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Technologies enable strategy, development and innovations23.1.2020
KRISTIINA LAMMILA, CIO
Ahlstrom-Munksjö
Ahlstrom-Munksjö – Global leader in fiber-based solutions
• Fibers are at the core of what we do and the common
denominator for our products and solutions
• Natural fibers represent 94% of our total fiber use
• We offer custom made specialized fiber-based materials
• Our value proposition is based on innovation, quality and service
• Our offering contributes to a more sustainable everyday life by
providing renewable materials that are alternatives to non-
renewables, and solutions that make the end product more
sustainable
Key facts
• Global network of sales offices and 45 plants and converting sites in
14 countries
• Approximately 8,000 employees, More than 40 different nationalities
• More than 7,000 customers in over 100 countries
• Pro forma 2018 net sales of approximately EUR 3 billion
• Shares listed on Nasdaq Helsinki and Stockholm
• Head office in Helsinki 3
Public
Balanced end-use and
geographical exposure
KEY STRENGTHS
• Leading position in chosen segments
• Operating in growing markets
• Balanced geographical exposure to a
broad range of end-uses
• Designed sustainable and innovative
solutions for customers
North
America
Asia
Europe
Rest of the world
South
America
Transportation
Industrial Health Care & Life Science
Consumer
Goods
Homebuilding
& Furniture
Share of sales 4
Public 4
Smart solutions out of fibers
TEX-STYLE™ - an extra
resistant composite abrasive
backing
CelluStraw™ - a fiber-based
solution for paper drinking
straws
World of Colors gives
heavyweight papers a great
design look
Optilam™ - a release material
to optimize RFID inlay
lamination
GenReleaz™ specimen
collection card for cost-effective
biosamples
Trinitex® Advance W3200 for
gas turbine filtration products
Extia® 1000 for industrial
filtration applications
TrustShield™, single-use
fabrics for ultimate protection
ReliaMAX™ microfilters for
sample preparation and particle
removal
HighFlow - a reinforcement
fabric for wind and marine
industry
5
Public
Leading positions in growing markets
# Market position in strategic segments
% Market growth in percentage
* One of the leading suppliers in the relevant segments
Figures are based on management estimates.
Public
6
Sustainable and innovative fiber-based solutions
Human rights
Community engagement
Employee well-being
PEOPLE
Supply chain
Energy, water and waste
Carbon dioxide
PLANET
Profitability
Innovation
Business ethics
PROSPERITY
BETTER PERFORMANCE LOWER IMPACTFEWER RESOURCESSAFER MATERIALS
Diagnose diseases and purify polluted
drinking water
Formaldehyde free abrasive backings
and fluorfree food packaging materials
Plastic free and compostable tea and
coffee materialsFilter materials to purify air and protect
people from viruses and bacteria
Code of Conduct | Sustainability Policy | Sustainable Business Council
Sustainable everyday life
EcoDesign Tool
MISSION
7
Public
Profitability
Strategic transformation supporting profitable growth
2013-2016 2017 2018
Ahlstrom and Munksjö separately
focused on profitability
improvement
and deleveraging
Creating a growth
platform through the
merger of Ahlstrom and
Munksjö
Acquisition
driven growth
Caieiras
Expera
Targeting global
leadership in
chosen growth
segments
Growth focus,
increased
capex
2019
Continued shareholder
value creation and
deleveraging
Strategic alternatives for
Decor and plan to divest
fine art paper business
Comparable EBITDA (illustrative)
Measures underway to maintain and improve competitiveness, and drive growth1)
1) Illustrative (not necessarily in scale), not to be considered as guidance
2) Munksjö’s reported adjusted EBITDA margin for 2015
3) Pro forma comparable EBITDA margin in 2018
Comparable EBITDA margin-%
2015 2018
Cost synergies
from Expera
and Caieiras
in 2019
Annual
impact
from organic
investments
Business
synergies
from Expera
2020 onwards
Remaining
Ahlstrom-Munksjö
merger synergies
in 2019
Cost savings
program
2020
8% 2) 11% 3)
Variations in
volumes, selling
prices and raw
material costs also
impact profitability
8
Public
Public
New organization structure based on core capabilities and
business characteristics, effective 1.1.2020
9
Ahlstrom-Munksjö IT transformation – Building foundation for future
Ahlstrom IT Transformation started 2014 –
Starting point required fundamental IT turnaround
Very person dependent IT. IT competences distorted.
High cost level. Poor visibility to IT costs. Unhealthy balance betweencreate and run.
Not common governance for ITIT not owning IT – functions and businesses doing on their own many topics
Very limited documentation. Poor asset inventory.
Business continuity not secured. Not holistic security approach.
Auditor compliance at poor level.
3rd party vendor agreements lacking service level targets and other critical terms andconditions
Not one
unified
service
offering and
not standard
service levels
11
Public
IT and Business Process Management key targets
IT Vision
We are a proactive
enabler which provides
secured, value-added
solutions and services
to support
Ahlstrom-Munksjö
strategy fulfilment and
provide value for
business to achieve its
objectives.
Enable Ahlstrom-Munksjö strategy implementation
Provide services for end-users
Secure business continuity 24/7/365 in all countries
Ensure compliance with privacy regulations and protect company security
Drive aligned Business process management
with Business areas and Functions
Ensure reasonable and fit-for-purpose cost level (opex and capex)
Ensure compliance with external and internal auditor requirements
Protect company security and minimize other IT
related risk
12
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Ahlstrom-Munksjö IT transformation journey key milestones
Ahlstrom-Munksjö journey
Public
2015 2016 2017 2018 2019
Ahlstrom
IT transition
to Tech M
Ahlstrom
small IT
transition
to Tieto
Munksjö
IT transition
to Tech M
Expera
and Caieiras IT
transition to
Tech M
Osnabrück
plant
carve-out
Ahlstrom
and
Munksjö
merger
Expera
Speciality
Solutions
and
Caieieras
acquistions
Several
M&A cases
Establishing and
continuously
developing ITIL
based IT
management
setup
Several
M&A
cases
13
13
IT investments increased during to years to enable Ahlstrom-
Munksjö strategy and development
Public
IT capex 17 M€IT capex 12 M€
Delivery of projects
with 300 person yearsIT capex 8 M€
IT capex 500 k€ IT capex 500 k€
2015 2016 2017 2018 2019
14
14
Ahlstrom-Munksjö IT having strong & business driven governance
IT Steering Group
• Managing Ahlstrom-Munksjö IT project portfolio, approving all projects
• Main technology decisions
• Managing and monitoring Ahlstrom-Munkjsö IT high-level performance and main partners high-level
performance (annual risk analysis, external audit compliance, service levels etc)
• High-level IT cost monitoring
• Approving IT policies (prior going for EMT and Board / Audit Committee approval)
Public
15
IT Business partners
To build strong relationship between
business areas, functions and IT
IT business partners for
• Filtration and Performance Solutions
• Advanced Solutions
• Decor Solutions
• Industrial Solutions
• Food Packaging and Technical Solutions
• Finance, HR, Procurement
• Communication, Legal
• R&D
• Technology, OT
Public
16
16
Ahlstrom-Munksjö has been under heavy development and
changes since 2015
Fast company development and large Ahlstrom-Munksjö
arrangements would not have been possible without
strong & scalable IT platform
Public
17
Enabling Business DigitalizationEnabling new solutions and capabilities for company’s development
and growth. Enabled with versatile partner network and effective
data & analytics solutions.
Enabling Business
Efficiency
Ensuring business gets maximum benefit out of key applications.
Building new ERP and other key application landscape. Ahlstrom-
Munksjö IT services portfolio continuously developed to provide
required capabilities for company’s development.Securing Business
Continuity
Securing Ahlstrom-Munksjö
IT services continuity,
required by the business
and related risks mitigated
effectively. IT setup on
the level required to
enable achievement of
all focus areas.
2018 2019 2020 2021 2022
Public
Ahlstrom-Munksjö IT focus points – Now ready for future challenges
18
IT enabling Ahlstrom-Munksjö strategy, development and innovations
Ahlstrom-Munksjö strategy overview
Public
20
Ahlstrom-Munksjö strategy implementation
requires strong IT contribution
➔ Sustainability & traceability
➔ Innovation
➔ Growth and company arrangements
➔ Growth and production investments
➔ Local accountability
➔ Efficiency and agility – Strong global IT platform a must
➔ Customer value
➔ Ahlstrom-Munksjö vision enablement – Growth segments
➔ Teamwork
➔ Long-term commitment
Public
Global IT service portfolio
• 75 % of revenue done with SAP, OrderPlan (O2C ERP) and CarelMill (MES)
• OrderPlan own-coded system (late 1990) with non-sustainable coding technology
– According to detailed evaluation OrderPlan can’t survive next 10 years
• CarelMill old product, not used by other companies any more
• Company having several ERP & MES technologies
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22
Reasons for planned Business renewal and IT renewal
Final decisions not done
Business and IT renewal covering business operations and renewal of core IT
applications (ERP and MES)
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Ahlstrom-Munksjö long term strategy enablement
Required Ahlstrom-Munksjö business renewal
Aging IT application landscape
23
Renewing
Ahlstrom-
Munksjö as a
Company
Ahlstrom-Munksjö business renewal agenda from two directions
Ahlstrom-
Munksjö as
effective
Portfolio
company
• Enable flexible asset model
• Effective finance and procurement
management
• Capacity optimization
• Effective customer management
• Working capital optimization
• Strong platform for M&A cases and synergy realization
• Audit, Regulatory, Privacy Compliance
• Transparency & traceability
Disruption
caused by
A-M
Optimize business Transform business
Disruption
caused for
A-M
Traditional supply
chain
Future supply
chain
24
Public
Summary on identified Business transformation opportunities
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Business opportunity General description
Business process harmonization
and process automatization
Procurement, Finance and also other opportunities to harmonize and automate processes
Sustainability & Traceability • Extensive traceability over the whole supply chain from supplier raw materials to customer can be high
differentiator for Ahlstrom-Munksjö
• Sustainability big strategic and competitive advantage for the company
Customer side pressure • Possible to integrate customer’s solutions better and provide own modern capabilities
• A-M could be as vendor available on procure-to-pay platforms
• Required blockchain solutions are possible to be blugged in
• True customer centricity possible
• Effective key account management
Knowledge driven company • With modern ERP & MES architecture possibility to have Single source of truth – Full, on-line visibility over
all levels of operations
• Ahlstrom-Munksjö is having huge amount of data – Currently majority of the data is used at one plant level
or data is not utilized at all. Turn from backwards reporting to forecasting and simulation
• Reporting, Analytics, Forecasting, Simulation – Not only looking backwards but also forwards
Personnel management • Prepared for reduction on workforce and challenges to recruit. Enterprise of Tomorrow, Employer branding
• Taking into the consideration retirement challenges and opportunities to optimize operations, Ahlstrom-
Munksjö should be able to do with less amount personnel the same as now
Factory 4.0 • Predictive maintenance, Integrated quality, Improved OEE, IoT solutions
Supply chain optimization • Working capital optimization, order management optimization etc.
R&D and Product development • Co-creation with customers, effective end-to-end internal R&D mgmt25
ERP & MES capabilities are still required –
Digital solutions not replacing core business systems
Digital ecosystems requires core systems
Source: Gartner
ERP &
MESERP & MES
Different levels of systems
Core elements on
manufacturing company
management
26
Public
2020 2021 2022 2023 2024 2025 2026
Planned high-level business renewal transformation schedule
Template *)
creationPilot
Procure to Pay Finance
Rollouts
Plant to Supply Order to Cash Commercial Excellence
Template creation PilotRollouts
Wave 1
Rollouts
Wave 1
Rollouts
Wave 1
Rollouts
Wave 1
Option: Advanced Liquid Technology
core solution
Currently systems used by ALT are
not enabling business development
as required.
Template continuous development
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27
Successful business transformation requires full operational
model development – People & organizational structure,
Processes and Technology
28
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Ahlstrom-Munksjö Process and Data management model under
stabilization – Responsibility of IT and Business Process Organization
Public
29
Final decisions on Business renewal under preparation
• Technology vendor selections
• Implementation partner selections
• Stabilizing process and data management
practices
• Building high-level program plan
• Planning organizational change
management
Final decisions during H1 / 2020
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30
ERP & MES technology renewal will take several yearsDuring the transformation process required new solutions will be built outside of the
program to ensure company’s success
Current on-going digital projects
• Building modern analytics and reporting
capabilities
• Digital collaboration capabilities
• Few plant maintenance related projects
Public
31
Operational IT coming close to Core IT 1(2)
Essential for future factory digitalization
• Another bigger development focus area within Ahlstrom-Munksjö is closer co-operation
between Operational IT and Core IT
• During the last two decades process automation / process control infrastructure technology
has turned to IT technology
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32
Operational IT coming close to Core IT 2(2)
Essential for future factory digitalization
• Due to new technologies and digitalization these layers are
coming closer together (picture on the right)
• Also paper machine and other machine vendors are having
solutions to build digital solutions for plants
• Related to digital solutions, vendor landscape is under heavy
turbulence
– To ensure Ahlstrom-Munksjö interest fulfillment, good
company level co-operation is a must
• Ahlstrom-Munksjö needs to be on the driving seat and
optimize its
– Spend
– Continuity
– Security
– Compliance
– Agreements
– Ownership of data
Public
33
Ahlstrom-Munksjö has built joint OT development agenda by IT and
Business Areas operation leads – Co-operation facilitated by IT
• Joint Steering Group established
– Business areas VP Operations
– Head of Indirect sourcing
– Head of IT infrastructure, Head of Production IT, CIOO, CIO
• Focus areas 2020
– OT security improvements
– Sourcing co-operation
– Improving OT management processes (patching, backups,
monitoring etc)
– Increase IT management awareness within OT
– Joint IT and OT infrastructure target architecture planning
(networks, computing, facilities)
– Tighter production investments co-operation
– Frame agreements with main OT vendors to cover
Ahlstrom-Munksjö interests
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Source: Deloitte
Summary of the presentation
• Strong IT foundation built to enable A-M strategy and to support
company changes on flexible manner
• Business renewal proposal, along with ERP & MES technology
renewal, under finalization
• Close co-operation between IT & OT on its way
• Digital solutions build as required already now
• Tight co-operation between business areas, functions & IT
Technologies enable strategy, development and innovations
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