paper industry research

8/6/2019 Paper Industry Research

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SCM 607 Dr. Wu

Yukasa ShidaAnlai Jiao

Michael Brunell

Joshua Thomas



� Michael Porter

� Adding value in each steps



1. Acquire raw materias (logs) and harvest treesin the timber farms

2. Logs gets transported to the mill, washed,rinsed, and cut into small wooden chips

3. Chips gets assorted by the size

4. Pulping process. Fiber gets separated and

becomes pulps. 5. Water gets removed from the pulp

6. Dry end



� Location ² an important component in SCM

� Major players in the industry are U.S.,Scandinavian, and Japan

� Future trends ² Russia,China, Indonesia (lowwages, low enforcement oversight).

� Within U.S. : Wisconsin, Pennsylvania,

Georgia, Alabama, and California



� Pulp & paper industry : a large network ofproduction units that refines the wood intoconsumer products.

1. Procurement network: forest

2. Production network: pulp & paper mills,converting plants

3. Distribution network: warehouses, distr. centers

4. Sales network: office supply retailers



� a merger of two firms at different stages ofproduction wherein the output of one firm isthe input of the other.

a. Forward integration

b. Backward integration

� M&A common in pulp and paper industry

� Able to control larger portion of its SC activities� Cheaper to buy than build one



� a cause of concern to every business that has asignificant supply chain

� negative effects on a supply chain caused bydistorted information as this informationmoves up the SC

� Can cause significant inefficiencies



Examples in the paper industry

1. the printer (an end-customer) orders once perquarter according to the real market demand he

has or is estimating2. the dealer meets this demand and anticipates

that the printer may need more (or less) than heorders; the dealer acts somewhat later than his

customer3. the paper mill reacts to the dealer's orders in

the same fashion and somewhat later than thedealer



� The planning horizon stretches from almosthalf a century (e.g. new capacity) down tohours and minutes (e.g. operative truck

routing).

� The physical lead-time ranges normallybetween 5 to 12 months.

� Planning throughout this multi-leveled chain

is complex and are categorized into 3 differentplanning horizons



Planning Horizon

1. Strategic « long term (i.e. opening/closingmills etc.)

2. Tactical « mid term (i.e. allocation rules, usagerules)

3. Operative « short term (i.e. slitting rolls based

on demands)



� > 2,400 paper mills in over 50 countries

� Different units, measure, currencies involved

� Recognized as one of the most diverse andimportant global industry

� Dominated by N. America (U.S., Canada),Northern Europe, East Asia (Japan), Australia,

and Latin America



� Self-regulation built into a company'sbusiness plan so that it pursues the triple

bottom line that's good for profits, peopleand the planet� Community growth and development� Reduce their carbon footprints

� Re-evaluation of their operation to adoptmore environmentally friendly one� Ethical sourcing



Example: International Paper Company (U.S.)

� Partnering with independent certificationorganizations to ensure responsible forest

management.

� Reducing non-renewable fuel usage in the U.S. by 38 percent and corresponding green house

gas emissions from fossil fuels by 40 percentover the past decade.

� Investing in electrical self-sufficiency (90percent in Poland mill).



� Significant environmental impact

Clean Air Act

Clean Water Act

� Politics An alternative fuel tax credits

Richly rewarded for the operation method

Possibility of backlash as payments mount



� Goes back to the Han Dynasty period (China)

� Cai Lun

� Process evolution

� Usage evolution (From simply a writingplatform to various usage i.e. tissue, packaging,plates, filters, bags)

paper industry research

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