“Improving efficiencies in price-driven industries” – first published on ProcessWest magazine
First published in ProcessWest, November 2015 – Article by Alfred Becker
Improving efficiencies in price-driven industries
Despite predictions that the digital world would make paper obsolete, paper and pulp production remains strong in North America. However, thin margins and high asset costs create formidable barriers to entry and make operational efficiency a must. In fact, maximizing resources and streamlining operations can often be the difference between success and failure when competing in this highly commoditized and price-driven market.
Not surprisingly, companies in this industry are constantly focused on cash flow and cost cutting, scrutinizing every aspect of operations for improvement opportunities. Fortunately, today’s new digital world is arming executives with real-time data to help uncover unique new ways for increasing efficiency.
Technology requirements for data-driven decision making
The world has experienced a literal explosion of data. As software applications such as enterprise resource planning (ERP) and supply chain management have become more robust and comprehensive, they have also become more data-intensive. Additionally, thanks to the “Internet of Things”, nearly everything is transmitting data. Sensor-equipped tools and machinery are delivering continuous streams of information. Yet data by itself is meaningless. Paper and pulp companies must have the right technology in place to allow anyone to easily extract and gain insight from all types of information. While there are many technology solutions available, at the very least companies should have an integrated system featuring these three main components:
- A powerful technology platform that combines database, application processing, and integration services capable of quickly processing heavy amounts of data from multiple sources;
- A graphical, intuitive and adaptable interface to make it easy for non-technical users to access, share and use data; and
- Cloud-based services so companies can have sophisticated, always-available solutions when and where they need it.
With the right technology solutions in place, it’s possible to begin accessing, analyzing and using data to make smart decisions that optimize existing resources and improve profitability.
Companies constantly are uncovering new ways to make their processes more efficient thanks to data-based insights. Below are a few of the most effective data-driven strategies used by paper and pulp companies to save money, speed turn-time and improve operations:
- Standardize best practice processes: Once a new process is implemented — such as profitability analysis based on paper machine, running speed, grade and basis weight — companies with robust IT systems are able to quickly analyze the results and identify the processes yielding strong ROIs. Those new changes then can be replicated at other mills, thereby maximizing assets and reducing waste.
- Forecasting accuracy: Proper planning is critical for sustainable success. Yet, forecasting is extremely difficult in the paper industry due to frequent order changes, 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 sales, industry or environmental trends in real-time and contact supply chain partners to ensure production capabilities match anticipated demand.
- Sales and operations orchestration: Providing all departments with easy access to synchronized business data provides the opportunity to collaborate in real-time and reduces the manual effort of forecasting and analyzing what-if scenarios in order to shorten the planning cycle. This additional level of collaboration and speed supports a higher degree of sophistication in making decisions that can be used by sales for business analysis and strategic planning to capitalize on business growth opportunities.
- Finance and reporting productivity: Standardizing data and providing real-time access to the information in an easy-to-use format has been proven to improve the performance of monthly closing with fast execution, and higher quality. In addition, it empowers non IT-users to utilize information for earlier and better decision making, often highlighting operational problems or opportunities when there is still time to change course. In addition, it reduces the workload of IT resources even when faced with increasing business volume.
Next steps in data-based manufacturing
On top of the technology solutions already being utilized for operational efficiencies, there are two future innovations poised to dramatically change 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. Taken a step further, these same networks 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 tremendous amount of newly available data is leading to a future 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 roll of paper, 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 the rolls. Of course, this capability requires technology capable of analyzing data in real-time and presenting the results in easy- to-understand graphical formats.
In an environment where every dollar counts, companies must continue to dig into data to uncover opportunities for greater efficiency and effectiveness. Proactively harnessing real- time data and analysis is giving pulp and paper companies the edge they need to survive and compete in this ever-changing market. Making operational decisions based on real-time information helps deliver wider margins, improves financial performance and helps meet success goals.