Supply chain challenges of North‐European paper industry
Authors: Koskinen Pekka , Hilmola Olli‐Pekka 
Published: April 2008

Purpose

Owing to the consolidation and globalization of the paper industry, manufacturing units have keen interest to focus on particular product groups. While this specialization will create opportunities for scale economics in production, management of supply chains becomes increasingly challenging, as one particular manufacturing unit serves a number of different sales locations. The aim of this paper is to identify improvement areas in the new supply chain context of paper production, and possibly give further support for the general discipline development.

Design/methodology/approach

Research work is based on two different case studies completed for one major North‐European paper manufacturer, which is mostly serving its customers in Europe and the USA. The first case study (a preliminary one) started when supply chain challenges were recognized at the end of the 1990s, and a manufacturing unit was seeking managerial remedies – this investigation only concerned one manufacturing unit, while not singling cut any particular supply chain in the analysis. During the most recent years a more detailed case‐study was conducted with this paper manufacturer, which concerned lead time performance of four different strategically important supply chains. These supply chains were championed by two different large manufacturing units (the preliminary analysis concerned one of these two paper mills). The objective of this research work is to identify whether general lead time and response studies, mostly completed in the automotive industry, are applicable to paper production.

Findings

According to the analysis North‐European paper manufacturers hold approximately 45 days of distribution inventory. Interestingly, in the case study it was found that in distribution this does not result in high efficiency–on the contrary different parties involved (railway, port operations and vessels) need to have a considerable amount of free and unused capacity in their operations to ensure the smooth flow of materials.

Research limitations/implications

The case studies were conducted in the factories of one large North‐European multinational. Therefore, the observations are limited to this company. However, in order to generalize the results further, the authors have analysed North‐European paper producers through macro data and financial reports in any research environment. To cover a mismatch between company level quantitative analysis and macro data, the authors consulted several key persons in the case company concerning the research results. Therefore, triangulation in the empirical data was achieved.

Practical implications

It is argued that four reasons, namely: scale emphasis in production, IT systems to support supply chains, sea shipment, and outsourced distribution, play a vital role in the forthcoming performance improvement initiatives. At the moment this results in long supply chain lead times, whatever the distance to the actual market. Decision makers in practice need to find solutions for these in order to improve performance further.

Originality/value

Supply chains are rarely analyzed in research works through more than one supply chain – here analysis of four different supply chains concerning lead time is provided. The analysis is based on the enterprise resource‐planning database, and findings are verified with interviews with the managers and directors of the case company.