Buying Peace of Mind

By David Savastano, Ink World Editor | 09.06.05

Purchasing executives work hard to make sure that their companies

Purchasing is one of the keys to the success of any company, and the printing ink industry is no different in that regard. Purchasing executives have their eye on countless factors, including quality, service and prices.

The role of purchasing agents is a sophisticated one, in which executives look at the bottom line, including what it really costs to use raw materials. The men and women who lead their corporations’ purchasing efforts make sure their companies are getting the best value for the money in a timely fashion, and they have the responsibility to see that the right raw materials arrive on time and in the correct quantities.

It is a crucial role, and the professionals who handle it know exactly what works and what does not.

The Role of Purchasing Agents
Craig J. Foster, vice president, materials management at Flint Ink Corporation, said that his role is simple: to protect the interests of his company and its shareholders and customers, both internal and external.

“Purchasing agents get a bad rap, but we’re an important line of defense for our shareholders,” Mr. Foster said. “We cannot afford to become complacent in assessing the value chain. We want to work with our supplier base to ensure that constant improvement is achieved. We owe this to our customers and our shareholders. Our program buyers look at supplier programs without bias as to regions, traditional supply options or strict cost models, but with a total value proposition model.”

“Ultimately,” said Judith Zuckerman, corporate director of purchasing for Superior Printing Inks, “as purchasing director, I do the best for my company and thereby our customers, too.”

Kenneth C. Collins, senior vice president, corporate purchasing and supply chain management at Sun Chemical, said that relationships with suppliers are essential to Sun Chemical.

“The key to purchasing is business relationships and making sure your suppliers will go the extra yard,” Mr. Collins said. “Most of our suppliers have been with us for years, and are very key to our business. Relationships are super important. We have even taken our suppliers to meet with our major customers.”

“Relationships and years of service do count with us in that better communication often occurs with people we know,” said Shannon Barry Sheehy, director of business development for Color Converting Industries. “This makes our respective organizations better able to sort out and implement value-added ventures. Of course, we consider fair economics as a green fee.”

As for the idea of relationships, Mr. Foster said that it is absolutely essential for the purchasing agent to remember to whom they are truly responsible.

“My number one business relationship is with Howard Flint and our shareholders,” Mr. Foster said. “If you’re buying based on relationship only, you’re not doing the right thing for your company.”

Important Requirements
In speaking with purchasing leaders, it is clear that many of the same essentials are the same. Excellent quality, on-time delivery and service are essentials.

For Sun Chemical, it is critical to make sure that a supplier can meet its production requirements. “We put a lot of effort into making sure a supplier has the capacity we need, as well as offer the quality we require,” said Mr. Collins. “To this end, we visit the supplier’s manufacturing facilities to see if it is a world-class site and that it meets all environmental regulations. We also use these visits to learn about the supplier’s feedstreams of raw materials to make sure they too are using quality suppliers and products in their processes.”

Sun Chemical has implemented a Constant Composition production system in which raw materials are pre-tested and then put on the specs for a specific ink formula. This system results in more consistency, higher quality and more efficient production.

“Once the product is analyzed by our scientists, we spec the product, and our supplier signs off on the spec,” Mr. Collins said. “Because of Constant Composition, we tend to use single supply sources and make the raw materials formula specific. That way, if our supplier doesn’t change the product, we won’t have to make adjustments during the manufacturing cycle. And that’s good for us since every change we have to make costs us hours of production time. If we can produce a batch in one-third of the time it used to take, it gives us tremendous savings.”

Sun Chemical tests incoming raw materials to ensure it meets specs. “We do incoming tests on the majority of our raw materials; most of our plants are ISO approved, as are most of our suppliers,” Mr. Collins said. “ISO has made all of us more consistent. We rank our suppliers, and if they earn our highest ranking, we have confidence in them and don’t have to continuously re-qualify them, or continue extensive incoming pre-testing.”

Rick Westrom, vice president of purchasing at INX International, said that quality, service and competitive prices are critical areas he looks for when selecting suppliers.

“We look for companies that can supply quality products, the volume that we need and be competitive in cost,” said Mr. Westrom. “If they can’t service the product, it doesn’t do us any good.”

Ms. Zuckerman noted that quality and service are the two crucial elements she looks for when selecting suppliers.

“I look for quality first with service a close second,” said Ms. Zuckerman. “Quality is of paramount importance. There also has to be value for your money. Superior is a quality house and does not buy off-standard material ever.

“Even when quality is there, it doesn’t help if service is lacking,” Ms. Zuckerman said. “Can the manufacturer supply the material needed, both qualitatively and quantitatively?”

“We look for technical competence, competitive economics, consistent delivery, consistent product, responsiveness to service issues, willingness to partner (for joint development, supply chain management, etc.), and financial health,” said Ms. Sheehy.

“CCI's approach to buying does differs depending on the product at hand and emphasis on selection criteria differs depending on the product being sourced. We make a very clear distinction between commodity and specialty products.,” said Ms. Sheehy. “The role of cost differs greatly in these very different arenas and we place emphasis on different supplier selection criteria when we purchase a resin backbone for a new ink system that earns us marketshare versus when we source solvents.

“We essentially measure and monitor our supplier selection criteria on an on-going basis to ensure that our supplier selections remain appropriate over time (e.g. technical performance, service, delivery, responsiveness, value-add projects, etc.),” Ms. Sheehy said. “Certainly price support is also a consideration, much more so on commodity products such as solvents or TIO2.”

“My biggest concern is reliable lead times,” said Steve Gehr, plant manager at Squid Ink. “If you tell me two days, then get it to me in two days. If you tell me two months, then get it to me in two months.

“I set mins and maxes for my stock based on lead time,” Mr. Gehr continued. “I don’t want any surprises. I have a couple of vendors who I know how they will perform, which makes it easy on me. There are other vendors who make me uneasy; if I have my reorder point set for four days and they tell me four weeks, it gives me some problems.”

If possible, some companies like to work with a single vendor, but have a reliable company lined up in case of an emergency. “I try to go with one company and have a backup,” said Mr. Gehr.

“We consolidate sources of supply where ever possible to increase buying power,” Ms. Sheehy said. “We single source and use the 80/20 rule for most major raw materials. Certainly, we make certain to line up alternate suppliers to all of our critical raw materials.”

Mr. Foster said that the suppliers who come in offering ideas on efficiencies and innovation are the companies that will succeed. “Generally, we’re looking at suppliers who have the consistent ability to provide us with a value product,” Mr. Foster said. “We’re looking for those who provide a consistent stream of improvement. Suppliers who have impressed us are those who recognize their expertise and can use that knowledge to help us enhance our own processes. There are huge benefits in waste stream reduction, distribution efficiencies, working capitol management, throughput improvement and G&A efficiencies which our suppliers influence, yet many never address these as a selling tool.”

Mr. Foster added, “People who understand they are selling a commodity or quasi-commodity also understand it is all about providing value because that’s what separates them from the rest of the pack.

“We try to identify value in many forms,” Mr. Foster noted. “How much does the product cling to the packaging? How long does it take to dissolve? What does it do for the ink’s gloss, runnability and mileage? How much packaging has to be thrown away? How many invoices are sent? The good suppliers, and we work with many, can help quantify the value of their product by looking at every one of these cost components.”

“There are times where we may pay a higher price because at the end of the day, it brings greater value,” Mr. Foster said. “If I can get six hours less cycle time, pump the product five times faster, process fewer invoices, etc., then we are talking about value.”

The role for suppliers, then, is to show that their product does bring value. “Suppliers have to help us identify value in their product,” Mr. Foster said. “We have to work together to prove out the value. With certain products, we may not know the best way to handle, move or distribute it, and our suppliers have to understand that we’re looking for them to help us drive efficiencies in both of our systems. That’s what separates a good supplier.”

Companies that consistently offer innovative products also have a major advantage in selling their materials.

“Prove your mettle through innovation,” challenged Mr. Foster. “Provide us with something that makes our product something that our customer needs for its quality, its performance.”

Conversely, companies that are not emphasizing innovation run a risk of becoming obsolete. “Any supplier resting on their laurels, not looking to innovate or create efficiencies, won’t last long,” Mr. Foster said. “Someone will ultimately pass them by.”

Mr. Collins also counts on Sun Chemical’s suppliers to bring their product innovations to him. “We tell our suppliers that we look to receive their innovations first,” Mr. Collins said. “We don’t want to hear about some new product from one of our competitors.”

Mr. Westrom said that INX puts a high premium on innovation.

“Preferred suppliers help us to develop new products and listen to our needs,” Mr. Westrom said. “We have a few good suppliers who have worked with us innovatively to develop new products and help us meet the continuous needs of our customers.”

Exceptional Service
When discussing vendors who have provided exceptional service to their company, purchasing leaders describe times when a supplier went well out of their way to solve a problem.

Mr. Collins cited two examples where companies overcame logistical problems to ensure that Sun Chemical received its shipments.

“We bring a lot of raw materials in by rail, and when Union Pacific merged with Santa Fe, the railroad schedule became horrendous,” Mr. Collins said. “One of our suppliers went the extra yard and took it upon himself to route cars through Canada to bypass the problem. Another supplier had a fire, and air freighted material in from their European plant to make sure we would meet our schedule.”

“Superior has one vendor so involved that he has actually made personal deliveries in emergency situations,” Ms. Zuckerman said. “That goes, just about, above and beyond the call of duty, and I find it wonderful.”

Knowing that on-time delivery is a certainty takes pressure off the purchasing department.

“I have a chemical vendor who has told me that if I order by noon, I can have it the next day,” said Mr. Gehr. “They’ve never failed once, which makes it so easy.”

Another way a company can provide exceptional value is by working with customers to provide innovative services.

“One of our most valued suppliers led us through a ‘Value Chain Analysis’ seminar and has since jointly developed the product that was the outcome of that seminar with us,” Ms. Sheehy said. “This same supplier has worked with us to optimize our supply chain by providing different delivery options and even delivery forms to aid in our continual cost-reduction efforts. They have also provided direct communication links to business unit managers and appropriate technical personnel in an insititutionalized format (bi-annual business meetings, quarterly technical meetings, and exchanges of lab personnel).”

Mistakes to Avoid
Purchasing executives work with countless suppliers looking to secure business. In many cases, these companies differentiate themselves through superb quality, service and pricing. Other companies, alas, distinguish themselves in a negative fashion through a variety of mistakes.

Mr. Collins said that broken promises from suppliers is a sure way to lose Sun Chemical’s business. “Suppliers who promise things and don’t deliver, where you’ve agreed to a schedule and they fall short, are a problem,” Mr. Collins said. “If you become undependable, we have to move away and find someone else. We’ve had companies submit samples for our lab, and once we’ve scaled up to use their products, they changed the formula because of price. We were left with an unusable product that we had to pump out of our tanks.”

Mr. Westrom said that attitude and lack of performance from suppliers are problems he has come across.

“There are suppliers who provide only standard products and do not listen to our needs,” said Mr. Westrom. “This lack of performance is irritating and greatly reduces the worth of the supplier to INX. When a supplier makes false promises, or doesn’t follow through, their value as a supplier is eliminated as they hurt our company.”

Ms. Zuckerman expects vendors to care about their products and to provide complete service.

“Superior expects sales people representing their company to do so 100 percent, and not shirk responsibility should problems arise,” Ms. Zuckerman said. “I want sales people to be knowledgeable about their products, and know or suggest what will work best for Superior Printing Inks. I can’t appreciate a sales force that is uninformed about current printing ink manufacturing needs. Sales people need to be totally involved in every way, from correct invoicing to technical matters.”

“Dishonesty, form letters re: price increases and other important communications, and/or difficult communication (e.g. unreachable, indirect links to decision-makers) are all examples of supplier behaviors that are not effective at CCI,” Ms. Sheehy said.

Mr. Foster said that companies who can offer only the lowest price are not assured of an order.

“Everybody is focused on price, but how do you bring value and quantify that value?” Mr. Foster asked. “Price is obviously important, but if all anyone can talk about is price and not efficiencies or innovation, they’re not doing justice to their company or our company. If you’re coming in to talk about price, we will oblige you, but that will never capture what we could both achieve if we thoroughly analyzed our pattern of business and its associated costs. We all have to look at total cost through production.”

The Bottom Line
For any company, it is only natural that a company would expect to be treated by its suppliers the same way it treats its customers.

“CCI applies the same approach to purchasing raw materials as it does to selling its products,” Ms. Sheehy said. “We strive very hard to build supplier relationships in the same way that we build customer relationships; in a way that is sustainable for both organizations over time.”

For Mr. Foster, the bottom line is that the supplier must consistently provide the quality and innovation that Flint Ink requires.

“The relationship between our suppliers and us is reviewed every day, after every shipment and renewed after every quality shipment,” Mr. Foster said. “A company that can sustain the relationship knowing that continuous improvement is a requirement for both parties is truly a partner. It's what our customers expect from us, it’s what we expect from our suppliers, and I'm sure it’s what our suppliers expect from their suppliers.”