By Mike Vieira | Jan 06, 2018
Rancho Cucamonga, California
Rancho Cucamonga, CA
Industry: Supply Chain
Products: Packaging Paperboard
Pacific Paper supplies sheet stock for the paper needs of more than 175 different companies around Southern California. Its customers have come to rely on the company’s dependable and fast delivery, accompanied by top-notch customer service practices. The products are used in everything from boxes, paper cups, and fast food containers, to greeting cards, signs, and just about anything that’s made of paper or cardboard, including the packaging.
The business traces its roots back to 1990, but owner and CEO Bill Donahue took over the operation in 2016 with the intent of growing the company at a faster rate. He has a lifelong background in the paper business with Georgia-Pacific and International Paper and is using that experience to move Pacific Paper forward. "We’re doing some things from a marketing perspective, broadening our geographical reach," says Donahue. "We were really just concentrating on a sixty to eighty-mile range from our facility in Rancho Cucamonga, California. We’re now serving customers in Tijuana, Mexico, and reaching a range of customers up in Northern California too."
In order to maintain better control of delivery of its products, the company has used its own fleet of trucks to serve the Southern California area. With its newly expanded customer area, however, they’ve had to adjust and make efficient use of third-party carriers to reach their distant clients. "We’ve got to be really careful that we’re choosing the right carriers that can reliably deliver our product," says Donahue. "We want to deliver it on time when our customers expect it." Future expansion of additional facilities in new areas will likely allow them to deliver directly once again to most of their customers.
Approximately seventy percent of the company’s raw materials come from a mill in Idaho, while the remainder is shipped in from overseas. Presently, all of the cutting, trimming, and processing of the various types and thicknesses of material is done on at their Rancho Cucamonga facility. "There is a fair amount of on the job training because it’s very important that we run the machinery as efficiently as possible to maximize throughput," says Donahue. "Just as importantly, we want to minimize the amount of waste we create. We typically have a machine operator and an assistant on each of our sheeters." On the two shifts per day that the company runs, the operators have ten or more years of experience. "We consider our workforce to be one of our best assets," says Donahue. "We’ve got very dedicated, loyal people."
That committed workforce is what allows the company to stand out from the competition in dealing with its clients. "Our model is really built on providing the best customer service available to our accounts," says Donahue. "For the vast majority of the customers we deliver to with our own trucks, orders made by 5 pm on one business day will be delivered at whatever time the customer wants it on the next business day. We have less than a 24-hour turnaround on 90-plus percent of everything we do. I think when customers factor in the supply chain benefits, the turnaround time, our reliability, and the quality of product that we deliver, I think they’re willing to pay us a little bit more than our competitors. They value that type of service."
Pacific Paper uses its own salespeople to directly interface with potential customers in both their local area, as well as in the new markets into which they are expanding. That furthers the close relationship the company has with its clients and allows them to more easily meet the exact needs of customers.
While there are some seasonal peaks and valleys to the company’s business, they are able to easily manage that with adjustments to their inventory purchases of raw materials in anticipation of changing demands and do not have any need for more drastic measures such as varying their workforce size.
Needs: Eventual investments in new equipment to improve efficiency and lower costs to help cope with other upward pressure on costs.
Challenges: "I think the overall climate in California is one that puts upward pressure on costs," says Donahue. "Employee costs are going to continue to rise. If we want to attract and retain the best employees, we’re going to have to pay them what they’re worth, and we’re projecting that cost to continually go up. We’ve also seen a pronounced rise in rent over the last year, and it’s going to go up next year and the year after that. That’s just a reality. If we want to make the same kind of margins we make today, we have, through some combination of productivity, efficiency, and increased sales volume, be very diligent in order to offset the increased costs that are coming at us."
Opportunities: Continued expansion into additional geographic areas is a key strategy for the company.