The project problem
The project began with a problem: Saica Group wanted to improve customer satisfaction, service and efficiency of their paper and corrugated board businesses. However, the operational scale of Saica meant that solving this problem wasn’t going to be easy. They are the leading company in Europe producing recycled paper for corrugated cardboard with six paper mills located in Spain, France and the UK producing in excess of 3.3 million tonnes of brown and white liners and fluting.
David Maeso, Supply Chain Director at Saica, was direct and uncompromising in the challenges facing Saica:
“Customers are becoming more and more demanding, requesting a better service with shorter delivery times…We realized that the current make-to-order supply model couldn’t provide the service levels requested in the most demanding markets. In order to improve our service level, (i.e. reduce lead times and increase delivered ‘on time in full’) we needed to implement make-to-stock and vendor-managed-inventory supply models.
Having compared different solutions available on the market we chose I-Plan software for integrated supply chain planning as it met our needs and was the most complete and least complex option…They really understood our business, shared our vision on how to improve efficiency and service and were very committed. After all, this is a major business process change which is not just about a new tool but also about the people and processes empowered by top management.”
I-Plan De-Risks Supply Chains
Supply chains are complex, volatile and every link carries commercial risk. On a client by client basis, I-Plan assesses these risks and deals with them. In the case of Saica, the implementation process began with the organisation of a new supply chain department and I-Plan was tasked with transforming a make-to-order supply chain into a make-to-stock and vendor-managed-inventory supply chains. This change is what drove an astonishing thirty percent reduction of inventory levels, a twenty percent improved service level and a lead-time reduction from corrugated board plants to paper mills of about ten days.
One of the key ideas of implementing a supply chain software and integrating it in real time with ERP production planning and with shop floor systems, is that paper mills and corrugated board plants produce different items to agreed inventory levels rather than basing production on customer orders. It’s a cloud-based solution with a browser interface that supports a mixed MTO/MTS business model.
Based on corrugated board production needs, reels are called off from the plants’ in-house stock and invoiced simultaneously. As the inventory level of an item reaches the agreed minimum level, the system automatically generates an order for replenishment. The refill of the item to the corrugated board plant will either come from mill stock or from paper production. The advantage of this process is that no one at the corrugated board plant needs to issue separate orders for liner or fluting items as the system automatically manages it.
The base for this way of working is forecasts that derive from finished box and paper reel orders through to aggregate demand for each paper grade and width. This includes optimizing inventory levels around corrugator constraints in order to achieve minimum trim loss. Using several years’ sales history, the broad trends and seasonality can be identified, despite the variability in individual customer orders. Through the forecasting system sales staff across all box plants and paper mills enhance the forecast, by adding customer and market insights.
A Summary of Success
Summarising how I-Plan transformed and de-risked the Saica supply chain, David Maeso identified six key factors:
“We knew that transition from order-based production to production based on a forecasted demand needed a thorough plan with many milestones and commitment from all staff involved. Therefore we took it step by step and started with our paper mill and corrugated plants in the UK. By doing it in this way we minimized risks and were able to support the organisation during the implementation phase in a good way.”
2. Phased Roll-Out
“After two years all our corrugated plants in the UK are in the system and we are rolling it out in France and Spain. Fifteen branches of our corrugated business area are now included. We have also brought a couple of external corrugated board customers into the system in such a way that we control their inventories and make the replenishments.”
3. Planning for Success
“We have seen a number of positive effects and the supply chain work is now done in a planned way, causing less administrative work and freeing people to do more added value work. The inventory levels in paper mills and corrugated board plants have been reduced by 30 per cent, which is a remarkable reduction, and the customers are very satisfied.”
4. Focus on Demand
“Our service level has increased by 20 percent and the lead time for orders has gone down by about ten days. The production planning in the paper mills is done based on demand and not on customer orders which has given longer runs in the paper machines. We have a better visibility regarding the material flows which means that we can optimize logistic efficiency much better.”
“The software supplier understood our vision from the beginning and have given us valuable support throughout the process. This was important for the project success and to get the most out of the system. We are a very demanding customer and have challenged them regarding further developments of the tools… and we make roadmaps together.”
6. The Problem I-Plan Solved
“Finally I would like to stress that the reasons for implementing a planning based sales and operation system was not primarily cost reduction but to improve customer satisfaction, service and efficiency. In the UK alone the system covers 10 plants, 294 inventory keeping units and 207,000 tonnes of liner and fluting. So it goes without saying that improved efficiency…So we meet our target to be the leader in efficiency and create value for customers.”
The transformation taking place at Saica is evidence both of the power of I-Plan to de-risk supply chains and of the skill and dedication of the team tasked with the implementation process.
Inventory level: 30% reduction
Service level: 20% improvement
Lead time: 10 days reduction