What the Heidelberg and Unisource Partnership Means for Printers
In June, Heidelberg USA and Unisource Worldwide announced a partnership whereby Unisource will serve as the U.S. distributor of Heidelberg’s Saphira-branded consumables. It will enable commercial printers to order paper and consumables at the same time, either online or through a single phone call, for same- or next-day delivery by Unisource. It reportedly will also allow printers to reduce costs and achieve economies of scale by managing their equipment, consumables and paper purchases as a bundled offering.
Printing Impressions Editor-in-Chief Mark Michelson sat down recently with Jim Dunn, president of Heidelberg USA, and Allan Dragone, CEO of Unisource Worldwide, to discuss what this new alliance will mean for their printer customers.
PRINTING IMPRESSIONS: Can you start out by explaining what lead to this agreement in the first place?
JIM DUNN: On Heidelberg's side, it was the growing requirements of our customers in their adoption of our consumables business, which was getting beyond our ability to serve them at the level required. We began exploring what else could be done, and decided to look for third-party organization that was not already engaged in the consumables business. By the luck of it, we came upon Unisource, a best-in-class industry company right in our home town.
ALLAN DRAGONE: I'm not sure who initiated the first meeting between our companies. Unisource had considered getting more into the consumables market many times. Some of our major competitors are already in that market. Obviously, we are well-positioned from a supply chain and location standpoint, delivering too many of those customers anyway. But we never felt comfortable enough to pull the trigger on that decision, especially as a company coming third into that arena. We were cognizant in having the right partner and deciding what would be the best fit.
At the same time, Unisource was looking at how it could expand its third-party logistics business. So, we met with Heidelberg, and quickly realized that a partnership could be a very good fit. It was a very fortuitous meeting, and I remember coming away from it feeling that we really needed to pursue the idea. There is a real good fit and a benefit to both companies, which is often not the case. It probably has taken more time than we first thought as we're trying to ramp it up. But, that's what happens when you have two well-established companies trying to make everything line up correctly before introducing it into the marketplace. But, thank goodness, we're now at the point and are moving forward.
PI: The initial announcement indicated that the partnership would roll out first in the Southeast and then go national at some point next year. Where do you stand with that timeline right now?
DUNN: We actually just delivered our first order yesterday (Nov. 8) right here in Atlanta. And, as luck would have it, it was an emergency order that came in the early afternoon and was delivered later that same day. So, we're starting with the South and really letting the operational performance define the next step. We concluded that we wanted to make sure this would work extremely well as our real value proposition is performance. It's all about having the right product, at the right place, at the right time. We didn't want to fumble, even a little bit, in the beginning.
PI: From a logistical standpoint, is Unisource stocking Saphira consumables in its distribution centers?
DUNN: We think there will be a need for about eight Unisource stocking locations in the United States. Saphira consumables will be stocked like any other product available from Unisource Worldwide. It will be transparent to customers. They can order online or call us, and it will flow straight through. The order will then pass to Unisource's highly efficient system, which determines what delivery truck and what time of the day is required to meet the customer's schedule.
DRAGONE: Unisource's biggest benefit is that our more than 500 trucks can reach 85 percent of North America with next-day service. Our first order was a rush order, and I'm sure there will be many more like that in the future. Our emphasis, as a company, has been on operational efficiency and operational excellence. We're doing similar types of programs with other companies as well, but not on the same scale like we are doing with Heidelberg.
DUNN: One of the most interesting opportunities came down to two types of individuals within our respective organizations. Unisource's drivers and our press instructors spend the most amount of time at customers' plants. We heard stories how over the top Unisource's drivers are to accommodate their customers. They're typically the same drivers delivering to the same accounts. It was similar on our side with our press instructors along with our other support staff. So, it made sense to bring those two types of people together and let them call the shots to take care of our customers.
PI: Are you doing any testing or have plans to provide printers with statistical data that shows the longer life, quality and costs benefits of using Saphira-branded consumables in conjunction with various Unisource grades of paper?
DRAGONE: That's a great question because that's exactly what we are doing now. Heidelberg has a tremendous amount of data that is being made available to us, showing consumables consumption in conjunction with some of our Unisource brands, as well as our mill-branded products. We're also looking at the runnability and the efficiencies on-press. This has really been a huge benefit to us. Given how demanding the print environment is today and the pressure our printer customers are under, it's valuable information we can then provide—with Heidelberg's help—that will help customers save money and create more efficiencies.
PI: So, are you saying that your offerings won't be based around price alone because, when they factor in the savings in different areas, customers may actually be saving more money?
DUNN: One of the cultural aspects that we found through our mutual discussions is that neither of our organizations are afraid of accountability. That's what we want to drive for, because that's where we deliver the most value. If you're looking at just consumables or paper, then the only evaluation is how they perform in the pressroom. Will it be the least per pound, gallon, skid or whatever else, perhaps not. More important: will it be the best value?
We've learned on the consumables side, and are learning on the paper side, what buying decision processes are involved. To a great degree on the consumables side has been all about the supplier relationship. In the past it’s been the old buddy who shows up with the donuts and tickets to the ball game. Breaking through has been a challenge, and you have to do it delicately. But, bit by bit, it works by applying hard facts and figures to determine real performance of products. A printer can then see, for example, that by using this new washup solution, his waste is down 20 percent with little or no cost in making the change. That makes it a no-brainer decision. We have begun testing Unisource papers so we can jointly certify how this paper performs.
PI: How is the combined paper/consumables bundling offering being set up? Will it be volume based, a case-by case situation, etc.?
DUNN: We're really working through that now. We said, number one, let's get product to the printer's doorstep. Then, let's determine through our mutual databases where we have common customers. As we get completely comfortable with the statistical component, the deliverable, we'll then come back and develop some bundled offerings. In all likelihood, though, I don't think there will be that many canned offers. We anticipate that our Printers Advantage program can be extended to provide large scale benefits to small and mid-sized printers.
PI: What would you consider to be the target size print shop for this new offering?
DUNN: I don't know if we've really defined that, but we have a pretty good profile as to the dominance of volume that we get. If we look at our 33,000 customers, about 1,100 represent almost 70 percent of our total business. Some of the overlay that I see with Unisource is that they kind of mirror one another, and that these printers require a lot of paper. That certainly will be one sweet spot, but we also see opportunity through Printers Advantage and other programs focused on the smaller shops.
PI: Are there issues from a salesforce standpoint in terms of who's bringing in the business and who's getting the credit?
DRAGONE: Not really, at least not on our side. Our salespeople are very excited because, first of all, the preeminent brand in commercial printing is Heidelberg. Our salespeople feel like they have died and gone to heaven having the Heidelberg name associated with the Unisource name in the marketplace. They see it as a tremendous opportunity with their customers.
DUNN: It was delightful to know just how many of the salespeople within our respective organizations who already knew each other in a given area. In the early going, we brought the sales teams together. They got the message from both companies that we are not going to put any of them in a position to lose an opportunity.
PI: I know it's still early in the game, but do you foresee your relationship expanding beyond what it is now?
DRAGONE: I haven't thought that far ahead. But, for instance, if Heidelberg were to become a dominant force in wide-format digital, that's an exciting area where we'd be interested in expanding our relationship. That's purely blue-sky thinking on my part, but could be attractive to us.
DUNN: One area that I've thought about, for more than a year, is based on an in-house ink management provider. There are several ink manufactures which are already providing this service. However, we think that these existing installations have a narrow focus compared to what is possible. The core of the service would still be ink mixing, but would immediately extend to Print Color Management and related lithographic trouble shooting. We believe that we can expand that with all of the other things that our organizations offer, from maintenance, to cleaning supplies, to first-line services. The value is that we can help the print run their operations with reduced waste, rework and wasted time. As soon as I find a customer that sees that the same way, I'm willing to work with them and give it a try.
PI: What message do you want to get across to printers as to what value proposition this new distribution agreement provides them?
DRAGONE: I would say the greatest advantage is the ease of doing business. A customer can wrap up almost everything they need with one phone call or one online order. That presents a tremendous value proposition, coupled with the fact that they can count on getting next-day service.
DUNN: The other side of it is in situations where printers are having a problem. For example, a customer may be having what he perceives is a lithographic problem, so he's trying everything. He's changing paper, changing inks, he's trying all kinds of things. With our new Systemservice, we can detect faults in a press, including the motor heating up in the inker. The printer may think he's got a litho problem, but he doesn't. He's got a bearing problem. But because it's tying up that roller, it manifests itself like a litho problem. That allows us to get that customer stabilized more quickly.
As a result, he's going to have better utilization of his paper, less waste and more press uptime. If he is legitimately having a litho problem, between our pressmen and Unisource’s paper specialists, there is no other variable in the equation. As long as we can approach it that way, we can get the guy up and running. Traditionally, the easy way out in the consumables business is to say, "Well, I haven't changed the formula, so it's got to be your paper." This keeps that from happening.
PI: Finally, have there been any stumbling blocks in your partnership so far?
DRAGONE: The only argument we've had in our relationship is that Heidelberg wanted its logo bigger than the Unisource logo on the side of our red delivery trucks.
DUNN: While we lost that argument, I could not be happier with the look of the Heidelberg Saphira logo and Unisource’s gleaming red trucks.