Each link in the supply chain is important, and suppliers play a key role in our industry. Manufacturers and distributors couldn't do their jobs without companies that provide great equipment, paper and ink. One of the many suppliers I respect is Appleton, so I'm excited that Albert Selker is sharing his thoughts in this column:
Several forces in the document industry have combined to reduce overall demand for traditional forms and change the face of our industry. Here are several of those forces:
* Sluggish U.S. economy from 1999 to mid-2003 and subsequent cost cutting in industries that are major forms users
* Continued advances in technologies such as e-forms, e-commerce, electronic data interchange (EDI), electronic bill presentment and payment (EBPP) and XML
* Gradual changes in forms production, usage, storage and printing technologies at the end user level
* Decline in the number of installed impact printers, reducing demand for custom continuous products, especially multipart forms and mailers
The result of these trends is that overall demand for all traditional U.S. forms papers has declined since 1990. Demand for traditional multipart forms is declining by 8 percent annually. Also, conventional forms as a percentage of total industry shipments will continue to decline, reaching only 43 percent in 2006.
Other forces of change in our industry include the migration of forms jobs from conventional plants to facilities using digital printing equipment; more high-speed, web-fed laser printers that are driving increased demand for custom continuous forms in jumbo rolls; increased demand for some continuous products such as label/form combinations, single-ply mailers and documents with security features; increased demand for some unit sets such as integrated or affixed cards and labels and collated sets of preprinted or blank sheets for laser printers; and sales of very short run custom continuous forms are shifting to distributors and directs that specialize in software-compatible forms.
Forms distributors continue to make efforts to diversify their product lines and move into growth segments. Likewise, Appleton has responded to our changing industry in two major ways. The first is recommitting ourselves to understanding the changing nature of the documents business, and searching for ways to continue to add value in the face of these changes. We have undertaken several major research projects during the last few years to ensure we understand what's most important to our customers. Also, we've been deeply involved in DMIA and directly with document sales professionals. We know our printer customers value consistent, high-quality, next-day delivery with no minimum orders; reliable competitive pricing; and ideas to help them grow their revenues, gain efficiencies or cut costs. To those ends, we benchmark our product quality and delivery to ensure it's world-class, measuring against those standards monthly.
In today's market, competitive price is a given, but we monitor pricing to ensure we stay competitive. We've launched a series of value-added services, including The Seal of Excellence™ program, in which we obtain specific feedback for our customers' clients regarding key elements of value and satisfaction in document purchasing. The feedback is benchmarked against other industry printers that have participated, so each can see how it stacks up against others. In addition, we've helped our customers increase their revenues by launching new products aimed at growing opportunities. Some of these products include DocuCheck® security documents, eCarbonless™ and Xero/Form® II xerographic carbonless papers, new carbonless converter products and coated ink jet papers.
The second way Appleton has responded to the changing industry is diversification. We've evolved from mainly a carbonless company with some thermal paper sales in 2001 (when Appleton employees purchased the company) to a much more diversified company. Today, the firm has four business pillars. Our Carbonless business remains an important first pillar. Our second pillar, Thermal and Advanced Technical Products, supplies an array of direct thermal imaging point-of-sale, tag, ticket, label and gaming items. It also includes SmartStrate®, a label product that overcomes RFID chip inlay failures associated with mechanical damage, electrostatic discharge and issues related to printing on uneven label face stocks. Security is our third pillar and has grown to more than $130 million through organic growth and our recent acquisition of European company BemroseBooth. Performance Packaging, the fourth pillar, makes paper and plastic based packaging and materials that have unique technical properties such as oxygen, moisture and UV barrier protection.
Here are four conclusions we all can draw from the changes the industry is experiencing:
* Significant shifts in product mixes sold through our channel mean the forms industry is gradually dissolving as a clearly identifiable product or market specialty.
* Technology and market forces are transforming the industry into a segment of a much larger printed business document industry, which in turn is part of an even larger printed business communications industry.
* Traditional forms industry participants have succeeded in replacing losses of conventional forms volume with a multitude of products that can complement forms and utilize existing sales skills and distribution (but not necessarily manufacturing) practices.
* The traditional forms industry has learned to take advantage of its role as a large distribution network for products and services needed to operate and promote businesses.
Phil Schmidt is president of distributorship Advanced Systems & Forms Inc., Livonia, Mich., and president of DMIA.
