Outsourcing Finishing Operations: Redefining the Finishing Room for Survival in the 21st Century
By Pulp & Paper Canada
Paper manufacturers are now putting value-added to their products "just in time" for delivery on time. Outsourcing some of the finishing operations help the paper producers meet the challenges of toda...
By Pulp & Paper Canada
Paper manufacturers are now putting value-added to their products “just in time” for delivery on time. Outsourcing some of the finishing operations help the paper producers meet the challenges of today’s competitive printing industry, the requirements of improved printing technology, and the demand of the customers, while maintaining the necessary profits and return on investments for their shareholders.
The new customers of the future are fewer but larger printing organizations with expensive modern technology. Ordering paper by brand name and shopping for the best price and delivery on the web will become more common.
Rising paper prices, rising cost of energy, tight labor markets, changing paper grades changing technology, increasing e-business, high cost of equipment and new technology combined with lower profit margins, have made it more and more difficult for the smaller printers to survive. Therefore it becomes more and more important for the paper manufacturer to reduce the cycle time, production cost and maintain good customer service.
Historically the paper producers made large runs of a specific paper grade and finished the orders in their finishing rooms at the paper mills on sheeters, trimmers, embossers and winders before packaging the product. The orders were then shipped to the selected paper merchant for warehousing, sale and distribution to the printing industry and other end users. The merchants would hold large inventories on their floor. If special sheet sizes were required on short notice, the merchant could trim down stock to suit the customer’s needs, depending on the size of the order.
At paper mills, large runs of specific grades on the paper machines were turned into stock items (by sheet size) for inventory, and a smaller amount of the run made into make orders for special sheet sizes (non-standard). These make orders had long lead times; several weeks were sometimes necessary to fill specific make orders. The process was slow and required more time for approvals of samples, layouts, etc., before going to the press.
Technologies have changed both the papermaking process as well as the printing industry. The expectations of the end-users towards paper has also changed, envelope stock used to be for envelopes; text grades were printed for books as book paper. Nowadays, a grade of paper can be used for textbooks, envelopes, folded publications, advertising bulletins etc., and expected to run properly in all types of equipment, printing, folding, sorting, etc. All of this is required to happen at lightning speeds, therefore it is important for the paper manufacturer to give the best service possible with good product on time and minimize the opportunity for customers to look elsewhere for products and services.
The pulp and paper industry is now coming out of the worst recession in 50-100 years. As part of this process considerable restructuring is taking place. One aspect of this restructuring is the decision to outsource processes previously done internally.
The mill finishing department and logistics department are under increasing pressure to respond to strict customer service requirements and meet the service level customers have come to expect from all their suppliers.
The finishing department in a mill is the department with the greatest number of employees and many different work centers. The equipment purchase price is very high thus capital intensive (not to mention the shrinkage in the finishing department takes away from the tons produced on the paper machines versus shipped out the door.) Yield has been much improved over the years by outside converting operations.
Outsourcing some of the finishing room operations allows the paper and paperboard producers to have the required flexibility and service levels needed to meet the ever-changing demands of today’s customers. Having a parent roll program located in the customers’ territory allows for better service of the more frequently ordered low volumes of smaller sheets. Equally important to quick turn around is to give the mills and merchants the ability to service, with special packaging requirements, the customer on short notice.
Partnering with outside converting operations is successful and meets the expectations of both the paper manufacturer as well as their distribution networks and customers, providing the selection of the outside partner is properly executed and the end expected results have been clearly defined and made known to both parties.
What are some of the reasons for outsourcing?
Reduce and control operating cost
Improve company cash flow
Access world class capabilities
Resources not available internally
Free up resources for other purposes
Make capital funds available for other projects
Accelerate re-engineering benefits
Focus on core business
Need surge capacity
Whatever the reason for outsourcing, one of the first considerations is the objective. Is this short term or long term: Will it be part of the customer service strategy or will this become an integral part of the mill supplier relationship? As the saying goes “Failing to plan is planning to fail”.
What are the potential benefits? The benefits will be a direct reflection of what the mill needs. Using an outside converter will give the mill additional sheeting capacity, improve customer service in a target market. To start a parent roll program, help get better service at a reduced cost for non-standard sheets on small orders. The availability of good product ensures that the customer will return for other products also. Not only the paper mills have reduced the number of suppliers, the printing industry has also reduced their number of product and service providers.
The printing trade is changed in many ways. The digital technology, sheet sizes, processes, order sizes, equipment and the customer’s requirements are not the same as 10 years ago. This makes finishing paper more specialized and requires more attention to detail. At outside converters the specialized finishing and converting process of paper and paperboard is designed to support and assist paper and paper board producers and merchant distributors, in supplying their customers with finished product ready for use in the printing and packaging industries.
This type of service gives the paper mills and merchants the much sought-after competitive edge with quick and effective converting and shipping of product to their valued customers. Proper definition of the requirements, needs or expectations would mean that the selected outsourcing partner could become the golden nugget for the paper producers. This golden nugget takes many forms. For some paper mills and merchants, it is flexibility. For others, it is a quick turn around of special orders, special sheet sizes, press-ready skids or digital sizes cut on a precision folio sheeter. For some, it is the benefits of finishing their products on state-of-the-art equipment reflected in the accuracy of the sheet size and square to suit the modern day printing press without the large capital investment in new sheeting equipment.
The outside converter of today has state-of-the-art equipment as well as trained personnel, experienced well-trained quality control people, and programs in place. Typically found at outside converting operations, such as Trillium Converting, are people from the paper and or printing industry with many years of experience. The objective is to provide a finishing service with quality workmanship to all customers using state-of-the-art equipment. The use of modern sheeting equipment provides precise sheet lengths. Quick Skan Measuring tables allows for verification of sheet squareness and accuracy in width and length dimensions.
Microfiche provides perfect measuring of the cut quality for all products and allows the operator to make the necessary adjustments and provide a clean, dust-free finished product. The air-conditioned production plant assures the proper climate for finishing paper prior to wrapping the pro
duct to the customers’ specifications. The recognition of “supplier of choice” would be a result of understanding and adhering to the customers’ expectations as well as a commitment to excellence by both the converters’ employees and the customers.
Identifying and selecting a service provider
Qualifying an outside partner becomes crucial as well as a mill responsibility. Clear benchmarks must be set. The evaluation process must be completed with the objectives and targets clearly defined as well as the expected results made measurable and monitored. Traditionally outside converters were job lot sales or brokers who had obtained used equipment to sheet their products and had time to sell on their sheeters. However the modern day converter is strictly a paper and board converter who has new equipment and sells machine time only, not paper nor does the converter compete with the customers.
Once you establish the guidelines to evaluate potential suppliers such as market location, level of service required and your expectations you must complete the qualification process, the quality control, the daily paper work, the product utilization reports, the traceability of products, in other words there must be no difference in the end product whether it is finished at the mill or at the contract converter. This should be transparent to the end users of the product. The expectations of each party should be known by both parties, what inventories are kept, what lead times are realistic, what reports are to be used, what are the sheeting quality standard and measures to be followed, what are the packaging standards, how will claims be handled. The terms and conditions of the partnership need to be clear and understood. A deal is a good one only when it is good for both parties.
Successful outsourcing steps
There are many keys to creating a successful outsourcing partnership, including establishing objectives that can be measured. Developing a process for managing the relationship is also very important. It is a major mistake to believe that once the activity has been outsourced that it needs no further attention. Outsourcing means turning a process over to an expert, but it does not mean relinquishing the responsibility. A complete closed loop must be established and implemented defining each step of the task to be executed.
1. Precise, measurable objectives
Too often vague, non-quantifiable guidelines are developed. They are subject to many interpretations leading to misunderstanding, disagreement and dissatisfaction. Objective measures are a means of avoiding conflict.
2. Establish and share a scorecard
Assess critical performance measures on a regular basis. Monthly audits help the mill responsible keep tabs and report back especially early in the relationship. The measures must be directly related to the objectives developed. Each measure should be independent of other measures. They should be common knowledge to both parties (internal as well as the outsourcing partner).
3. Measure your core business
Establish the benefits and business objectives you plan to gain before you begin. Compare the financial benefits or cost of outsourcing with the existing methods used internally, i.e. payroll, increased yield, additional sales due to location, exchange on foreign currency and improved business development.
4. Create a review process
Whether the scorecard elements are on track or not, there must be periodic reviews with the outsourcing partner to determine why things are going well or not proceeding as planned. This review helps both parties think through what can be transferred from one part of the outsourcing activity to another.
5. Have quality control in place
There are many items to keep within specification, some examples of critical items are sheet size, square, the cut quality at the knife and at the slitters, curl, the jog of the pile, any kind of markings, how the shade within the run varies, etc. How do you expect to see any defects reported? How do you expect to see roll utilization reported? Reports and procedures must be in place and completed on time. Make sure the selected partner has the quality inspections and the specifications to meet your requirements.
6. Packaging standard
The products used must meet or exceed your expectations. Your product must be protected and the appearance must meet your present level of quality if you want transparency in the appearance of your product in the market place, it must be planned accordingly.
Changes to the way of doing business are ongoing, as well as the types of business the paper industry is used to dealing with. More small printers are being bought by the larger ones, thus leaving fewer businesses to deal with. The printing firms are larger and have more buying power, which require better servicing from the suppliers and availability of stock items. Delivery on time of make orders and pricing are a few of the key ingredients to become the supplier of choice.
With the technical evolution in the paper industry, and the speed at which the information travels on the internet the printing firm who gets the work is the one with the technology, and has access to the selected paper for the job. The paper used will be provided by the paper producer who has the better service and price.
Stategic and proper selection of the outsourcing partner is extremely important. The right outsourcing partner could become the golden nugget of customer service for the paper manufacturers of choice, selected by the buyers in the printing and graphic arts industry.
Jean Pierre Dupr is the president of Trillium Converting Corporation.#text2#