A Paper Company Optimizes Its Industrial Footprint
A systemwide margin improvement program puts the company on track for a double-digit boost to EBITDA.
Following its acquisition by a private equity fund, a leading manufacturer of fibers and sustainable specialty materials launched a value creation plan with the goal of optimizing product allocation across its plants. We worked with the company on its strategy and operating model, operational improvements, and approach to ESG.
To improve operational excellence (OpEx), we worked with FiberCo* to design an optimal industrial footprint based on four key initiatives:
Powered in part by our Network EDGE suite of digital tools, we established a Digital Twin of FiberCo’s operation based on inputs at the product category and paper machine levels. That enabled us to create a list of scenarios and a “size of the prize” estimate based on four potential value creation levers. We developed an optimization model that spanned 700 product categories and 68 assets, and we mapped approximately 15,000 logistic flows to minimize overall cost-to-serve.
We helped FiberCo identify 37 priority initiatives that targeted approximately $60 million of the $100 million cost management goal. All business areas were involved, with product reallocation and capacity optimization receiving particular focus.
We developed detailed analyses of each initiative and created specific business cases based on technical feasibility, economic impact, and strategic considerations.
We worked closely with FiberCo to implement selected initiatives and provide continuous updates on progress as well as the identification of new opportunities. We also addressed trial projects and provided P&L impact tracking.
Through this technology-enabled analysis, we uncovered distinct pockets of value that helped the company achieve systemwide margin improvement through both cost reduction and growth. The company reallocated volumes within its baseline footprint, optimized its product portfolio and capacity, and invested in existing assets to create additional reallocation opportunities and optimize the global strategy of various business units and areas.
As a result, FiberCo saw an EBITDA improvement of more than $10 million within 18 months of the initial diagnostic, was on track by month seven to reach $60 million in impact, and has the potential to reach $100 million or more in EBITDA improvements based on the actions identified by the diagnostic.