How is the tissue industry coping in today's volatile world? - Paper Technology International 2023 - Paper Technology International 2023 - Flipbook - Page 64

How is the tissue industry coping in today's volatile world? - Paper Technology International 2023

PAPERTECHNOLOGYINTERNATIONAL How is the tissue industry coping in today's volatile world? - Paper Technology International 2023
Profitability largely hinges on efficiency, both in production
and business processes. No wonder many respondents place a lot
of importance on reliable Manufacturing Execution Systems (MES).
The presence of a top-class MES is seen as boosting improvements
not only in production, but also in operations, maintenance, and
business planning.
Besides energy prices, raw material availability and cost
are having a significant effect on profitability. The tissue industry
is a low-margin business where cost fluctuation has an immediate
impact on profitability.
Tissue manufacturers are in raw material competition
with other industries, notably the containerboard and cardboard
industries, which due to higher sales margins are in a better position
to buy at higher price levels. This creates a profitability pinch also
from the supply side.
Tissue mills struggle most with energy and raw materials
In contrast with the enterprise level, at mill level, energy
and raw materials were seen as the biggest and most imminent
problems in the industry. Regarding energy, skyrocketing prices
were the main source of concern, while raw material sourcing
suffered not only from rising prices but also from declining
availability. The combined effect of the rising cost of doing business
and the importance of managing the supply chain more efficiently
leads companies to seek tighter closeness to their markets.
How are we performing on urgent issues?
It is interesting to see how tissue companies see themselves
performing in some of their key areas of concern.
Sustainability gets the most mentions as the most important
improvement area, but a gap analysis reveals that companies
nevertheless seem satisfied with their present performance. In
fact, they slightly exceed their own expectations between urgency
and perceived performance. In contrast, profitability performance
is seen as clearly worse, by far topping the list of the gravity
of shortcomings. Companies are also dissatisfied with their
performance on energy efficiency at a rate of twice those of demand
planning and forecasting, and digitalization and making good use of
data.
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One way of interpreting this is that respondents approach
issues alternately from a profitability and a sustainability angle.
A somewhat striking finding is that around a third of
companies see themselves as sustainability forerunners, while one
in five are not paying much attention. The rest consider themselves
as following trends with more moderate investment.
Interestingly, product quality is an area where most
companies exceed their own expectations. Respondents are also
satisfied with their present level of customer service.
Nearly six in ten respondents consider organization,
processes, and know-how to be their most important areas of
improvement investment.
Digitalization a key success enabler in a turbulent market
The tissue industry is undergoing perhaps one of its biggest
business environment changes in history. There is war in Europe.
We are just recovering from the Covid pandemic that at a stroke
upended all business plans. Cost pressures are mounting, and
both the demographics of the target markets and end-customer
behaviours are changing. We are seeing a real litmus test of
success for the entire industry.
Digitalization has undeniable importance in such
circumstances. Companies can clearly see the helpfulness of
digitalization in both the hard and the soft side of the business –
machine monitoring, optimization and maintenance, as well as
demand forecasting and helping react to rapid market changes.
When asked about their key focus areas in digitalization and
applying new technologies within the next 12 months, nearly nine
out of ten respondents mentioned production.
A basic requirement for realizing the benefits of digitalization
is to have a reliable MES in tissue mills. As a development area,
implementing or improving the MES solution is considered important
by one-third of respondents.
The following areas, in order of importance, are
maintenance, energy, supply chain management, and Sales &
Operations Planning (S&OP). Quality issues and sales are areas
where digitalization is seen to be of least help.
Market maturity seems to play a role in how the issue of
digital improvements is approached. Less mature markets seem to
focus on production efficiencies, while more mature geographies
emphasize a more bird’s-eye view by looking for better usage of
data in overall decision-making.
Artificial intelligence (AI) is a hot topic in today’s digital world,
and the technology is being adopted by tissue industry forerunners
as well. From a list of corporate-wide functional areas, production
and manufacturing seem to use the technology most, with 40 per
cent of respondents naming those areas. Interestingly, “none” was
the next most common answer, indicating that nearly a third of
respondent companies are not using AI in any of their business or
production functions.
There seems to be high demand for creating a reliable digital
trail of operations to determine the correct KPIs for keeping abreast
of actual production and product quality performance.

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