Examining the Paper and Packaging Industry Value Chain

Objective

After completing this lesson, you will be able to examine the value chain of the Paper and Packaging industry and how business models are evolving.

Planning and Production Process

Let's understand the planning and production process of paper, focusing on the three steps shown in the video. We’ll also explore how grammage and grade are managed throughout the production planning process.

Watch the video to learn about the planning and production process of the Paper and Packaging industry.

Expanding on the Value Chain

The next step is to understand the business processes associated with each part of that value chain. This video dives into those processes to help you identify and speak to the specific activities in this industry.

SAP Customers in the Paper and Packaging Industry

The list of SAP customers across all the Paper and Packaging Sub-Segments

SAP customers in the Paper and Packaging industry are utilizing SAP's innovative solutions to optimize their business operations, improve efficiency, and meet the evolving demands of their industry. These customers are leveraging SAP's software in various areas to streamline their customer experience and manufacturing processes, enhance supply chain visibility, and improve sustainability efforts.​

Some examples of SAP customers in the Paper and Packaging industry include:​

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1. International Paper: One of the largest producers of fiber-based packaging, pulp, and paper products, International Paper utilizes SAP's software to manage its complex manufacturing operations, improve inventory management, and enhance customer service.​

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2. Mondi Group: This global packaging and paper company leverages SAP's solutions to improve its production planning, optimize logistics, and ensure compliance with environmental regulations.​

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3. Smurfit Kappa: As a leading provider of paper-based packaging solutions, Smurfit Kappa uses SAP's software to streamline its order management processes, enhance production efficiency, and improve overall business performance.​

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Overall, SAP customers in the Paper and Packaging industry are embracing technology to drive digital transformation, improve sustainability practices, and stay competitive in a rapidly changing market.​

Profiles of Example Customer - Innovation and Sustainability

Let's explore detailed profiles of five example SAP customers to get insights into the structure of the Paper and Packaging industry.

A comparison table of six companies (UPM, Mondi, Steinbeis, Westrock, Koehler Paper) highlighting their focus areas, products, revenue, and other key business aspects.

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Similarities Across the Industry

  1. Global Presence and Market Influence

    • Global Reach: Most companies, except Steinbeis and Köhler Paper, operate internationally. UPM, Mondi, and Westrock manage extensive production sites across multiple countries.
    • Sustainability Focus: Sustainability is integral to each company’s mission, with a strong emphasis on environmental stewardship.
    • Diverse Product Lines: All companies offer a wide range of products, including paper, packaging materials, labels, and specialty items like thermal and décor papers.

  2. Innovation and Sustainability

    • Mission Statements: Sustainability is a recurring theme, positioning these companies as leaders in environmentally conscious practices.
    • Supplemental Products: UPM, Mondi, and Steinbeis enhance sustainability efforts through products like biofuels, biochemicals, and recycled materials.

  3. Energy Initiatives

    • Renewable Energy Usage: Companies like UPM, Steinbeis, and Koehler Paper utilize renewable energy sources, such as biomass, wind, and solar power, to align with sustainability goals.

Key Differences

  1. Scale and Revenue

    • Revenue and Employee Disparity: Westrock leads with USD 21 billion in revenue and 58,000 employees. UPM (USD 10.5 billion) and Mondi (USD 7.7 billion) follow, while Steinbeis ( USD 279 million, 354 employees) and Koehler Paper (USD 1.322 billion) operate on smaller scales.

  2. Production Capacity and Sites

    • Production Sites: Westrock has 300 sites across 30 countries, demonstrating its global dominance. Mondi has 100 sites, while Steinbeis operates a single production site.
    • Paper Production: Westrock produces 12.3 million tonnes annually, significantly more than Steinbeis (280,000 tonnes) and Koehler Paper (500,000 tonnes).

  3. Specialization and Product Focus

    • Unique Product Areas:

      • UPM: Forestry, pulp, timber, and bio-products
      • Mondi and Westrock: Packaging and paper
      • Koehler Paper: Thermal and décor papers
      • Steinbeis: 100% recycled paper
    • Supplemental Products: UPM leads with bio-based innovations, while others focus on recycling or core offerings.

  4. Strategic Moves:

    • Mergers and Acquisitions: Westrock’s merger with Smurfit Kappa created a global leader with over 100,000 employees. UPM’s closure of a paper plant signals a strategic pivot, while Mondi pursues growth through potential acquisitions. Smaller players, like Steinbeis and Koehler, have limited M&A activity.

In-Depth Insights

  1. Strategic Positioning in Sustainability

    • UPM: Focuses on renewable resources and bio-based innovation
    • Mondi: Combines sustainability with design-centric solutions
    • Steinbeis: Centers its business model on 100% recycled paper
    • Westrock: Integrates innovation with sustainability to create stakeholder value
    • Koehler Paper: Emphasizes renewable energy and long-term commitment to sustainable production

  2. Regional Influence

    • Global Leaders: UPM and Mondi operate extensively across continents.
    • Regional Specialists: Steinbeis focuses primarily on Europe.
    • US and Global Dominance: Westrock has a strong presence in the US and a growing footprint in Europe.
    • German-Centric Approach: Koehler Paper operates mainly within Germany while maintaining a global outlook.

In conclusion, while all five companies share a commitment to sustainability and innovation, they differ significantly in scale, market reach, production capacity, specialization, and strategic actions. These differences define their unique positions within the Paper and Packaging industry.​

Lesson Summary

Production Process: Paper production involves three key steps—purchasing/producing pulp, processing pulp into jumbos, and trimming jumbos into sheets, with grade and grammage managed throughout.

Efficiency: Production is optimized by grouping similar paper types and using trim optimization to reduce waste.

Industry Statistics: About 33-40% of all wood traded worldwide is used by the paper, pulp, and packaging industries, with many mills being self-sufficient in energy.

SAP's Role: SAP customers like International Paper, Mondi Group, and Smurfit Kappa use SAP software to streamline operations, improve efficiency, and enhance sustainability.

Industry Similarities and Differences: Companies share a global presence and sustainability focus but differ in scale, production capacity, specialization, and strategic moves.

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