Case Study

Swedish Pulp & Paper Mill Expects New IT-Based SCM System to Benefit Packagers

Stora Gruvon (Sweden) has introduced a completely new Information Technology (IT)-based supply chain management system designed to significantly reduce stocks and delivery times to its customers. Known as "Reflex," the IT system can process vast amounts of data, while simplifying and speeding up administrative procedures in the process. Stora's system has been under development for the past two years.

A part of Stora Paperboard (which belongs to the Stora Group in Sweden), Stora Gruvon has an annual sales volume of 500,000 m.t. of paper products and 100,000 m.t. of market pulp. The products are mainly used for packaging, particularly within the food products industry. Altogether, the company has 1,250 employees.

As with most major primary manufacturers, Stora Gruvon's packaging industry clients are continuously under pressure from their customers to ensure fast delivery. Logically, this pressure is progressively being shifted toward paper producers such as Stora in terms of reduced lead times. The adoption and implementation of an effective supply chain management system to handle these increasing demands requires the development of a kind of forecasting system. Through constant reporting of orders passing through the customer channel, mills can improve and refine their planning, production, and deliveries.

Necessary Investment
Stora Gruvon's marketing manager, Leif Broden, explains that the large volumes of data being handled by his company meant that something had to be done. "Without a large investment in IT, we would have no chance of handling this task," he says. The old-fashioned manual processing of orders, invoices and grammage specifications has now been transferred to the company's IT base. The client can communicate with the company via the medium it prefers — the telephone, fax, Internet, EDI, etc. The principal advantage is that the system can be continually expanded and refined. "A vision of the future is that we could simply collect data straight from the cash register," Broden adds.

Speedier deliveries mean that both the mill and the client can reduce the size of their stocks. This cuts down the amount of capital being tied up. One Stora calculation shows that clients could double their profit margins by using Reflex — saved money that could be used for investment in new technology, product development, etc.

Broden reports that the reaction from customers is positive. "They understand, of course, that it can take time to implement a complete change in the system, but on the other hand the traditional form-filling procedures take even longer. Many companies in the packaging industry are subsidiaries integrated into the paper manufacturing groups. A large proportion of Stora Gruvon's clients, however, are independent companies.

"We would like to see these packaging companies enjoying the same benefits as their integrated counterparts," Broden emphasizes. Faster deliveries also mean a higher rate of warehouse turnover, he points out, adding that "our company's own minimum target is 20 times. Another aim is that 50% of our turnover will be sold via Reflex within three years. The 1998 target is 20%."