Greg Hrinya, Editor03.13.23
The manufacturing supply chain continues to be a hot-button issue for our industry. The difficulties over the past three years have been numerous. Most recently, another labor stoppage in Finland gave many label and package printing professionals flashbacks to 2022.
However, the current state of the supply chain is far different. In order to better understand global issues at play, L&NW sat down with Tim Kirchen, SVP Americas, UPM Raflatac, to explore these issues and more.
Many converters have overbought to ensure they are not faced with material shortages. UPM was at the heart of the Finnish Paperworkers’ Union strike last year certainly had an impact on the North American paper supply. According to Kirchen, the international supply chain will continue to play a major role in converters’ future success.
“Structurally, the North American market has been undersupplied by domestic suppliers,” explains Kirchen. “This, unfortunately, has not changed, and in recent months, we’ve seen additional removal of domestic paper liner capacity. This will put even more stress on domestic supply, particularly liner. As a result, North America will need to increasingly rely on imported paper and filmic raw materials to meet the growing demand for PSL products.
“On the positive side, at UPM Raflatac we have secured sufficient raw materials with our strategic suppliers to fulfill the demand we see in the market,” he adds. “While it may feel temporarily like there is an oversupply of PSL raw material in the market to channel de-stocking we see in the industry, the structural equation of demand and supply has not changed.”
Despite the difficulties of 2022, UPM Raflatac has rebounded – boasting strong material availability. “Our raw material supply chain has fully recovered, and we are not seeing any interruptions at this time,” states Kirchen. “During the strike, our teams and our customers responded well. In many cases, we were able to offset raw material shortfalls by switching to alternative raw materials or alternative products.”
While allocation was another pressing issue for the industry last year, UPM Raflatac has secured a diverse range of suppliers to ensure continued material availability. These steps will help ensure converters’ ability to meet their customers’ demands.
“At UPM Raflatac North America, we never implemented product allocation,” says Kirchen. “We have secured raw materials with a diverse base of supplier partners and are confident that we can offer customers very dependable service, both in terms of availability and lead-times.”
Kirchen also cautions that news of international labor stoppages should not necessarily frighten those in the industry, as these workforce tactics are often commonplace. “The right to industrial action (i.e. strike) is enshrined in law in Finland,” Kirchen adds. “The practice is a respected method of strengthening the premise of success for both businesses and their employees.”
Kirchen anticipates a strong future for UPM Raflatac and the industry at large. The lessons learned over the past few years have provided both suppliers and converters with a better roadmap to navigate future challenges.
“We certainly have learned much in the last 2.5 years about our supply chain, raw material supply dependencies, and how to optimize our internal processes and operations,” he comments. “We have seen that our industry, despite all the external shocks to demand and supply, is very resilient. At UPM Raflatac we have learned from the challenges of the last few years and aim to become a more dependable and reliable partner to our customers. We are confident that the industry will find a new supply/demand equilibrium over time. We are quite optimistic that the PSL industry, with its proven resilience and positive growth outlook, remains an attractive market for raw material suppliers, which will help to secure long-term supply stability.”
However, the current state of the supply chain is far different. In order to better understand global issues at play, L&NW sat down with Tim Kirchen, SVP Americas, UPM Raflatac, to explore these issues and more.
Many converters have overbought to ensure they are not faced with material shortages. UPM was at the heart of the Finnish Paperworkers’ Union strike last year certainly had an impact on the North American paper supply. According to Kirchen, the international supply chain will continue to play a major role in converters’ future success.
“Structurally, the North American market has been undersupplied by domestic suppliers,” explains Kirchen. “This, unfortunately, has not changed, and in recent months, we’ve seen additional removal of domestic paper liner capacity. This will put even more stress on domestic supply, particularly liner. As a result, North America will need to increasingly rely on imported paper and filmic raw materials to meet the growing demand for PSL products.
“On the positive side, at UPM Raflatac we have secured sufficient raw materials with our strategic suppliers to fulfill the demand we see in the market,” he adds. “While it may feel temporarily like there is an oversupply of PSL raw material in the market to channel de-stocking we see in the industry, the structural equation of demand and supply has not changed.”
Despite the difficulties of 2022, UPM Raflatac has rebounded – boasting strong material availability. “Our raw material supply chain has fully recovered, and we are not seeing any interruptions at this time,” states Kirchen. “During the strike, our teams and our customers responded well. In many cases, we were able to offset raw material shortfalls by switching to alternative raw materials or alternative products.”
While allocation was another pressing issue for the industry last year, UPM Raflatac has secured a diverse range of suppliers to ensure continued material availability. These steps will help ensure converters’ ability to meet their customers’ demands.
“At UPM Raflatac North America, we never implemented product allocation,” says Kirchen. “We have secured raw materials with a diverse base of supplier partners and are confident that we can offer customers very dependable service, both in terms of availability and lead-times.”
Kirchen also cautions that news of international labor stoppages should not necessarily frighten those in the industry, as these workforce tactics are often commonplace. “The right to industrial action (i.e. strike) is enshrined in law in Finland,” Kirchen adds. “The practice is a respected method of strengthening the premise of success for both businesses and their employees.”
Kirchen anticipates a strong future for UPM Raflatac and the industry at large. The lessons learned over the past few years have provided both suppliers and converters with a better roadmap to navigate future challenges.
“We certainly have learned much in the last 2.5 years about our supply chain, raw material supply dependencies, and how to optimize our internal processes and operations,” he comments. “We have seen that our industry, despite all the external shocks to demand and supply, is very resilient. At UPM Raflatac we have learned from the challenges of the last few years and aim to become a more dependable and reliable partner to our customers. We are confident that the industry will find a new supply/demand equilibrium over time. We are quite optimistic that the PSL industry, with its proven resilience and positive growth outlook, remains an attractive market for raw material suppliers, which will help to secure long-term supply stability.”