Q1 Paper Outlook — Market Taking Stock
Ideally, there should be a two-way flow of information in an open business relationship, but Nash concedes that requires a level of trust and cooperation among all of the parties involved. While they may say all the right things, he has been disappointed by the actions of some papiNet member mills.
"Everyone talks about the ability to improve the supply chain, to take costs out of the system and get better visibility into supply and demand," Nash says. "But some really see it as a new revenue opportunity and a way to invite other players to the party, thereby fragmenting and complicating relationships more than they already are. These parties are using technology as an excuse to introduce more noise into the system." He is troubled by the introduction of third-party, non-asset holders into the process in the form of independent paper dotcoms.
The ability to get an accurate snapshot of supply and demand is the only way to keep peaks and valleys out of the market, Nash asserts. This would require everyone to accept a level playing field, however.
"When the paper market last got tight in 1995, our perception (at Quad/Graphics) was that there never was a shortage of paper. We had paper stuffed in every nook and cranny of this plant," Nash admits. "We think papiNet will provide total visibility of the entire paper supply chain. That would mean everyone could wait later to make decisions, buy closer to their real needs, ship later, etc. Everybody could know what's needed, when it's needed and where it's needed."
Ziegler reports that Quad/Graphics has already progressed to live exchanges of purchase orders and delivery messages with its paper suppliers, with goods receipts in final testing. Some of the mills are sending electronic invoices and order confirmations in return, he adds.
