Supply Chain Organization and Customer Collaboration. CSCMP Chicago Round Table April 12, 2012 Howard Lortz and Andrew Weiler
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1 Supply Chain Organization and Customer Collaboration CSCMP Chicago Round Table April 12, 2012 Howard Lortz and Andrew Weiler
2 Leading manufacturer of paper and packaging products Third-largest North American manufacturer of uncoated freesheet paper Office & commercial printing papers Envelopes, forms and newsprint Flexible papers for food wrap and other applications Containerboard and corrugated products Boise Paper 2011 sales: $1.5 billion Boise Packaging 2011 sales: $950 million 2
3 Manufacturing and Distribution Locations 5,400 employees 17 states, Canada, Mexico, France, Netherlands, Spain Acquired Hexacomb and Tharco for $325 million in /12/12 3
4 Boise owns Tharco Packaging, Inc. - Leading manufacturer and distributor of packaging solutions - 1,600 SKUs of standard size boxes - Traditional and plastic corrugated - Foam packaging and antistatic products 4
5 Recently, Boise Inc. acquired Hexacomb protective packaging business. Hexacomb is a leader in kraftpaper-based honeycomb protective packaging and operates twelve manufacturing facilities across six countries. Hexacomb converted approximately 60,000 tons of containerboard. 5
6 Safety Boise's Safety Strategy Consists of: Leadership committed to achieving the vision. Effective communications to relay safety and health expectations. A process to identify strengths and weaknesses and the means to address them. Employing those committed to the safety and health process. Effective training and development to include extensive safety orientation. Continuous and consistent focus on housekeeping and measurements. Holding all accountable for the safety and health process and extensive employee involvement. INCIDENT-FREE! 6
7 Individual Choices Help Create Corporate Sustainability Our people make choices every day that enhance our performance. Employees developed our Stewardship Principle: We manage our businesses to sustain environmental resources for future generations. We seek new opportunities to grow profitably while balancing the goal of sustainability with customer requirements, environmental perspectives, and returns to our investors. We do this by working safely, enhancing the communities where we operate, using natural resources intelligently, and taking a stand to improve the global environment. 7
8 Boise Inc. Helped Design Better Practices, Better Planet 2020 An initiative of the American Forest & Paper Association that sets the most extensive, quantifiable sustainability goal setting put forth by a U.S. manufacturing industry. Boise CEO Alexander Toeldte is chairman, AF&PA board of directors in
9 Supply Chain Organization 9
10 Logistics Planning Organization 10
11 Supply Chain Responsibilities Customer Service Average 6,000 plus orders per month 62% of orders are electronic Business systems support VMI/EDI Boise.com CSR systems Logistics Sales Forecasting Production Planning Inventory management Distribution systems Freight Management Sales, Inventory, Operations Planning (SIOP) System Optimization Machine Loading Five Quarter Financial Forecast and Budget 11
12 Supply Chain Roles Tasks, responsibilities Accountability Roles: Logistics Sales Marketing Manufacturing Transportation P - Primary C - Contributory DISTRIBUTION AND FREIGHT MANAGEMENT Develop RFPs and select carriers C P Select Transportation Management Systems C C P Manage freight costs per ton C C P Select 3pls for service and cost P C C C Negotiate warehousing and converting costs P C C C Select and Install systems to support distribution P Develop International Distribution Strategy P C C C TOTAL LOGISTICS COSTS Freight Cost Targets P C C C Inventory Targets P C C Distribution Management P C C C Network Optimization Model P C SERVICE METRICS Service Targets C C P C Execute fill rates P C C C Execute on time delivery P C C C INVENTORY PROGRAMS Customer eligibility decision, prioritization C C P Manage Stocking Lists C C P C Analyze excess and slobs inventory P C C Replenish inventory programs P Mill Inventory programs P P C Job Lot Management P C C C 12
13 Customer Experience Vision Why do I buy from Boise? Simply put, Boise just gets it. They understand my business and the problems I face. They understand my supply chain and offer services and solutions that I can depend on. They are my trusted partners in marketing, sales and logistics. They re easy to work with, too. They provide me options in how I send and receive information. Whether it be via phone, , mail or the web, I always get what I need. When I call someone at Boise, they are always knowledgeable, informed and efficient. They know what s going on and handle my requests with one call. They make me feel like I m their most important customer. Most importantly, I trust Boise. They meet their commitments. My paper arrives when they say it will. If there could potentially be a problem someone always calls me with options and information. They care about my business, and my customers. I ve built my operations around their service reliability. They always make it right. 13
14 Monthly Sales, Inventory & Operations Planning (SIOP) Update data & generate preliminary forecast Sales adjusts forecast Preliminary Operating Plan Pre-SIOP Meeting SIOP Meeting Month End Week 1 Week 2 Week 3 Update files: Actual sales Production Inventory System generated forecast Revise forecast based on: Promotions New Customers New products Market change Review adjusted forecast Demand changes Inventory requirements Capacity constraints Supplier constraints Prepare for S&OP Meeting by: Resolve problems and develop recommendations End of Week 3 Authorize change Identify alternatives Break ties to problems not resolved Set agenda Hold S&OP Meeting: Make decisions Final Operating Plan 14
15 Sales & Operations Planning The Sales & Operations Planning process translates business plans into a tactical operations planning and execution system. 36 Months Business Model optimal loading, identify Gaps, develop execution plans, & monitor Planning execution performance. Tactical Execution 1 Month 1-3 Months Monthly Financial Forecast SIOP Plan Block Schedules, Production Schedules, Inventory Replenishment Updated 36 month price and volume assumptions. Load plans and gap identification Production planners build master plan. Actual orders entered in plan blocks Mill trims PM production schedules X Y Z Friday operations meeting Production variability, Demand Variability, Transit delays 15
16 Organizational Challenges Replacing an aging work force Finding people who want to work in non urban areas Advancement opportunities Working in a smoke stack industry Understanding the millennial generation Third party relationships and company culture The use and selection of systems without a background in operations Customer collaboration 16
17 Customer Collaboration OfficeMax 17
18 Transportation Synergies OfficeMax partners with Werner Enterprises for PowerMax DC deliveries to approximately 900 stores. Boise utilizes some of their backhaul capacity in key lanes Reduces empty miles Provides efficiency gains at PowerMax s On-going dialog between transportation organizations to identify additional opportunities. 18
19 Pallet Recycling Program Reverse logistics program from OfficeMax DCs to Boise Pallet manufacturer Partner pallet manufacturer reworks and ships down to Boise s Jackson, AL mill. 19
20 LEAN Warehousing Boise s Chicago Regional ServiCenter began partnering with OfficeMax s local facility in January to mentor in the area of LEAN warehousing. OfficeMax has a strong LEAN culture and we are working to harness that knowledge in our own operations. 20
21 Safety: Carton Handling Team Objective: Develop leading-edge indicators and solutions that reduce Recordable injuries and Lost Time Incidents (RLTI) occurring in supply chain and retail while handling office paper products in carton quantities. Accomplishments: Perforated Cartons Added Paper Flag to the STARS reporting More space for pallets of paper at store layouts Directions for safe handling included in SOPs (standard operating procedures) Safety included as topic in 2012 Store Audit Safety included as topic in DM Meetings Carton Packaging and Handling Risk Assessment 21
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