Study of the pulp & paper/wood industry

Study of the pulp & paper/Wood induStry

Value oriented Maintenance and aSSet ManageMent

Highlights

• Maintenanceasafactor worthbillions

• ValueorientedMaintenance asbasisanddriverfor sustainablesuccess

• Evaluationofmaintenance andassetmanagement performancebymanagers andoperationalstaff

• Benchmarkingforderiving substantialareasofaction • Keyfactorsandpractical solutionsinsuccessful implementation

• Resultsinthepulp&paper andwoodprocessingindustry

Excursus: Shutdown Management

Content

2

Page3 Preface

Page 4-15 Studyofthepulp&paper/woodindustry

Page4 ExecutiveSummary

Page5 Maintenanceasafactorworthbillions-There'sstilllotstobedone

Page6 ValueorientedMaintenance-Basisanddriverforsustainablesuccess

Page7 Studydesign-TheConMotoMaintenanceScoreTest©

Page8 LevelmodelofMaintenanceandAssetManagementExcellence

Page9 Resultsofevaluation-Industrycomparison

Page10 Findingsandvaluecreationareas

Page12 Keyfactorsinsuccessfulimplementation

Page13 Excursus:ShutdownManagement

Page14 Results-What'sthebottomline?

Page16 Yourcontactperson

MarkusMärzDirectorBusinessDevelopmentConMotoConsultingGroupGmbHmaerz@conmoto.de

NilsBlechschmidtSeniorPartnerConMotoConsultingGroupGmbHblechschmidt@conmoto.de

Dr.LeonhardWeckManagingDirectorConMotoConsultingGroupGmbHweck@conmoto.de

©2014ConMotoConsultingGroupGmbH.Allrightsreserved.Forrepeatordersandreprintingauthorisationpleasecontact:

ConMotoConsultingGroupGmbHBoschetsriederStr.6981379MunichGermany

Tel.:+49(0)8978066-138Fax:+49(0)8978066-101Email:[email protected]

Authors

Change and transformation – these are the key-wordsthatcurrentlycharacterisethedevelopmentnotonlyofthepulp&paperindustry,butalsothewoodprocessing industry.Thesesectorsareun-dergoing a difficult process of change which isconfrontingcompanieswithnumerouschallenges.

While inmostoftheindustrialisedcountriesinthewest,themarketsareincreasinglysaturatedandarehardlygrowingatall,potentialgrowthisstillbeingforecastaboveall for theso-calledemergingmar-kets.This is connectedon theonehandwith theincreasing private consumption, but on the otherwith the growing export rates of these emergingcountriesandthegreaterdemandfortransportpa-ckagingthatgoesalongwithit.Paperisstillalongway from exhausting its potential as a packagingmaterialanditcouldincreasinglyreplaceother,lesssustainablematerials(especiallyinthefoodsector).

Moreover,thefinancialandnationaldebtcrisishashad significant effects. Although a certain basicneedforgraphicpapersaswellashygieneandpa-ckagingpapersoffsetseconomiceffectstoanex-tent,theinternationalpaperindustryshowedanoti-ceableslow-downinproductionandalowgrowthrate into 2012. Even though various institutions,suchastheworldbank,arecurrentlypredictingthattheeconomicsituationwillimprovethroughouttheworld,significantfluctuationsindemandarealsotobeexpectedinthefuture. Furthermore,itisverydifficulttofindaconsensusofopinion,especially in thepapermarket.Extre-mely variedmarket conditions are evident in thefourtraditionalsegmentsofgraphicpapers,card-boardandpackagingpapers,hygienepapersandspecialpapers,andtheindividualcompaniesmustconfrontthese.

Alsothewoodprocessingindustrieshavetoadaptpermanentlytonewcircumstancesinordernottobe left behind. So the development of intelligentproductsandsystemsolutionsonabasisofhigh-tech and ecologically advantageous materials,which for example provide newopportunities forlightweightconstructionofproductsandbuildings,rates among the much discussed topics of the researchlandscape.Especiallywood-basedmate-rials take on a key role and promise sustainablegrowthpotentialforthewoodprocessingindustry-which isunderpressurebysuppliersaswellasbyitscustomers.

Onethingisclear:thechallenges–suchashighermaterialcostsandenergycoststhatareleapingupandthathitthepaperandwoodprocessingindustryparticularlyhardasenergy-intensivesectors–arenotgettinganysmaller.Bothfactorshaveanega-tiveimpactoncompanyprofits.Itiscertainlypos-sibletospeakofanerosionofprofitsoverrecentyears,which isaccentuatedby theover-capacitythatexistsinsomeareas.Butforthosewhoknowhowtoapproachchangeandtransformation,thereareopportunities.ValueorientedMaintenanceandAssetManagement represents one possiblewaytoapproachtheproblemareasoftheindustryandto create a decisive competitive edge for sustai-nable, profitable enterprise development. This ispreciselythefocusoftheConMotostudyintothe pulp&paper/woodprocessingindustry.

Yourssincerely,

NilsBlechschmidtSeniorPartner

Preface

3

Cost ef�ciency

Shutdown optimisation

Stock of spare partsInvestments

Plant availability

Reliability

PROFIT ORIENTED VALUE CREATION

VALUE ORIENTEDMAINTENANCE/

ASSET MANAGEMENTEFFICIENT CAPITAL

EXPENDITURE

The importance of maintenance increases withequipment intensity in production. For the com-panies in thepulp&paperandwoodprocessingindustry,uptojustunder50percentofproductioncosts could be influenced directly and indirectlybytheefficiencyofmaintenanceactivities.Thisisasignificant lever for thesuccessofacompany.Butwhatisthebenchmarkforsustainablemainte-nanceandassetmanagementandwheredothecompaniesstandtoday?

TheConMotoConsultingGrouphasexaminedindetailtheMaintenanceandAssetPerformanceofatotalof158companiesandproductionsitesonfourcontinentsover recentyears.Theefficiencyof26differentmillsandplants inninecountrieswas studied in the pulp & paper/wood industrycluster.Theseincludebothconcernsandcorpo-rations listed on the stock market and mediumsizedcompanies inthefieldsofpapermanufac-turing (including special papers), cardboard andpackaging, hygiene products, pulp productionandwoodprocessing.

Overall, the study of thepulp&paper andwoodprocessingindustrygivesaclearsignalthatthingscouldbesignificantlybetter.Expressedasschoolgrades,theproductionsitesexaminedliebetweena grade of ‘poor’ (level 2 ‘stragglers’) and ‘satis-factory’ (level 4 ‘uppermidtable’) in theConMotolevelmodel ofMaintenance and Asset Manage-mentExcellence.Intermsoftheratiooftheoverallpoints score achieved to the maximum possiblescore (corresponds tobestpractice), theaverageinthisindustrialsectorisjust42percent.Eventhebestcompanyintheclasshasconsiderableroomforimprovementat56percentmaintenancematu-rity.Thisfailuretomakegainsinefficiencyissurpri-sing.However,theresultsimultaneouslyshowsthatproductionstillhasafutureinhigh-wagelocationsiftheopportunitiesofValueorientedMaintenanceandAssetManagementareusedconsistently.

Inanoverallcomparison,theequipment-intensiveandsafety-sensitivechemicalandpharmaceuticalindustrydoesbest(average47%).Thepulp&pa-perandwoodprocessingindustry(average42%)isinthirdplaceintheindustryranking,butisalrea-dybelowtheoverallaverage(44%)ofallthecom-paniesexamined.Theautomotive industrybringsup the rear with an average Maintenance and AssetPerformanceofjust39percent.

Thequestionnowarisesastowhatistobedonetosetnewstandardsforprofitorientedvaluecrea-tionwith efficient capital expenditure. The aim istoincreasethetechnicalavailabilityandreliability,whilesimultaneouslyreducingthelifecyclecostsofproductionsystemsandequipment that requi-rehigh investment.To thisend it isnecessary toestablishaself-sustainingdevelopmentinmainte-nance and assetmanagement, i.e. transfer bestpractice concepts and methods sustainably intothe ‘maintenance culture’ of companies or pro-duction sites. Ultimately, the staff must be putinapositionwhere theycanoperate innewandbetter ways, ‘live’ and stabilise them in the longterm. Both the industry-specific value creation areasandthekeyfactorsinsuccessfulimplemen-tationaresummarisedinthisstudy.

The successes achieved in the pulp& paper andwood processing industry speak for themselves.ThecompanieswereabletomoveupagoodtwolevelsontheirwaytoMaintenanceandAssetMa-nagementExcellence.Theimplementationprojectscompletedalsoshowthat inall relevant ‘KeyPer-formance Indicators’ (KPIs) significant, objectivelymeasurableimprovementswereachieved.

Effectiveness, for example, measured by the in-dicator ‘planned and unplanned downtime as apercentage of available time’ (-30 to -60%) im-proved significantly. Subsequently one of thecentral economic performance indicators, themaintenancecostratio,was loweredby15to25percent. A key reason for this is the increase invalue creating activities in themaintenance areaby reducing wasted time. At the same time, thestockofsparepartswascutby30to50percent.Theresultwasconsiderablyhigheravailabilityand reliabilitywith lower resourcecosts.Theseunde-niably significant advances in operational perfor-mancealsohadasustainablypositive impactonoperating income: companies with the highesteffectiveness and efficiency are among themosteconomicallysuccessfulintheirindustry.

Thisprovidesthefoundationforoperationalexcel-lenceinthefuture.Decision-makerswhorecognisethisandtakeaccountofthecompetitivefactorofmaintenance and assetmanagement in a proac-tivewaywillhaveaclearadvantageoverothers.ConMoto‘sindustrystudypointsthewayhere.

Executive Summary

4

Studyofthepulp&paper/woodindustry

5

Yourcontactperson

´

ConMoto Consulting Group GmbH, MunichBoschetsrieder Str. 69

81379 Munich

Germany

Tel.: +49 (0)89 78066-0

Fax: +49 (0)89 78066-101

ConMoto Consulting Group GmbH,

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70184 Stuttgart

Germany

Tel.: +49 (0)711 76779-0

Fax: +49 (0)711 76779-205

ConMoto Consulting Group

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HeadofConMotoCompetenceCentre ValueorientedMaintenanceandAssetInnovation

NilsBlechschmidtSeniorPartnerConMotoConsultingGroupGmbHManagingDirectorConMotoStrategieundRealisierung

Tel.:+49(0)8978066-114Fax:+49(0)8978066-101Email:[email protected]

NilsBlechschmidthasbeenamanagementconsultantsince1995atConMotoConsultingGroupGmbHandsince1999heisaSeniorPartnerandshareholderofthecompany.Heisresponsibleforthefieldof ‘ValueorientedMaintenanceandAsset Innovation’.Asanexpertinthisareaandwithwell-foundedknowledgeofvarioussec-tors,suchastheaerospaceindustry,engineeringandplantconst-ruction,thecarandcomponentsupplierindustry,processindustry(chemicals,steel,semi-conductors,pharmaceuticals,food),plasticsprocessing industryand transport technology,hegivesnumerouslectures. Since 1997 he has been speaker in renowned expert forums,suchasPlantMaintenance,EuroMaintenance,WorldMain-tenanceForumandconferencesofVDIwithparticularemphasisonMaintenance Excellence and LeanProduction. Before his time atConMoto,NilsBlechschmidtwasemployedastheTechnicalHeadofanaircraftmaintenancebusinessforsevenyears.HecompletedhiseducationasaDipl.-Ing.(graduateengineer)inaerospacetech-nologyattheUniversityoftheBundeswehrinMunichandgainedhisMBAatHenleyManagementCollege(UK).

ConMotoConsultingGroup

We have been supporting companies for more than 24 years to secureandimprovetheircompetitivenessandsustainability.Around80consultants,distributedacrossourofficesinMunich,Stuttgart,Vienna,St.Gallen,BratislavaandShanghai,workcompetentlyandwithcommitmenttorealisethebestpossiblebenefitsforourclients. Wecreateadvantage!This is the guiding approach of our implementation-oriented consultancy.