“How current and future technology solutions improve supply chain management, optimize resources and drive profitability” – first published on Corrugated Today
First published in Corrugated Today November/December 2015 – Article by Alfred Becker
How current and future technology solutions improve supply chain management, optimize resources and drive profitability
Making a sustainable profit in the pulp, paper and packaging industry can be a challenge, to say the least. On top of substantial start-up costs and razor thin margins, the costs associated with developing products using environmentally-friendly processes and raw materials leave little room for mistakes. In fact, the nature of the business is such that even a slight change in energy or transportation costs can force a company under. Consequently, organizations must maintain a laser-like focus on operational excellence and resource optimization if they are to succeed.
One area frequently scrutinized for increased efficiency opportunities is an organization’s supply chain. While this is often viewed as a stand-alone division, in reality, one’s supply chain is connected to nearly every facet of an organization. As a result, when disparate systems are used by various departments or information is held within silos, it can be difficult, if not impossible, to identify areas for improvement and make positive changes. Instead, organizations need tightly integrated, unified systems in which data is easily accessible to anyone at any time. While there are many obstacles to this ideal goal, recent technology solutions have made supply chain integration not only possible, but profitable.
Complex, Global Supply Chain
Merger and acquisition activity has been vigorous in the pulp, paper and packaging industry as companies look to gain scales of efficiencies through strategies such as centrally sourcing raw materials to reduce costs or sourcing from less expensive countries. However, consolidation also often means companies must face the difficult task of managing heterogeneous technology systems and processes used by different departments, suppliers and manufacturing plants.
The global nature of business is another contributing factor to today’s complex operational environment. In an effort to reduce expenses or utilize more eco-friendly suppliers, some organizations procure raw materials in one country and transport them to another for use in the production process. Purchasing pulp from Latin American and shipping it to mills in the United States and Europe is an example of this practice.
For these reasons, and many others, businesses are faced with managing very complex, global supply chains. And while it’s likely that operations will remain extremely complicated, technology now exists to help employees and their customers leverage real-time data for smarter decision making. Below are a few real-world examples of how technology is being used to improve supply chain visibility and increase profits:
- More Accurate Forecasting – Proper planning is critical for sustainable success. Yet, forecasting is extremely difficult in the paper and packaging industry due to short turn-times and order customization. To help anticipate customer demand and fill orders on time, companies are using powerful database platforms to access, analyze and correlate historical data with current projections. This allows them to identify trends in real-time and contact suppliers to ensure production capabilities match anticipated demand.
- Detailed Product Information – Apart from delivery dates or quality aspects, customers demand precise information on the materials used to produce paper products. From the forest groves, wood chips and pulp processing, the entire chain of custody can now be tracked, traced and presented to buyers for insightful purchasing decisions. Customers looking for environmentally friendly products, for example, can now see exactly what percentage was made from certified woods.
- Streamlined Logistics – Connecting the shop floor to other business systems allows decision makers to optimize material movements between warehousing and production. By integrating real-time material availability with real-time manufacturing capacity, days in inventory reductions of 15 percent or more are common.and sequence their tasks from the loading docks to the storage locations.
- Greener Operations – Production of paper and packaging is very energy consuming process. Companies want to keep energy consumption low without affecting quality. Using real-time data streaming directly from the machines, operations can be adjusted online to maximize machine usage and produce products in the greenest possible way.
On top of the technology solutions already being utilized for integrated supply chain visibility and sourcing management, there are two innovations that are dramatically changing how business is done:
- Cloud-based Sourcing – Companies with connected systems have been able to increase productivity by using cloud-based sourcing to find and qualify new suppliers faster, gain spend visibility and automate sourcing activities. Taken a step further, this kind of business network can be used as a tendering marketplace for transportation requests. If a company has excess transportation capabilities, it can publish its availability to the marketplace and connect with other companies with products to transport.
- Quality Description – The ability to record, condense and use huge amounts of newly available data has tremendous benefits; one of which will be the ability to describe the quality of a product in a very granular way. By reviewing all types of process data such as pressure, steam, and electricity, and correlating it to quality parameters like thickness variation, it’s possible to determine how much energy was applied to deliver a certain quality result. When the product is sold, like a corrugated box, it will be possible to describe the resistance to moisture, predict mechanical durability, and provide details such as the quality differential between areas of the surface of paper rolls being used to produce such corrugated materials. Of course, this capability requires technology capable of analyzing data in real-time and presenting the results in easy-to-understand graphical formats.
Technology solutions enable paper and packaging companies to sharpen their competitive edge by maximizing their operational excellence and creating a profit-driven supply chain. Companies can optimize the performance and output of capital-intensive assets while managing product costs, assuring product quality, lowering energy consumption and reducing environmental impacts.
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Agree with Operational Excellence and Resource Optimization, but I would also include "Customer Focused Value Added Design"!
Hi Leslee, thanks for your comment. Do you have an example where technology can improve "customer-focused value added design"?