Logistics in Paper Ordering and Warehousing

By: W. Eric Schult

It’s the kind of thing that keeps your pressroom managers up at night—or whenever it is they’re supposed to be sleeping.

Eyeing that depleted bay of specialty stock in an otherwise over-stuffed and under-sized paper warehouse, they start to get that sinking feeling that they may not have enough paper rolls for that seasonal tab that’ll make or break the newspaper’s end-of-month revenue goals.

Maybe the bay was three-quarters full when they had to make the call a month ago whether to replenish their inventory, and they fretted they didn’t have enough floor space for another truckload. Maybe a commercial print job, or three, dropped in and consumed a couple stacks more than they would have otherwise used in the meantime. Maybe while trying to rotate stock, a different grade of paper got buried in the back of that bay, only to be discovered in the 11th hour. Maybe they never put their eyeballs on the paper, and there turned out to be “ghost rolls” in their paper inventory system.

Perhaps it wasn’t a problem of paper ordering, warehousing, handling, consumption or reporting, at all. The mill might have fallen behind in manufacturing and had to reschedule a shipment. The load might have gotten delayed in transit by the trucking company or rail line. The supply side adds some variables to an already complex equation in logistics that can potentially knock your press schedule off-kilter.

Admittedly, it’s a simpler matter for some papers than others. A newspaper with a single-wide press and a fixed web width (commonly 22 inches) might only stock full- and half-rolls (11 inches) of newsprint, maybe an offset grade of stock in fulls and halves for special tab sections, and half-rolls of craft stock for wrapping pre-prints. A paper with a double-wide press and fixed web widths (commonly 44 inches) would necessarily add 3/4-rolls (33 inches) to the mix, besides the 22-inch halves and 11-inch quarters. There’s no rocket science involved in any of that.

However, there are exponential leaps in degree of difficulty for newspapers that have web-width variability and run various grades of paper and formats in the service of an established commercial web print business.

I count my paper, The Fayetteville (N.C.) Observer, among those. By way of example, in this age of print regionalization, in which print jobs are coming to us from as far away as Florida and West Virginia, we used 33 different sizes and grades of paper to fulfill 400 web print jobs in June.

No, our paper warehouse isn’t the size of a football field. At 7,800 square feet, it’s a relative shoe box for the 1,500-plus rolls we keep in inventory at any given time. Because there doesn’t seem to be an empty corner in adjacent storage space where we haven’t already tucked an odd roll—not to mention some spillover paper storage in a remote distribution center—we’ve actually been scaling back on some lesser-used grades and sizes, even as the total number of jobs has edged upward.

It’s not an uncommon tactic. “Papers that can do variable web and that have commercial print business are whittling down what they keep in inventory,” said the director of one of the newspaper industry’s largest buying groups.

Where in a different economic climate they may once have stocked grades including 35-, 40-, 45-, 50-, 55- and 60-pound groundwood or white offset—“trying to be all things to all people”—now they “try to standardize with fewer choices,” he said. “Generally out there, we hear of reduced inventory levels.”

My paper is holding about five weeks of inventory, compared to as many as seven weeks a few years ago—so tight then that paper rotation was a challenge for us. The procurement director for a large chain told me he currently shoots for a 45-50 day inventory level, which he said is sufficient for affiliates that receive their paper by truck. Those that take their paper via rail might have slightly higher inventories, since rail reliability is more questionable. He observed, though, that some papers have been slow to whittle their supply down, “fill[ing] the space up” in their warehouse “because they’ve always done it that way.”

Continuing, “as circulation numbers have dropped and web widths narrowed,” a target inventory that used to fill the space can be achieved with room to spare. Papers should be calculating their consumption and only storing what they need, he said. Otherwise, “you increase your risk of running obsolete inventory.”

His counterpart at the buying group said his client’s papers tend to shoot for 30-days inventory—some as high as 45 and some as low as 20. “The days of loading it up” in the warehouse are over, he said.

Oh, how things change! In a different lifetime, during one of the most volatile paper markets of my career, I rented space in a remote warehouse and stocked up on eight months of newsprint, based on corporate projections of a relentless ratcheting up of paper prices. The tactic saved us a bundle.

With paper prices stable these past several years, regional logistics and some of the value-added services my newsprint vendors are able to provide help me fine-tune my inventory with loads of various kinds of stock. We’re down to storing 7-10 days of standard (46-inch web) full rolls of newsprint in our warehouse, thanks to a distribution strategy by Kruger Paper that fits our needs very nicely.

Kruger’s Corner Brook mill, on the island of Newfoundland, ships its paper to two ports of entry on the East Coast—Portand, Maine and Norfolk, Va. In both those cities, the mill employs third-party warehouses to hold the stock, and lets their newspaper customers draw from storage, as needed.

“We allow 60 days, and pass along the storage [fees] after that,” a Kruger spokesman said. While there’s a long lead time for manufacturing and delivery to port, requiring accurate consumption forecasting, the proximity of the mill’s storage facility affords us ready access to paper that would otherwise consume a large footprint of our warehouse floor—space that gives us more flexibility for storing the variety of stocks and web widths our commercial print customers have come to expect.

As for the dozen or so web widths of newsprint we consume at a less predictable pace, we find a nimble partner in Resolute Forest Products for that. A good chunk of our commercial print work includes weekly quarter-fold “tall tabs” and stitched and trimmed or glued booklets that require 28-, 32- and 35-inch webs and the half-rolls with which they correspond.

Since drop-in commercial work can deplete our shorter supply of those sizes, Resolute’s Augusta, Ga. mill, only 3½ hours drive away, is our optimal source.

Resolute is the largest newsprint manufacturer in North America. It’s able to turn around orders within a couple weeks, mix and match web sizes to fill out a truckload, and—in the event of manufacturing delays—call on its sister mills across North America to fulfill an important shipment in a timely way. “Because we’re a big network, we can just move stuff around,” a company spokesman said. “Our size matters.”

Our third, and only other regular supplier of paper products, is not a mill but a “converter/merchant”—not to be confused with a broker. “There are a lot of good brokers, but we stay away from that term,” said Karl McGrann, CEO of McGrann Paper Corp.

McGrann supplies us with most of our offset grades of stock, of all sizes. Basically, it buys the paper directly from the mills in a pre-manufactured state and uses slitter/rewinders to custom-ship various web widths and core types to their customers across the United States.

McGrann has three converter plants—in Charlotte, N.C., Syracuse, N.Y. and Rancho Cucamonga, Calif.—and a couple dozen warehouses strewn across the states. The company has ties with Catalyst and Norpac, in the Pacific Northwest, to purchase the ‘jumbo rolls’ used to convert to a finished product.

“We carry a broader scope of paper than most people,” McGrann said, and specialize in “just-in-time” delivery. By tracking the history of their customers’ paper consumption, “we try to stay 45 days ahead” of them, anticipating their orders with the mills, and having the master rolls necessary to customize a finished product. “The paper’s a commodity. We don’t sell paper; we sell service. We try to out-service everybody.”

As if to prove the point, he provided prompt solutions to two shortcomings I’ve experienced in doing business with his company: an answer as to why his rolls are all 40 inches in diameter and whether it was possible to get 50-inchers instead (yes, for regular, full truck orders); and, even better, a solution within 24 hours to automate the import of McGrann paper manifests into Ediwise’s AbitRol paper inventory database. No more manual data entry of 150 rolls per month into AbitRol! If only we’d asked five years ago!

For their part in it, Eric Wee, vice president of e-commerce/sales at Ediwise and Barbara Cook, CIO at McGrann, have my eternal thanks. I’ve subsequently learned that there are some 30 other newspapers still using the legacy AbitRol database that could benefit from this solution if they are buying paper from McGrann or using another paper merchant capable of generating manifests in the correct format. All of these AbitRol customers might also be interested to learn that Ediwise is currently offering to upgrade them to Ediwise’s AbiNet web-based cloud service, free of charge, if they convert by Sept. 30. You’re welcome!

While I’m talking about AbiNet, I might as well solicit feedback from its users in the industry about their familiarity with the incidence of what I call “ghost rolls” in the database. Wee understood what I was talking about when I mentioned them, and the corporate procurement director quoted earlier seemed to understand the concept, as well.

Ghost rolls, in a nutshell, are roll numbers that appear in the database inventory but do not physically exist in the warehouse. Conversely, it can happen also that a physical roll in your warehouse can be found not to exist in your database inventory. These phenomena can happen—at the mill or in your own warehouse or reel room—when improper paper handling procedures are employed.

I’m interested to know how many papers have encountered them at month-end, or when scanning a roll, and what they’ve done to combat recurrence. Write me at schulte@fayobserver.com or find me on LinkedIn.com.

(Columnist’s note: Some of my industry colleagues quoted in this article are left unidentified, at their request. Their reticence to be quoted for attribution had mainly to do with the nature of their roles as “below-the-radar” negotiators, and the necessity for each to secure corporate permission to represent himself as a company spokesman.)

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