Buyer-Seller Viewpoint Analysis Paper and Biorefinery Conference

Transcription

1 - Viewpoint Analysis Paper and Biorefinery Conference Graz, May 31 st 2017

2 Who we are Management consultancy specialized in the pulp, paper and packaging manufacturing industry Focus on sustainable performance improvements Interdisciplinary and collaborative project approach International team of industry experienced consultants Primarily top tier paper & packaging companies among client base (> 1bn in revenue) Vienna office founded in 2006 US operations started in 2010 Projects in more than 30 countries DRIVING CHANGE TO DELIVER RESULTS 3

3 Objectives of the buyer-seller viewpoint analysis Evaluation of collaboration in the forest-based industry Market Insights into perceived market developments in the forest-based industry Collaboration Currently practiced and aspired forms of collaboration Collaboration performance of the forest-based industry compared to other industries Perceived benefits of, and barriers to collaboration StepChange Consulting conducted this analysis by surveying conference participants and additional other industry experts 4

4 Overview of study demographics Respondents came from a variety of backgrounds Demographics Demographics More than 100 survey participants Focus on conference participants and additional industry experts Participants by functions 59% sellers 25% buyers 16% other Participants by industry segments 47% suppliers and service providers to the forest-based industry 38% producers of pulp, paper & packaging 15% other interest groups of the forest-based industry 5

5 Agenda: - Viewpoint Analysis Agenda Market overview Current and aspired forms of collaboration between buyers and sellers Collaboration: Benefits and barriers Key take-aways 6

6 Wood demand expected to increase, supply with different trend. Demand, supply and price for pulp expected to increase. Until 2020 I expect demand/supply/price to increase (all respondents) Market Overview 100% 50% 0% 50% 100% Demand 90% Wood Supply 60% Price 86% Pulp Pulp Demand Supply Price 74% 70% 88% No Increase Increase If you are a wood buyer Are you ready for a potential margin squeeze? If you are in the pulp business How do you handle the pulp paradox? 7

7 Recovered paper demand anticipated to rise, no increase in supply. Demand, supply and price for chemicals expected to increase. Until 2020 I expect demand/supply/price to increase (all respondents) Market Overview 100% 50% 0% 50% 100% Recovered Paper Demand Supply Price 77% 84% 81% Chemicals Chemicals Demand Supply Price 64% 59% 62% No Increase Increase If you use recovered paper Have you considered all possibilities to reduce risk? If you buy chemicals Are you prepared for price increases? 8

8 Balanced views on future market developments for MRO and machinery Until 2020 I expect demand/supply/price to increase (all respondents) 100% 50% Market Overview 0% 50% 100% Maintenance, Repair, Operations Demand Supply Price 60% 51% 56% Machinery, OEM Demand Supply Price 52% 55% 55% No Increase Increase If you are in MRO or machinery/oem business Are you prepared for differentiation? 9

9 No market growth expected for graphic paper. For packaging paper, respondents expect demand and supply to increase. Until 2020 I expect demand/supply/price to increase (all respondents) 100% Market Overview 50% 0% 50% 100% Graphic Paper Demand Supply Price 95% 83% 76% Packaging Paper Demand Supply 93% 89% Price 51% No Increase Increase If you are a graphic paper producer What do you do to improve your cost base at lower utilization rates? If you are a packaging paper producer Are you ready to manage pricing? 10

10 Agenda: - Viewpoint Analysis Agenda Market overview Current and aspired forms of collaboration between buyers and sellers Collaboration: Benefits and barriers Key take-aways 11

11 Direct, long-term relationships are the preferred mode of interaction in the forest-based industry. Sales channels considered efficient. Relationships and sales channels (buyers/sellers only) Sales Channels 100% 50% 0% 50% 100% Long-term relationships with suppliers preferred? 81% 92% Dealing directly with producer preferred? 82% 94% Existing sales channels efficient? 75% 92% Will traditional sales channels change until 2020? 63% 62% If you are a buyer in the pulp and paper industry Sales channels might be changing faster than expected. Are you ready for these changes? No Yes 12

12 The change in sales channels is thought to be driven by electronic platforms and the automatic sharing of inventory levels If you expect sales channels to change, how will they change? Sales Channels Electronic platforms increasingly used for selling and buying 80% Automatic sharing of inventory data with suppliers 70% /phone no longer standard for purchase orders and invoices 43% Is your organization ready for selling and buying via electronic platforms? Are you working on possibilities for automatic sharing of inventory levels with suppliers? Multiple answers allowed 13

13 s and sellers satisfied with levels of collaboration. s significantly overrate customers service level satisfaction. Satisfaction levels in the industry (buyers/sellers only) Collaboration 100% 50% 0% 50% 100% Are customers satisfied with level of collaboration with suppliers? 80% 90% Are customers satisfied with service levels from suppliers? 56% 87% No Yes If you are a seller in the industry Attention: it seems you are over-rating the level of satisfaction of your customers! Are you asking for customer feedback and acting upon it? 14

14 Overall, sellers are more actively engaged in collaboration, and buyers show willingness to engage in collaboration Rate the level of collaboration with suppliers/customers Joint cost-reduction projects We are already engaging in this 43% 50% Collaboration We would like to engage in this 50% 22% 93% Exchange of data on inventory levels 43% 50% 29% 31% 81% Joint research and development 29% 43% 50% 25% Usage of EDI etc. for electronic transactions 29% 42% 43% 22% Exchange of supply/demand forecasts 43% 21% 36% 33% Usage of Vendor Managed Inventory 21% 31% 21% 22% Exchange of production/consumption data 36% 25% 43% 42% Are you ready for joint cost reduction projects, and for data exchange? 15

15 Regarding collaboration, the forest-based industry is perceived to be performing worse than other industries, except for R&D Collaboration performance in comparison to other industries Industry comp. 100% 50% 0% 50% 100% Coordination and exchange on business targets / business strategy Exchange of standardized KPIs for performance comparison Willingness to exchange data with suppliers/customers Mutual improvement projects in the supply chain 69% 62% 60% 53% R&D and innovation collaboration 51% Worse Better The industry has a critical view on its collaboration performance Are you already taking action? All respondents. Multiple answers allowed. 16

16 Agenda: - Viewpoint Analysis Agenda Market overview Current and aspired forms of collaboration between buyers and sellers Collaboration: Benefits and barriers Key take-aways 17

17 s perceive overall higher benefits from collaboration compared to sellers Main benefits from collaborating with your suppliers/customers Benefits 71% 46% 64% 64% 30% -37% 27% 57% 49% 57% 27% 50% 43% 36% 43% 36% 51% +28% 29% 57% Optimized transportation/ warehousing costs Improved purchase price Reduced logistics costs Shorter lead times Improved possibilities of logistics planning Reduced inventory levels Improved possibilities of production planning Improved product development/ innovation Improved demand forecasting possibilities Top 3 benefits of buyers Top 3 benefits of sellers s don t perceive reduction of logistics costs as a major benefit. If you are a buyer, how do you share benefits to improve overall supply chain competitiveness? Multiple answers allowed 18

18 The main barriers to intensifying collaboration were named as high dependence on a specific partner as well as lack of trust Main barriers to increasing collaboration with suppliers/customers Barriers 64% 51% 50% 35% 43% 43% 38% -27% 16% +20% 29% 49% 29% 16% 21% 19% +24% 24% 11% 0% 0% High dependence on a specific supplier / customer Lack of trust in the partner Fear that partner receives larger share of the benefits Increased complexity Data security Lack of resources to be invested in collaboration projects Loss of flexibility Cost-benefit relation No substantial expected benefits Top 3 benefits of buyers Top 3 benefits of sellers s, overall, see higher collaboration complexity compared to sellers. If you are a seller How are you handling complexity? If you are a buyer, how are you handling data security? Multiple answers allowed 19

19 Agenda: - Viewpoint Analysis Agenda Market overview Current and aspired forms of collaboration between buyers and sellers Collaboration: Benefits and barriers Key take-aways 20

20 Key take-aways Perceived future market developments and collaboration Findings Demand and prices for all raw materials expected to grow, especially fiber-based raw materials No demand, supply and price increase for graphic paper expected Demand & supply for packaging paper expected to grow, price development expectations ambivalent Overall, sales channels seen as efficient by sellers and buyers but more sellers anticipate changes Overall industry sees itself lagging behind other industries in terms of collaboration Key benefits: s perceive overall higher benefits from collaboration compared to sellers Key barriers: Dependency on specific partner, lack of trust, unequal distribution of benefits, data security Engagement in collaboration higher on sell-side compared to buy-side, whereas the willingness to collaborate is high on buy-side 21

21 What s next? Considerations Overall, the pulp, paper and packaging industry is one, big, interconnected supply chain. Improvements and innovation will only come from successful collaboration. Risk of further margin squeeze due to respondents expectation for increase in raw materials demand and price. Proactive profit improvement initiatives necessary. IT platforms, concepts and capability largely exist more intense utilization of these enablers required to capture benefits Elimination of potential barriers to collaboration requires comprehensive calculation of business cases, management of complexity and data security Mismatch on perceived service level satisfaction can be addressed through a set of transparent and common KPIs and structured communication/feedback processes 22

22 Thank you! This presentation will be made available online: For questions regarding the study, please contact: Alexander Wirth or Valentin Schenkenfelder Tel.: alexander.wirth@stepchange.com valentin.schenkenfelder@stepchange.com DRIVING CHANGE TO DELIVER RESULTS 23