Trends to Watch That Can Help Printers Navigate the Modern Supply Chain
As we close out 2022 and start making plans for 2023, there is still a great deal of uncertainty for commercial printing businesses of all shapes and sizes, especially when it comes to the supply chain. Between raw material and paper shortages, transportation issues, labor challenges, global geopolitical pressures, and more, the supply chain has seen unprecedented disruption in recent years, and it doesn’t show any sign of letting up any time soon.
There are a host of issues that continue to disrupt supply chains within the printing industry. These include factors as diverse as global shortages of production personnel, limited shipping port capacity, shortages of shipping containers and trucks required to transport the containers, a lack of truck drivers, and ongoing COVID lockdowns in China, according to Andy Paparozzi, chief economist at PRINTING United Alliance. “Supply chains will continue to slowly heal. But healing will be erratic because the next disruption can come from anywhere, and a disruption in one part of these complex global networks can create disruptions in other parts. It isn’t a simple matter of fixing one isolated link,” he says.
Breaking Down the Major Factors
When it comes to making business decisions for the next 12 to 18 months, having a better understanding of some of those factors impacting the supply chain can mean the difference between your business staying nimble and ahead of the curve, and struggling just to keep the doors open. With that in mind, here are three supply chain trends you need to be paying close attention to.
1. Materials. “If you’re a commercial printer, the biggest concern you have — and it is absolutely number one — is ‘can I get substrates?’” Marco Boer, VP of I.T. Strategies, says. If printers can’t get paper and other substrates, he notes, they can’t make money by completing jobs, and “everything starts to fall apart.”
This is especially challenging for smaller commercial printers, who don’t have the buying power in comparison to some of the larger printing operations. Boer notes that many paper mills are scaling back their customer bases — ceasing sales to the least profitable 10% of their customers in favor of allocating those goods to the rest — which just increases the challenges. And, if that wasn’t bad enough, very few mills are willing to take on new customers right now.
What should you do?
Boer notes that better communication will go a long way. Talk to your suppliers as far in advance as you can, and alert them to upcoming busy seasons or big jobs ahead of time, so they can prepare their own inventory levels to serve you. “Buy it now and lock it down,” he says, “and plan way ahead — don’t wait a week or two in advance to order. Looking ahead makes [supply chain management] more predictable.” That does mean there is less “slack” in the system, with less excess inventory for those last-minute jobs, but that isn’t a situation which is likely to change any time soon.
2. Inventory levels and transportation issues. John Haber, chief strategy officer for Transportation Insight — a freight brokerage, managed transportation and drayage, and parcel solutions provider — notes that one major challenge in the supply chain right now, ironically, is too much inventory. “There is very little warehouse space because inventory levels are so high,” he notes. People are buying less overall, so these goods are taking up space and making it more difficult to move new goods around the country. Pair that with the labor issues surrounding the transportation industry, and it’s a recipe for trouble.
“Thankfully, we averted a major crisis with a railway strike, but some goods had stopped moving on the rails even without a strike, and some of the products printers use fall into those categories, so they could have been impacted by it,” Haber notes. He goes on to point out, as of the time this article was written, that while a compromise had been reached, no agreements had been signed yet, so that is still an issue printers should be watching.
There are also ongoing union labor concerns with getting goods in and out of shipping ports, and there are a number of issues around trucking and delivery services to be watching — the UPS contract ends in July 2023, and Haber notes “that is going to be a very tenuous negotiation.” Plus FedEx, which announced the largest rate increase ever seen, also recently fired its largest contractor in charge of servicing its routes.
In short, labor challenges in the entire transportation supply chain are going to continue to have a major impact on commercial printers trying to ship jobs, receive paper and other supplies, or even purchase and install new equipment well into next year.
What should you do?
You’ve got to continually pay attention to what’s going on,” Haber advises. “Too often people treat the supply chain as a one-time event. They go out, sign a contract, and then have it for three years. But you’ve really got to be managing it on a daily basis. You need to be diversifying your suppliers as well as your carriers and providers, do risk management, and have backup strategies.”
3. Shifting global influences. For Patrycja Wisniewski, director, Corporate Product Strategy, at Canon Solutions America, one of the major trends impacting the supply chain right now is actually a collection of pressures. First, she notes, “regulatory changes that are influenced by governments will shift the global supply chain.” This includes everything from manufacturing strategies, to environmental concerns, and even issues on a more global scale that can have far-reaching consequences to the supply chain.
“Geopolitical instability and conflicts remain a top concern, risk to global economic shifts and inflation remain, and volatile energy prices have superseded supply chain disruptions,” Wisniewski adds. “It is important to emerge from disruptions and focus on becoming more resilient and efficient, and institutionalize the new normal.”
This is something Paparozzi is watching closely as well, noting, “I think the greater concerns are geopolitical, particularly China and Russia. [The U.S. government] can influence domestic labor disputes. But it has little influence over the actions of China and Russia, both of which are essential to global supply chains. And the influence Washington does have, such as sanctions and tariffs, further disrupts supply chains.”
Wisniewski notes that, in response, the “focus on the distribution network and inventory strategies will remain a top priority.” Climate change, in particular, will force everyone, including commercial printers, to look for ways to modernize the supply chain, she adds.
What should you do?
“Prioritizing the right response actions is key,” Wisniewski notes. She stresses that print services providers need to take the time to look at ways to digitize and automate as much of the production — and operational — processes as they can, and to make themselves more nimble and better able to pivot as new challenges crop up.
She also says that gaining better insight and an “intimate understanding” of the economic drivers should be a priority for printers. Determine the areas of the business with the most exposure to those challenge and find ways to minimize the risk.
“There is a need to experiment with new ways of working in the end-to-end supply chain,” she points out, with all organizations — including commercial printers — needing to commit to stronger collaboration strategies, a more unified vision of the future, and far greater transparency into the process from beginning to end.
Unfortunately, Still No End in Sight
Sadly, Paparozzi notes, there doesn’t seem to be any relief to the supply chain disruptions in sight, at least for the first half of 2023, if not beyond. “Printers should assume supply disruptions, cost inflation, labor shortages, production inefficiencies — and the production delays they create — will continue. It is nice to be optimistic and assume conditions will soon improve materially. And maybe they will. But no one should count on it,” he adds.
“Instead,” he continues, “printers should be prepared to devote more time, resources, and talent to monitoring supply chains and to managing procurement and inventory ‒ i.e., they should elevate these functions to the same mission-critical status as sales, operations, and finance.”
Haber gives a similar sentiment, noting, “to be ready, [printers] need to be nimble, have contingency plans, and they need to have data and visibility. If you don’t have that — in real time — you’re working at a deficit. You can’t adapt quickly if you don’t know what you need to do.”
For Boer, one of the biggest things printers should be doing right now is communicating with their peers. “Most businesses should be getting heavily involved in peer groups,” he notes. “Discuss challenges, and see if you can collectively come up with a plan to mitigate some of them. For example, you produce Christmas cards, so you need a lot of paper now, but in March, this other guy does transaction statements and needs the paper then. Collectively work together to balance it out.”
Finally, Wisniewski stresses that while managing costs is absolutely important, it shouldn’t be done at the expense of everything else. “Manage [your costs], but manage them well,” she advises. “Prioritizing them above all else when choosing suppliers might [lead to difficulties.] Align your strategic partners, redesign departments, and stay relevant by maintaining a deep understanding of the marketplace.”
Finally, investing in capital equipment such as digital printing technologies and end-to-end automation will help maximize productivity with the resources you do have, while minimizing some of the challenges the industry is facing.
There are no easy answers, and sadly no one “quick fix” to solving the supply chain challenges the commercial printing industry is facing. It is a complex system, with far too many variables for any one person to try and predict with any degree of accuracy.
But staying informed, staying nimble, and being willing to shift gears when necessary have carried our industry through the pandemic years. That same mindset will continue to set the most successful shops apart from the rest.
Toni McQuilken is the senior editor for the printing and packaging group.