Streamlining the Parent Roll Supply Chain

Creating a more efficient marketplace

SCOTT GRIFFIN

Unknown to everday shoppers walking the supermarket aisle or clicking “place order” on their smartphones, there exists a relatively small group of specialized merchants across the globe managing the sales, marketing, and distribution of a product known as parent tissue rolls.

Involved in the never-ending pursuit of matching tissue paper producers with the converters who take a two-ton roll of paper and convert it into the small rolls and sheets that consumers use every day, these merchants help to manage the supply chain a minimum of two to four steps before products such as bathroom tissue, paper towels, facial tissue, and napkins reach consumers in the marketplace.

Away from home, these parent rolls are the raw material used to produce such items as the dispenser napkins at fast food chains and the hardwound towels at airport restrooms.

MERCHANT CORE SERVICE OFFERINGS

Referred to in the industry as ‘traders’ or ‘brokers’, parent roll tissue merchants provide the supply chain with more value than is commonly understood.

Merchant companies provide their clients with sales and marketing, logistics, credit protection, trade, and working capital finance, technical guidance and product development services. Working closely together, producers and merchants find ways to optimize sales, increase operational efficiency and shorten the cash conversion cycle.

These are exciting and dynamic times for the tissue roll merchant. RISI reported in 2017 that the Parent Tissue Roll Trade has demonstrated higher growth rates over recent years (+5 percent) than Total Tissue Trade (+4 percent) and Total Tissue Consumption (+3.5 percent). And with globalization, more parent rolls are moving to customers internationally.

Parent roll merchants must maintain a broad perspective on the market and adapt quicky to changing consumer habits. Today’s changes are occurring faster than ever before and present a challenging supply chain for our customers and suppliers to stay ahead of. Tissue paper production, by its very nature, relies on large capital-intensive investments in paper machines. These machines generally have limited production capabilities and fixed trim sizes. The merchant plays a critical role not only in finding profitable outlets for excess parent rolls, side trim, and off grade, but also in sourcing the complementary grades that producers need in order to provide a full range of end products to their final customers.

Historically speaking, the parent roll tissue merchant had been accustomed to managing a fairly standard, generic commodity group of grades. With all of the aforementioned changes, we’re seeing a hyper-accelerated need for producers to stay on category trends and effectively communicate their value proposition. Gone are the days when a brand name product can easily dominate private label competitors.

The most important role played by the parent tissue roll merchant continues to be balancing short-term supply with long-term customer needs. This is especially true in the away-from-home (AfH) and consumer private label markets, where supply requirements frequently change as companies gain and lose business through privatel labels product bids, distribution consolidation, and other external factors.

Understanding the market effect on our customers and suppliers, while not critital to the parent roll merchant’s daily activity, helps us project future client needs. The two biggest factors driving our customer needs have been private label growth and innovation.

PRIVATE LABEL GROWTH

Walking through the paper goods section of Walmart, one sees the Great Value brand prominently displayed on the shelves. At Costco, a similiar observation is made with its Kirkland signature products. Last year we witnessed the German grocer Lidl, which sells about 90 percent of its entire products in private label, enter the US market.

Parent roll merchants are accustomed to suppling the raw material required to support such ongoing store brand growth, either on a short-, medium-, or long-term basis in the event needs arise. For an integrated mill having its own paper making capabilities, the need to source material from a merchant could come as a result of a paper machine going down unexpectedly, a mill group building market share in anticipation of a new paper machine coming online, and/or a manufacturer wanting to produce a more efficient grade internally and source a less desirable grade to manufacture outside in the open market.

For an independent converter having no paper making capabilities, these market parent rolls are lifeblood to their businesses. Most importantly, quality usually does not need to be sacrificed to meet price.

INNOVATION AND
PRODUCT DEVELOPMENT

Today there are a multitude of technologies that have empowered a new generation of producers, enabling them to compete with the established brands: new papermaking technologies such as Valmet’s NTT or QRT products; conventional tissue producers capable of manufacturing a grade that can penetrate higher quality tiers; various advances in paper chemistry; improvements in pulp quality and refining; process control innnovations; and new converting line capabilities. Taken together, these innovations create increased efficiencies and more finely tuned product qualities that generate higher through-put and enhanced bulk and softness.

If viewed in isolation, these advances in innovation may not appear to be very effective, but added together they are significant. The bottom line is that parent roll merchants are managing more product categories today than ever before.

With the increase in product categories, coupled with the multitude of different production capabilities both on the paper making and converting sides, navigating through the landscape can be quite confusing and challenging to the consumer when evaluating the price-to-value relationship. Because price is visible and measurable and often the only thing a buyer considers based on limited information, it’s the merchant’s goal to bring other visible and measurable data into the narrative.

The industry can sometimes get caught up in traditional product definitions while overlooking the more important factors to customers, including product performance and value. In the retail segment, the two most important quality attributes are bulk and softness.

To address producers eager for higher returns, merchants work with mill technical teams to identify opportunities that enable them to compete in higher quality tiers.

To accomplish this, Central National Gottesman (CNG) has set up converting trials in conjunction with industry partners to sample various competing parent base sheet rolls. The trials represent different technologies available in the market and identify areas of overlap to penetrate higher product categories. The data also allow CNG to generate maximized pricing based on the attributes most in demand.

It is with the finished product attributes that the buyer who originally had limited information now has the opportunity to reference other data beyond price alone. A better understanding of true value leads to better and more informed purchasing decisions.

Whether you are a new entrant or an established player, merchants thrive on offering creative solutions to ensure your success, while streamlining the supply chain to create a more efficient marketplace.  

Scott Griffin leads the parent tissue business for Central National Gottesman, a sales and marketing organization specializing in the global distribution of tissue, pulp, paper, packaging, wood products, and metals. He can be reached at sgriffin@cng-inc.com

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