The case study in SCM is based on the the work done by JOY M. FIELD and ROBERT P. SROUFE (2007). In the presentation the case is presented to undertand the nature of business & Basics of cardboard manufacturing process. Later, The methodology is expalined to solve the mentioned problem. In the end, Managerial Insights are drawn from this case to guide SCM proffesionals for better decision making.
Key reference:
JOY M. FIELD and ROBERT P. SROUFE, “The use of recycled materials in manufacturing: implications for supply chain management and operations strategy”, International Journal of Production Research,Vol. 45, Nos. 18–19, 15 September–1 October 2007, 4439–4463
9953330565 Low Rate Call Girls In Rohini Delhi NCR
SCM case study: Cardboard mfg units
1. A study of supply chain practices
corrugated cardboard industry
Abhijeet Ghadge & Aravindan S.
M.Tech
Dept. of Industrial Engineering and Management
IIT Kharagpur
2. Overviewof presentation
Nature of corrugated cardboard manufacturing business
Basics of cardboard manufacturing process
The problem
Data about the problem
Methodology to solve them
Key result
Managerial Insight through this case
References
3. corrugatedcardboard industry
•35 million tons per annum (US)
•4 million tons were made from recycled materials
Types of organizations in business
Integrated firms (integrateds)
Non-integrated firms (independents)
6. Problemfacingtheindustry
“Imbalances in market power can result from conditions that give suppliers
more bargaining power than their customers.”
Suppliers(integrated’s ) are also competitors ( produce same final product)
The virgin materials are often controlled by a few companies.
Nonintegrated companies are relatively unimportant to their suppliers .
The integrated’s product is critical to the independent’s business.
Environmental concerns make it virtually impossible to get a permit to add
containerboard capacity using virgin materials
-Porter (1980) and Harrigan (1985),
7. Where is the source of problem?
Non-integratedOutput
Market
Non-integrated Integrated firms
Competitors for
same market
Supplier
Input material
8. Source of problem…
Suppliers of containerboard institute rationing, satisfying their internal
demand first.
Suppliers were not adequately meeting needs.
Independents corporate and operations strategy is
•Customer pull
• Flexibility,
•High value-added services
•Customer intimacy in their operations.
But
The mode of operations in the industry is
•high volume
•low-cost
As a result, independents needs in terms of product mix and delivery
characteristics were not satisfied
9. Concept of mini-mill
Unit which can extract fiber from used and old corrugated boxes.
Usually produce only one type of containerboard (either linerboard or
corrugating medium).
Low capital and operating costs.
Profitable at relatively small volumes, typically about 400 tons per day (tpd).
Quick commissioning (<1year)
10. Critical proposition
Lower capital costs of mini-mills
Less dependency on integrateds for their raw materials
The sources of OCC (e.g. municipalities, grocery store chains) are not
influenced by integrateds
11. Independent corrugated cardboard manufacturers can
increase their degree of vertical integration.
Integrateds soon will follow as
– Defensive response to maintain market share in the local
area
– Additional capacity.
What happens if only mini-mill is added
Designing of a reverse supply chain for OCC to leverage
on ones size and efficiencies
Then the Key difference??
12. RestructuredSupply chain
Corrugated Inc
Paper Co.
Paper Co produces linerboard for internal demand.
Trades linerboard with containerboard materials.
Paper Co will also trade linerboard with linerboard
producers in other parts of the country where
Corrugated Inc has corrugated cardboard mfg. facilities.
Fiber Co Fiber Co is involved in sourcing
secondary materials such as OCC.
13. Features of OCC
•OCC is a commodity with significant price fluctuations.
•Requirement 200000 tons of OCC per year .
•Availability :approximately 1 million tons.
•Competitive market
•Approximately 500 suppliers of OCC in target area
•40–50 tons per month→ Good supplier for Independents.
>200 tons per month→Acceptble supplier for Integrateds
•Disposal of OCC is not an important issue for most small
generators.
14. •Focuses on smaller generators.
•Be ‘‘ a mouse in the corner’’ and take care of the generator’s OCC
while involving the generator as little as possible.
•Install collection and compressing equipment at the generators sites.
•75% of the OCC shipped directly from the generators to the mini-mill.
•Procure OCC from suppliers within a 150-mile radius of the
mini-mill to reduce freight cost.
•Work with small generators of OCC in a cost-effective manner.
Procurement strategy..
15. Opening up of additional revenue stream
Independents tend to compete less on cost (due to their smaller size
and fewer economies of scale) and more on other competitive
dimensions, the CEO saw an opportunity to supply containerboard to
other independents in a manner consistent with their needs.
Paper Co both sells and trades their linerboard with other independents
(or corrugated medium manufacturers), and integrateds. Thus opening
up a new revenue stream for the organization
16. The new supply chain
Reference: JOY M. FIELD and ROBERT P. SROUFE, 2007
17. Implications for the supply chain structure, supplier relationships, and
operations strategy
--All firms in the industry can realize lower capital and operating
costs from using
recycled versus virgin materials.
--Decreased bargaining power of the integrated firms.
--Direct cost savings
18. Associatedrisks
•Fluctuations in the cost of OCC while containerboard prices remain stable or
even fall .
Reference: JOY M. FIELD and ROBERT P. SROUFE, 2007
19. Main insights of the case
•Steel industry experience the same lower capital costs by
building mini-mills that use recycled materials.
•Decoupled original producers and recyclers of cardboard
products.
•Supplier-customer relationship is unusual
Generator of OCC do not consider itself a producer in the traditional
sense and is, therefore, unconcerned with developing a marketing
strategy for this product.
Supplier of OCC is selling their by-products rather than their products.
20. Firm size will be negatively associated with the use of non price-related
strategies for securing their supply of recycled material inputs.
Main insights of the case…
In contrast with the reverse supply chain literature that typically assumes
that the existing supply chain is basically unaltered when the reverse supply
chain is designed separately from the forward supply chain system,
figures 1 and 2 show the supplier relationships before and after the
adoption of containerboard paper mini-mills and how they change as a
result of the availability and use of recycled material.
21. References
•JOY M. FIELD and ROBERT P. SROUFE, “The use of recycled materials in manufacturing:
implications for supply chain management and operations strategy”, International Journal of
Production Research,Vol. 45, Nos. 18–19, 15 September–1 October 2007, 4439–4463