Cost Effective Logistics

A recommendation by the NAPM for direct mill deliveries, on behalf of merchants, to printers and other paper users

The following summary highlights the key NAPM recommendations for the cost effective handling of general Printings and Writings sheets. The background and basic principles behind this proposal are outlined within the document.

§         Merchants should not request and should not expect mills to accept orders, for stock sizes, for any less than 5 tonnes for direct delivery to a printer’s premises.

§         Merchants should not request and should not expect mills to accept, for direct delivery to a printer’s premises, multi item orders comprising individual items of any less than 2 tonnes size in weight each.

§         Merchants should not ask for and should not expect mills to agree to make deliveries to printers’ premises in any less than two working days from the order being placed.

§         Merchants should not propose and should not expect mills to permit collection of orders from mill premises by merchants – this interrupts despatch operations at mills and hampers mill efficiency.

This “Best Practice” has been prepared for the guidance of merchants and is not binding upon them. Each company must remain free to supply whomsoever and howsoever they wish and it will be for each individual merchant to decide whether or not to apply the principles set out in this “Best Practice”.

Background

In the supply chain paper stocks can be held at any of the following: -

Mill

Wharf/external warehouse (can be owned by mill or merchant)

Merchant’s central warehouse

Merchant’s regional/local warehouse

Printer

Stocking and distribution costs incurred along the supply chain are a key factor for all parties, and should be reduced whenever possible.

Whichever party can distribute stock in the most cost effective manner to the required service level should be encouraged to do so, as otherwise logistics costs are duplicated unnecessarily.

It is with this in mind that mills and merchants should consider the mutual benefits of supporting ‘best practice’ in getting goods to the market most cost efficiently and thereby eliminating the costs of empty warehouses and of unnecessary journeys.

Basic Principles

Printers and other paper users require quick delivery (within 24 hours or less of placing their order), of a wide range of paper grades. Orders are normally small, c.350 kgs average, and comprise several grades often originating from several mill sources.

Merchants throughout the UK hold stocks to meet these orders.

Occasionally, printers require a larger order of stock originating from one mill source.

With such orders the merchant may ask the relevant mill to separate the particular order from its normal regular stock delivery, and, instead, deliver the stock on the merchant’s behalf directly to the printer’s premises. This generally takes more than 48 hours due to mills’ manufacturing and distribution lead times.

If merchants and mills do not recognise the true costs of distribution and fail to identify a weight at which stock orders could be more efficiently delivered direct to the customer then there is a danger of unnecessary duplication of labour and cost, together with a consequent disincentive for the merchant to carry adequate stocks for fast delivery.

Merchants should aim to:

Order to normal mill lead times,

Take deliveries in the most cost effective loads.

Hold full stocks of their products.

In return this will provide mills with the ability to have pricing and distribution policies, which reflect the economies achieved from merchants that follow these principles.

All parties should fully understand the costs of financing, storage and distribution at all points in the supply chain, with a view to minimising unnecessary and wasteful duplication wherever possible.

A mill is generally best equipped to despatch large orders for direct delivery to the printer cost effectively. A merchant is more cost effective in handling smaller orders because:

Merchants have the facilities and people to break down large mill deliveries into smaller delivery parcels.

Products from several mills can be combined by the merchant into one drop to the printer.

Merchants hold large local stocks with small delivery vans servicing narrow geographic areas.

Multiple drops can be undertaken by merchants on van routes

Most merchant delivery lorries are 17 tonnes gross, carrying between 9 & 9.5 tonnes net, with tail lift, and so any single delivery of 10 tonnes plus would probably be distributed more cost efficiently if delivered directly by the mill to the printer, if available and within required restraints.

Bespoke, manufactured special sizes can be made to order and a mill will best determine the minimum acceptable tonnage for such items and then cost the order appropriately.

The recommended minimum quantity for delivery by the mill to the printer is half the weight limit of a merchant delivery lorry (i.e. 5 tonnes). Quantities smaller than this can be efficiently incorporated into the merchant’s local distribution pattern without extra resources.

Proposed Best Practice

Proposal for general Printings and Writings sheets:

Merchants should not request and should not expect mills to accept orders, for stock sizes, for any less than 5 tonnes for direct delivery to a printer’s premises.

Merchants should not request and should not expect mills to accept, for direct delivery to a printer’s premises, multi item orders comprising individual items of any less than 2 tonnes in weight each.

Merchants should not ask for mills and should not expect mills to agree, to make deliveries to printers’ premises in any less than two working days from the order being placed.

Merchants should not propose and should not expect mills to permit collection of orders from mill premises by merchants – this interrupts despatch operations at mills and hampers mill efficiency.

This "Best Practice" is not intended to apply to stock of coated reels, which are generally ordered in large quantities and are not efficiently and cost effectively handled by merchants. There is a merchant stock business for business forms reels, which are often required in very small item quantities for fast delivery – but this business is not covered by this best practice proposal.

Nor is this proposal intended to apply to higher value and speciality products which can be cost effectively distributed in smaller quantities, due to the higher value - but again, for the same reasons set out above, merchants should not collect from mills.