when there is increasing demand, and this most likely reflects that there has not been a significant increase in worldwide demand for paper products—although that supply/demand balance could quickly change in light of the reduced capacity that IP’s Gibson highlighted.
Sund adds, “We have been in a 10-year period where [commodities producing] companies have worked toward productivity increases every year, historically absorbing cost increases. But, today, the increases that come from energy are so enormous that you can’t achieve enough productivity gains to absorb those costs.”
For the graphic communications industry, the picture may be somewhat brighter. First, as an industry we have increased productivity by cost center fairly effectively, but those islands of automation have delivered about all that they can. Now connecting those islands is an area that could generate significant productivity gains that can decrease overall costs and make our businesses more competitive.
By investing in print MIS solutions and workflow, productivity gains could potentially be exponential. Additionally, by moving to processless platemaking, graphic communications service providers can reduce costs by removing chemistry and energy-intensive developing, as well as time, from the platemaking process. It goes without saying that if you are still using film-to-plate, a move to CTP is becoming a necessity.
Another area of opportunity for the graphic communications service provider is supply chain management; that is to say, improving the process by which you work with your suppliers. Suppliers are busy improving their supply chain management practices in a number of ways to gain added efficiencies.
According to Mark Levin, president of Sun Chemical, “Every industry has been hit dramatically by consumables cost increases, mainly tied to petroleum. To offset that, we look at all of the dynamics to find ways to eliminate duality. We give a lot of thought to how to move product more efficiently by using full truckloads, minimizing shipments and managing the way we take shipments from our suppliers.”