Building resilience and driving profitability in Bioindustry operations

In the wake of COVID-19, the economy has moved from a stable decade to more challenging times for businesses and operations. Cumulative impacts such as supply chain disruptions, energy price rises and volatility, global political fragmentation, climate change and adaptation have created a dynamic environment in which companies need to take an introspective view to align spending with objectives. Budgets can no longer be based solely on the linear growth of the previous year's performance but must be built from the bottom up.

Productivity and efficiency remain strategic factors that are critical to the survival of the business. In a down cycle, in which the pulp and paper business currently is, mills with the lowest margin and least profitable operations will be forced out of the market. It is thus paramount to gain control, stop bleeding money and raise operational efficiency. More than ever, this requires a holistic view of operations and an openness to digitally enhanced strategies.

At AFRY Management Consulting, we understand the multifaceted nature of the challenges and recognise that no single solution will suffice. Our approach is a combination of proven measures that address all facets of operations and tailor recommendations to the specific case. Our measures increase productivity, improve energy efficiency, prioritise supply chain resilience, enable flexible inventory adjustments, adopt a holistic planning approach, embrace digitalisation and automation, and ensure employer attractiveness.

Fostering success with well-defined KPIs

For us, efficient operations are the foundation of competitiveness and business success. By definition, they maximise value creation and minimise waste while balancing the inclusion of resilience factors. To properly measure the value of operations, it is important to focus on the right numbers. These are the Key Performance Indicators (KPIs), which must be derived from the key success factors of the business we are helping to shape.

KPIs play a key role in quantifying the right levels of performance and creating accountability and transparency. With AFRY as a partner, we avoid common pitfalls associated with KPI definition, such as overemphasising aggregate performance that cannot be influenced by individuals or relying solely on lagging KPIs. The right set of KPIs visualises variations in the flow of production, be it material or information, allowing for improvement and efficient reduction of lead times. The bottom line is that establishing the right KPIs is what matters, makes money and protects against margin erosion.

Collaboration is at the heart of our approach, as we define KPIs with all stakeholders, visualise them for easy tracking and communicate them clearly. With this in mind, you need skilled and committed people on the shop floor to drive the processes. Properly supported by the right set of KPIs, they will be empowered to take responsibility and commit to continuous improvement.

Sustainable efficiency improvements need focus and targeted follow-up

The number of accidents and daily production, together with the reasons for losses in previous shifts, are the most common figures communicated at daily meetings. The production delivers the goods to be sold, and it is not surprising that its results are shown in figures. However, measuring all operations against it is misleading.

The supply chain surrounds the production and aims to provide the right quantity of goods at the right time, together with resilience through stocking. The challenges are a large number of mill-external variables. KPIs to optimise the supply chain performance need to capture, for example, forecast accuracy, planning rigour, inventory levels and variations in levels over time. Improvement gains include a one-off reduction in working capital and an annual improvement in EBITDA.

Asset management ensures plant operability and is highly integrated. Lack of execution excellence is relentless and typically results in increased unplanned downtime and opportunity costs. Appropriate KPIs track internal processes to smooth the workflow and ensure the highest machine availability at lower specific costs.

Pioneering profitability through collaborative and systematic operational excellence

At AFRY, we are committed to doing the right thing the best way, with profitability as our ultimate goal. If your operations are underperforming and inefficient, we bring a systematic approach to the table. This includes diagnostics and redesign of management processes and digital tools, and engagement at all levels for effective implementation and adoption.

AFRY Management Consulting specialises in transforming operations, with a focus on achieving sustainability improvement and closing the identified operational execution gaps. In these challenging times and beyond, we stand alongside organisations, enabling them to build resilience, reduce waste and increase profitability.