Answered by Suzanne Morgan, founder, Print Buyers Online.com

Question:
I have a paper merchant calling on me and urging our agency to go to either Directed Buy or Direct Buy for our paper purchases. He has assured us that it will save money and has also offered some annual rebates for using this system. This all sounds good at face value; however, I'm very hesitant to buy direct. I'm not convinced that as an agency we have the leverage to get better prices than the printers who are buying more volume and shopping the market regularly. I'm also concerned about liability if we have paper problems on press. Who will pick up the costs for down press time, replacement blankets, etc? I'm also concerned direct buy paper will affect my relationships with the printer as well as the bottom line costs.

The other option is a directed buy, where we would ask potential printers to buy from a specific merchant. This seems limiting as well. Could we potentially pay more for a specific stock if our printer has to buy from a directed merchant with which they do not have a volume relationship? Could we run into availability problems? Again, I'm concerned about the liability issues if we have paper problems on press.

J.W.

Answer:
PBO has a couple of good articles in our archives about whether or not print buyers should buy paper direct. Go here to view these articles:

Should you buy paper direct?
http://www.printbuyersonline.com/ShowContent.aspx?show=38

The Paper Purchasing Decision
http://www.printbuyersonline.com/ShowContent.aspx?show=39

I agree with you. Most agencies simply don't have the leverage to get better prices than printers that buy larger volumes because agencies inherently are producing a wide variety of print jobs with little consistently in the type and brand of paper specified for those jobs. Print buying companies that benefit the most from buying paper directly from a paper merchant or manufacturer are those companies that buy very large volumes of the same type and brand of paper.

I know of many companies that have significantly reduced costs by buying direct from a merchant or manufacturer. However, all of those companies repeatedly bought large volumes of the same paper month after month. And there are liabilities for the performance of the paper on press. Even more significant are the costs and issues regarding the shipping and inventory of that paper. The articles above elaborate on these issues.

As far as the effects on the relationship with your printer, it depends on the printer and the type of print job. Some printers are happy to have the customer buy direct because printers often have to pay the paper merchant for the materials 30 to 60 days before the customer pays the printer. So the printer’s financial liability is reduced. But if the paper cost isn't that significant for a print job, it may not be that appealing to the printer and may be more work for them and you. Again, it's often an issue of the volume of a specific paper needed. I suggest that you talk with your printers and get their feedback on these issues.

With the directed buy, you should not have any liability for the performance of the paper. I think it is fine to ask your printer to buy from a specific merchant. For instance, paper specification reps often ask buyers to request their paper or their company in exchange for free consultation to the print buyer. However, given the types of work that agencies produce, you might want to avoid a blanket request to buy from one merchant. I would treat this on a job-by-job basis, which would give the printer more flexibility to deal with issues of availability and pricing.

Suzanne

PBO members: If you have comments or advice related to this issue, please send your feedback to Suzanne@e-pbo.com and title your e-mail "Buying Paper Direct."
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