Me and my big mouth. Following a presentation I made to a group of print CEOs, a comment made by an audience member intrigued me. We’d been discussing the sourcing behaviors of corporate print buyers when he said, “Buyers think they’re getting great deals when they take part in directed buy programs – but printers get much better paper pricing than they can – and nobody wants to talk about it.”
So I put on my Nancy Drew hat (and with this hair, we’re talking circus tent), and sent out a request for information to my PBI LinkedIn Group as well as on Twitter.
Comments and anecdotes poured in. Everyone had a story about directed buy programs – but there was little consistency. I’m looking at a solid 15 pages of notes from contributors on this one topic, as well as notes from phone interviews.
What had I gotten into?
I haven’t written a complete article yet (webinars, blogs, and conference plans get in the way), but decided to kick off my report with a general Print Tip that introduces you to this concept.
If you aren’t familiar with directed buy programs, allow me…
“Directed buy” or “Directed to buy” paper programs are arrangements or initiatives made between a corporation (or other end-used organization) and a paper mill or paper merchant.
The objective of such a program is to enable the customer to manage and control the cost of paper purchased for their commercial printing.
Typically, customers let their printers buy the paper for their print jobs. With a directed buy program in place, a customer tells his or her printers that they are directed to buy the paper for their print jobs from a specific paper mill or merchant.
Discounted pricing has already been established for this customer in their private arrangement with their mill or merchant. Printers place their customer’s order for paper through this arrangement and therefore receive the discounted price. No additional mark-up of paper is added by the printer.
As you can imagine, this is a very sensitive subject – more so than any other I have encountered, even the “print broker vs. printer” debate. It seems to me that it puts paper companies right in the middle of a tight situation. They sell paper to printers. With directed buy programs, they sell paper to printers’ customers.
Who gets better paper pricing? That’s the million-dollar question. It depends on whom you ask.
I heard from a paper supply chain management specialist that corporate end users who set up this type of corporate initiative with a mill or merchant can “absolutely generate savings to their bottom line.” Her customers receive multiple benefits, not simply cost savings. For example, they have access to lots of data for their paper usage. Every order is tracked in real-time. Sustainability platforms can be managed in this way as well, telling the customer details about the paper such as how much is pre- or post-consumer waste, how much is SFI and/or FSC certified, and so on.
Details about the paper characteristics are available as well, including paper grades, basis weights, coated vs. uncoated, and which paper went to which printer.
This is the view from 10,000 feet. Some folks say that customers benefit tremendously from directed buy programs. Others disagree.
At a later date, I will share a lot more of the customer comments on this topic in a Print Tip. I think it will enlighten you as much as it did me.
In the meanwhile, feel free to submit your comments to today’s Print Tip.
(c) 2010 Margie Dana. All rights reserved. You’re free to share this post, but you cannot reprint or reuse it without prior permission.