Research & Innovation
business & IT
By Pulp & Paper Canada
beyond the high-level theories and principles of supply chain management (SCM), there is a simple and effective means to understand SCM and how it applies to the pulp and paper industry.In basic terms...
By Pulp & Paper Canada
beyond the high-level theories and principles of supply chain management (SCM), there is a simple and effective means to understand SCM and how it applies to the pulp and paper industry.
In basic terms, SCM is a business decision to actively participate in and improve the business processes of your company from vendor to customer and beyond. SCM is about effective management and improving the other “links” both up and down the supply chain.
The supply chain can be managed at many points or at specific instances where there may be a viable return. For example, upstream, mill chemical supplies could be an area of focus. Downstream, there may be opportunities to better manage the paper supply available to your customer.
The value of SCM
Paper companies have traditionally focused on their own business in two areas: cost-effective manufacturing and high-volume sales. SCM helps mills look beyond their own operations to better understand the needs, business processes and information flows of upstream and downstream vendors and customers.
By partnering with customers and vendors, a deepening of the business relationship occurs. This shift to value-added customer service is a long-term and strategic approach to retaining and attracting loyal customers.
Where to start
Implementing SCM does not need to be difficult. Some stepping stones are:
Start small, with a single “link” with which you have a good relationship. Begin to understand how they conduct their business and how your businesses interact. Think holistically and ask “big-picture” questions to learn what drives and motivates their business in order to determine what they really need.
Start with a single business process. Analyze the various transactions within the process and implement changes that create win-win opportunities. Play the role of consultant to learn more about your customer’s business. For example, learn why last-minute orders are frequent and then discuss how this situation could be improved.
SCM initiatives are unique to each business and to each process that involves your customer or supplier, and must be tailored to suit a specific set of business process variables. Your goal should be long-term, sustainable, and cost-effective business process improvements that benefit both you and your “link.”
SCM programs can be as simple as a change in a delivery schedule, weekly communications to discuss expected end-user demand, or the consolidation of invoices in order to reduce transactions. These are all improvements that can yield measurable, positive results.
Look before you leap
The implementation of SCM will likely require changes in business culture and thinking. Most mills are organized by functional area including sales, production planning, manufacturing, order fulfillment, logistics, etc., which may have competing objectives. Education of relevant staff and buy-in from stakeholders is needed. If management does not fully support plans to improve business processes, SCM programs may be difficult to implement.
Know ahead of time what information you are willing to share with SCM partners and what information is required to make process improvements. Production schedules, capacities, order patterns and end-user demand may need to be shared between parties to bring about positive change. Open, timely and honest communication is crucial to building trust, implementing the improvement, and earning a return on effort.
Do not assume that process improvement will lessen costs or reduce staffing levels. Understand, however, that higher quality business relationships promote long-term business with customers that may be less sensitive to conventional terms such as price and delivery.
Information systems can help
Communication is the backbone to any SCM implementation. While substantial initiatives may require automated systems, it is possible to implement small improvements that can be facilitated through manual means. Choose to implement only the SCM processes that the organizations have the resources to support.
Increasingly, SCM programs rely on system solutions that communicate information along the supply chain using electronic data interchange (EDI). These systems are integrated with downstream supply/demand, order fulfillment and production planning systems. Integrated information systems allow for the sharing of information across business functions within the mill to reinforce shared SCM objectives and influence cultural change.
Ensure that any information system expenditure adds value or improves the business process.P&PC
Murray Larkins, Millworks Business Manager, Computronix, Edmonton, AB; Kevin Luc, SCM Co-ordinator, Pasadena Paper, Pasadena, TX.