Liberate your business with IT: the pulp and paper industry needs to get out of the Stone Age and unlock the future with improvements in IT.
"IT has an important role in creating value within the industry, and good information will be a powerful tool to help the industry's recovery, but only if leaders change how they approach the industry and change their often 'Stone Age' approach to customer relationships and the exchange of information with customers," he said. Wilde's candid comments and counsel on the role of IT in creating value were a sobering message on the final day of the conference. Industry and customer panels both echoed the desire for improved utilization of information and standardization of practices. The closing CIO panel was a very positive final note for the conference. The industry is headed in the proper direction, but it will be a long journey before the industry is considered "world class" in using information to better satisfy customers and grow markets. Appropriate IT investments can truly be the tool to liberate paper industry companies from their past "Stone Age" approaches.
SOLUTIONS, OPTIONS, AND OPPORTUNITIES
Determining an IT ROI was a recurring theme throughout the conference's breakout sessions, technology showcases, and discussions with exhibitors. During his keynote address, Arnie Nemirow, chairman, CEO, and president of Bowater Inc., spoke of his company's pragmatic approach to making IT investments. Business case development by business unit managers is the fundamental decision criteria in Bowater's approach to IT spending. Wilde singled out Bowater as one of the best-run companies in the paper industry, and there is a definite relationship between Bowater's approach and Wilde's comment. To develop realistic IT justifications, Bowater has developed a solid handle on its business processes.
The forest products, paper, and packaging industries have a great opportunity to connect better with customers and suppliers, and to better integrate their company divisions. During the conference technology showcases and in the exhibit hall, solutions providers discussed numerous IT alternatives. The common theme of these discussions was that the greatest challenge for the industry will be to seize the moment by not only better defining our existing processes, but by developing more collaborative approaches to working with customer and supplier trading partners.
From an IT perspective, there some unique requirements within our attribute-driven, process type industry. Yet from the perspective of an external customer or new market, our products are no different than many other attribute-rich products. As an industry, we must be able to adapt to connectivity standard of the many markets we can potentially service.
The paper industry has demonstrated its ability to rise to a challenge many times during its history. The new challenge is to continue an aggressive shift to better understand our customers, create new products for new markets and better collaborate with all trading partners. Enormous amounts of information and heightened levels of IT systems interoperability will be required to meet the challenge. The Microsoft ".net" vision presented at one general session is one idea of how the industry might meet the challenge. There were numerous suppliers exhibiting at the conference with equally viable concepts of how to meet elements of the challenge.
THE BEST APPROACH
The best strategy is to prioritize IT investments based on strategic business goals. Focus on internal information flow reliability first, and then external connectivity within divisions and with trading partners. Most companies have addressed internal information flow issues is recent years. The new technology alternatives for external connectivity will be where the tough decisions are made.
The forest products industry has a reputation as a very slow adopter of new technology. Given some of our unique IT requirements and the relative small size of our sector compared to other manufacturing sectors, this reluctance creates the risk that we will become no longer commercially viable for the development of new, industry-specific IT alternatives. A review of the attrition, over the past few years, within the exhibitors list for this IT conference indicates that this may be a trend.
This scenario would force us to continue allocating our limited IT resources to development and maintenance of internally developed legacy systems. When most other industries are exploring outsourcing or other IT cost reducing alternatives, we may be committed to a growing IT maintenance budget. These IT resources would be better applied if focused on external connectivity and customer/ market growth focused initiatives.
THE GOOD NEWS!
Many conference breakout sessions discussed success stories or experiences in a wide variety of technology areas. Bowater presented a "Sensor to Boardroom" information flow session, several companies presented e-business initiatives, and various business information warehouse approaches were also discussed. Attendees flocked to the mergers and acquisition sessions, as would be expected given the consolidation in the industry. Wall Street has favorable comments on our industry's direction of consolidation and reduction of high cost capacity. The industry is on the right track. A renewed focus on collaboration and gains in supply chain efficiencies will fuel the expense to develop market growth opportunities.
With consolidation, our industry's company size profile is becoming more "bimodal" in nature. By leveraging new, cost effective IT alternatives for external connectivity with customers and suppliers, small to mid-size companies can successfully compete with larger companies. These companies may even be more agile and flexible to pursue new markets or provide greater customer service because of their size. The key will be smaller companies' ability to collaborate and leverage supply chain relationships to gain the same efficiencies the larger integrated producers are currently pursuing. Smurfit-Stone Container gave an excellent breakout session presentation about its internal supply chain integration efforts and the IT roadmap being used.
Leveraging the "value of information" will determine the winners and losers in the future of the paper industry. Critical internal and external strategies for taking advantage of information include:
* Streamlining internal business processes by eliminating the "information chase" within the organization
* Gaining complete visibility of order/shipment/invoice information among trading partners
* Leveraging market and customer information to create new product opportunities
* Using cost-effective external connectivity alternatives to better collaborate with trading partners and cut non-value adding transaction costs
The PIMA IT conference gave participants some sobering news from Wall Street, a wide range of IT solution options, and many approaches on how companies are using IT solutions for business value. Presenters and participants often stated that the ROI for IT investments is a prime concern; however, it will be equally important to reformulate a corporate IT vision to use information to libe rate the paper industry from some "Stone Age" approaches to working with customers and suppliers.
IN THIS ARTICLE, YOU WILL LEARN:
* Wall Street's view of the pulp and paper industry.
* Our industry's best IT options and opportunities.
* Critical strategies for maximizing the value of information.
* How the paper industry's IT adoption compares to other industries.
* Visit PIMA's home page: www.pimaweb.org
* Check the Solutions! Magazine archives for Ted McDermott's April, 2002 article, "Getting Value from IT Investments", at www.tappi.org
About the author: Ted McDermott is a member of the TAPPI Editorial Board and an e-business/technology analyst and consultant based in Palatine, Illinois. He can be reached at +1 847 934-6386, or by email at email@example.com.
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|Title Annotation:||Conference Report|
|Publication:||Solutions - for People, Processes and Paper|
|Date:||Jul 1, 2002|
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