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Tissue Industry: What if industry leaders choose to rethink their business planning process?

by Jari Kaukiainen on July 1st, 2021

What if Tissue Industry leaders choose to rethink their business planning from raw materials through paper production to converting processes to markets?

Companies in the tissue industry, under pressure from their customers on price and delivery performance, are turning to digital transformation to meet these challenges in a market that is increasingly volatile and unpredictable.  Rapid response to change, within the constraints of their manufacturing process, their inventory network and their raw material supply, requires a mathematical approach to creating possible operating scenarios along with strong collaboration tools to bring together the management teams in sales, production, supply chain and finance so that the business can make informed decisions. Within these planning processes, knowing the financial outcome and lost margin from straying away from the optimal plan is critical in an industry where costs are high, and margin is low. 

The market for tissue products has been steadily growing and diversifying over recent years. The tissue market is largely consumer-led, where most of the tissue products are low-margin commodities. Over the past 18 months, the demand for certain products in this sector has been volatile in the extreme. The industry operators have faced demand which has been at a record high with peaks and troughs due to the Covid-19 impact.  

Manufacturers have increased their supply capabilities to the maximum in this highly competitive market yet face competition from imported products as capacity is increasing in Asia. The big questions are what is the new normal? And at what price will the market stabilise? The only certainty is that volatility and uncertainty are here to stay, therefore the planning challenge will remain.

The Planning Challenge 

Digitalisation will drive the tissue industry to higher levels of efficiency.  To drive profit, manufacturers need to improve their supply chain planning capabilities dramatically. One crucial element for success in the tissue business is master the planning dichotomy of the process industry and discrete manufacturing processes. The tissue market is regional by nature but supplied by global companies, typically from multiple manufacturing operations. The upstream processes of pulp and base tissue manufacture operate continuously 24/7 of often in grade cycles of weeks or months. This is predominantly manufacturing semi-finished stock for later conversion.  It is difficult to align the continuous cyclical processes with end-customer demand, typically small quantities of diverse products with variations day-by-day.  

Planning semi-finished product production in large batches, where storage space is limited requires world-class forecasting tools and processes. The lead time for customer orders may be as short as hours from the converting line to the supermarket’s distribution center therefore finishing operations, along with their planning processes need to be agile. The converting operation is often a mix of own and externally managed contract manufacturing and require flexibility and consideration of factors such as non-standard package sizes, customer-specific packaging, bought in raw material supply and marketing promotional campaigns that create demand spikes and often campaign-specific wrappings. To outperform its competitors a tissue operation requires an agile end-to-end connected planning solution capable of managing both tactical demand and supply balancing, inventory buffers in semi-finished and finished goods materials and a short-term planning process for detailed up to the minute optimization-based reactive schedule creation.

The process

Tissue is a commodity product of low-density making transportation costs high, thus favoring the supplying operation to locate close to its end customer’s demand point. Also, as products are mostly substitutable by competitors it is important to provide quality service for direct customers (supermarket operators etc.) to prevent loss of sales. The best-performing companies have realized their business to be very much forecast-driven and make-to-stock (MTS). High volumes of diverse products both generic and customer branded in private labels are typical. The importance of higher forecast accuracy cannot be underestimated. Similarly important is to understand that part of the demand is not forecastable using statistical or even artificial intelligence-based methods, therefore market intelligence and collaboration are critical in reaching the required level in forecast accuracy to enable ‘manufacture to forecast’ to be profitable.  

The production process usually contains two or three phases. The raw material preparation and production takes place first in a pulping or stock preparation process like de-inked pulping followed then by tissue paper production and finally converting before the final product can be packaged for distribution. In the first and second phase production takes place in large quantities in process manufacturing. Converting then finishes the paper products such as toilet or kitchen papers, paper towels and tissues of different kinds. The raw material management of the tissue product represents a challenge. Pulp (of a different type), cores, different packaging materials and such need to be managed based on the order. This creates a requirement for systemized materials management based on the bill of material (BOM). Typical tissue paper production operates in a cyclical manner producing grades within the grade family moving from one family to another. The production cycle allows the timely planning of raw materials required for paper, the most significant being pulp. The detailed scheduling provides up to minute insights into what raw materials are required and where.

On those most modern mills, the advanced monitoring and prediction applications automatically optimize tissue machine operation to increase production capacity, machine uptime and energy efficiency and to reduce quality losses and overall operational costs, but that requires tight integration with business, and production planning and is not the case on all tissue operations today. 

Tissue paper production and consumption is expected to grow due to factors like urbanization, growing disposable income, and consumer spending. Profit margins are small, but with high volume therefore attractive for those who are able to meet the planning and operational challenge to keep costs low whilst maintain customer service.  In common with other process industries, in tissue manufacture, the capability to plan proactively based on profitability measures provides a competitive edge.  

The software solution needed

Tissue industry production and business planning requirements span the enterprise level to the operations shop floor level. The business-wide planning based on profitability drives operations to the best margins. Having business plans integrated to day-to-day execution is another key success factor. It is typical that short-term plans require up to minute level adjustments like moving a job from one converter to another because of a technical problem causing a shutdown on the line for example. Overall, the plant-based schedulers need integrated tools to act in their short-term plans to control activities near real-time. These changes in short-term plans need to reflect to central planning and business plans adjusting material requirements and inventory level projections accordingly.   

The I-Plan tissue solution

The I-Plan Integrated Business Planning solution for the Tissue Industry provides:  

A world-leading Collaborative Demand Planning tool with advance statistical forecasting, incorporating machine learning techniques, multivariate forecasting that enables statistical forecasts to be influenced by market trends, along with powerful event models that take into consideration end customer promotional campaigns. 

An enterprise-level Supply Network Optimisation tool with ‘what-if’ scenario planning that allocates demand to the pulp lines, tissue machines and converting lines to maximise profit across the enterprise.  The process models all constraints of capacity, capability and customer preference and delivers production schedules for all stages of the process, inventory plans for semi-finished goods and finished goods calculated to meet customer service targets, transportation schedules and time-phased raw material requirements 

Demand Sensing process that allows adjustment of the forecasts based on booked orders and deviation from normal customer behaviour to drive short-term production plans and inventory plans using real-time short-term forecast updates. 

Detailed Production Scheduling tool that generates minute-by-minute schedules for the tissue machines and converting lines, updating in real-time from shop floor execution systems and providing a ‘drag and drop’ user interface for short-term schedule adjustments. 

An Inventory Optimisation tool that ensures that semi-finished and finished goods inventories are maintained throughout the distribution network to meet service level targets, generating all of the needed production and stock transfer orders. 

A Sales Order Scheduling process to evaluate Available to Promise from Inventory and Capacity to Promise from production providing reliable delivery date promises in response to customer inquiries, reserving capacity and generating the needed production and shipment orders to ensure execution on time in full.  

A powerful Analytics system to generate reports, dashboards and KPIs to create a Control Tower for driving the business KPIs to their target. 

The I-Plan planning suite is a web application that is scalable, multi-language, multi-currency for operation in the cloud as a SAAS or on-premises deployment. 

Those tissue business owners who act in integrating the sales and operation planning to execution can turn their market uncertainty and volatility into an opportunity to outperform their competitors in the challenging Tissue Market. 

Find out more about the Solutions I-Plan has to offer. 

Mayr-Melnof PackagingFedrigoniThe Navigator CompanyPACT GroupSaica GroupInternational PaperCoca ColaMondi GroupBillerud-KorsnasClearwater PaperSt RegisSCG PaperSappiMetsa (formerly m-real)Stora Enso Wood ProductsKimberly ClarkNordeniaSuominen Corporation