Board Converting Article – 2020
Customer Commentary: Price is Not the Only Factor
Are Good Suppliers as Important as Customers?
Implementing a New Approach
Having this type of relationship means that a supplier can be asked to work with other suppliers and customers to bringthe best value for each party.This is a process many aspire to, but few achieve.It’s hard work and time-consuming. It’s also a relationship in the buyer-seller alliance in which the goal is to maximize quality and minimize the cost through sharing of information,resources, and effort.
It is said that there are three phases of supply chain management.The first phase is price based.We believe that in this phase, you can reduce costs through an organized purchasing effort.Phase two and three varying degrees of trust and its associated benefits,that supplier and customer can bring their organizations a competitive advantage.
As the buyer-seller relationship matures,there will be additional benefits achieved.That can be obtained through total cost and price negotiations.
The benefits for our company are numerous.Quality of the product is at the top of that list.We now use a box that is 50% stronger than it was a few years ago, without adding material or cost.Also, boxes that are intended to be the same with now warp. Prior to our alliance, we had inconsistent quality in the industry.Today, it is the best.
What is that worth? I don’t have the answer. However, we learned how to standardized physical aspects of the paper and developed appropriate handling standards.Now,our customer claims due to poor packaging, are almost non-existent.Our customer retention, growth, and relationships have improved.Is this the result of better packaging? Not all of it, but some of it.
Out relationship withACC continues to mature.Value-based activities are occurring.Benefits such as inventory management, equipment expertise such as a new Apstar rotary die cutter just installed byACC,process movements,waste management, and SKU reduction are shared between both parties.
Lesson learned:Boxes aren’t necessarily always the same quality,price, and service.They are often just similar.
The Coronavirus Price Increases “Pile-On”by Mills
There has been announced a price increase for corrugated boxes. Ultimately, the market will determine whether the increases will be implemented fully.Independents are wary of increasingly concentrated pricing power,first for their own ability to profitably serve their customers,and second,on our industry’s user-base which is continually looking to reduct its packaging costs and use.
Of the increase announced, independent box makers, not having the luxury to pass-through higher material costs, will thus experience a significant cost-price squeeze.As customers,we are not welcoming a corrugated box price increase,especially in this recession.Yet, the mutually beneficial relationship will never be terminated because of price.A willing ness to resolve problems fairly and the best interest of both parties will carry us through.