Paper Buying 101

Buying paper is a topic that gets discussed frequently in any catalog operation. And since paper is such a large percentage of a catalog’s printing cost, the topic certainly requires frequent attention.

Advantages: Buying Paper

Price: It’s often thought that buying paper directly from the mill or through a broker presents an opportunity for price per 100 wt. savings, especially if purchased in large quantities. It’s assumed that if you buy the paper yourself, you can avoid a markup or administrative fee that the printer adds when it purchases the paper for you.

However, these savings often are hard to realize. When you quote paper from a broker or directly from a mill, you may see the same or a slightly lower price than what the printer quotes. Of course, if the quantity is high, a slightly lower price per 100 wt. can result in significant total dollar savings.

In the current market, paper prices continue to decline. A good broker can help you take advantage of falling prices by passing on a lower price (if available) before delivery. By contrast, when paper is built into a printer’s contract, it’s often the printer who gets to enjoy any decrease in price at delivery.

Your broker also can advise you on when to lock into a price if costs are rising.

Find the right paper: If you’re buying your own paper, you’ll probably want to consider a variety of paper sources, which may enable you to find a better paper for your particular application and at a better price. Often, printers work only with a select number of paper houses and offer only those papers to you. Selecting a paper outside of their usual offerings may add to the cost.

Disadvantages

Logistical problems: Buying paper and having it delivered to your printer is similar to a purchasing agent buying component products and delivering them to another manufacturer instead of finding a manufacturer that can deliver the product complete.

Any time you get involved with supply components, you run the risk of something going wrong in the transaction. This is the No. 1 reason I recommend not buying the paper separately. Potential problems could include: wrong paper, late delivery, wrong quantity and bad quality. At this stage, any one of these problems most likely will cause a delay in your print job. A delay can be very costly in downtime, causing you to miss your printing window or even a critical mail date on time-sensitive materials.

If a press is down because something is wrong with the paper you provided, the onus is on you to resolve the problem. While you’re fixing it (by getting the broker, the mill and printer together), you may be racking up charges for down press time. In busy periods you may even be bumped out of the schedule and miss your printing window altogether.

Brokers will tell you they’ll resolve any problems, and I’ve found this to be true. However, the resolution may not come in time to save a critical mail date. In addition, there will be some administrative difficulty in getting the situation resolved, billing corrected, charges assigned, etc.

Payment terms: Within 30 days of delivering the paper to the printer, you’ll have to pay the broker or mill for it. If you’ve delivered a week or so before printing (to allow time to ensure the delivery is correct), and printing and binding takes a week, you’ll end up paying for the paper about one week after the print job is complete.

If you buy the paper from the printer, you’d have, at minimum, another three weeks to pay for the paper. Some printers offer 60-day terms, meaning you’d have almost two months more to pay for the paper. On large printing jobs, this can be a significant boon to cash flow.

Reacting to quantity changes: If you ever had to adjust print quantities at the last minute, you know the types of problems this can create.

The biggest issue in being able to increase quantity is having paper on-hand. If you’re using the printer to buy paper, it’ll often use a house paper that it stocks for other jobs. If so, you might be able to buy some quantity of this paper to achieve your increase. If you need to decrease quantity, you may be able to do so without having to pay storage costs on unused paper you supplied.

After reviewing the relatively small advantages versus the potential challenges of buying paper yourself, I feel confident recommending the following: Let the printer procure the paper. Of course, that doesn’t mean it still may not be right for you. Even if you haven’t had a problem yet, one could be lurking in your next printing job.

With this in mind, if you’re currently buying your own paper, I recommend making sure you’re aware of your savings and that those savings are significant enough to offset the hazards you may encounter.

Phil Minix is the managing director, Catalog, for Reiman Publications. You can reach him by e-mail at pminix@reimanpub.com.