Coping Strategies — Rising Cost Of Commodities
Likewise, there are significant opportunities for graphic communications service providers to improve supply chain management by working closely with key suppliers to improve efficiencies. This can often result in more favorable pricing in recognition of the costs savings the supplier can realize. “Consolidating purchases gives printers leverage and their supplier some scale to be able to help manage costs,” Levin points out. “If printers take larger quantity shipments less often, freight costs go down.”
He also suggests using electronic ordering and payment to streamline administrative processes, saving time and reducing error. Levin adds that last-minute orders of small batches of product can also result in serious cost increases due to less efficient transportation methods.
And with a smaller supplier base goes the need for frequent communication. This includes making sure that the products you use, whether they are ink, plates or other consumables, are scoped properly for the job, taking advantage of online resources most suppliers make available, and standardizing where possible.
“There is no magic to it,” Levin concludes. “Suppliers want to supply as much standard product as they can and get away from specialties.” Standardization also offers synergies to the graphic communications service provider, with less inventory, fewer deliveries and reduced manufacturing setup times.
IP’s Gibson adds, “Printers should ask their paper merchant how they can buy in a manner that will lower the cost of doing business. If a printer is ordering from a merchant five days a week and getting relatively small deliveries five days a week, it might make sense to order three days a week with deliveries three days a week.”
Speaking of commodities, to the extent a graphic communications service provider can differentiate offerings and design a portfolio of products and services that solves specific and quantifiable business problems, that service provider will change the way customers think about his services.