The Situation:
Pulp and paper companies operate in an intense competitive environment with significant challenges in global supply and demand. For Tembec, a Montreal-based forest products company, the keys to staying competitive and improving profitability with today's market challenges are to reduce costs, improve productivity, and optimize asset utilization. That's why the $4 billion company with a maintenance budget of more than $400 million annually decided to implement an asset management solution at its 17 mills throughout Canada, the United States, and France. Tembec formed an internal focus group of several department representatives to find a solution to meet its key business requirements.
Tembec needed a full-function asset management solution so it could standardize its processes for maintenance, repair, and operations; regionalize its warehousing and purchasing functions; reduce spare parts inventory; and improve asset reliability. The solution had to offer high price/performance benefits so Tembec could realize a quick return on its investment, thereby enhancing its bottom line and market capitalization.
The Challenges:
Over the course of nine years, Tembec had grown significantly through acquisitions. This resulted in an incongruent mix of asset management systems, business practices, and information technology. Tembec needed to select a single solution in order to have a common view of companywide information and facilitate benchmarking.
The solution had to address multisite and multinational operations to accommodate 17 mills with unique language, tax, and currency issues.
Tembec needed to improve labor efficiency, asset utilization, and overall maintenance, repair, and operations productivity by improving work planning. Better planning and visibility would also eliminate work order duplication and minimize reactive maintenance.
Tembec's existing purchasing process was plagued with inefficiency and high costs. The new solution needed to provide the functionality to aggregate purchases across locations for better pricing, and track purchases and the use of those items across the different mills.
The lack of reliable spare parts information throughout the mills resulted in excess inventory and high carrying costs.
The Key Insight:
Tembec required a system to effectively manage its equipment, facilities, and labor at multiple sites, and to address multinational issues. Tembec chose Indus to help improve labor productivity, reduce working capital expenses, streamline the company's supply chain, and enhance the visibility and performance of the company's assets throughout its mills.
The Solution:
Tembec has reduced duplicate work orders by 80%, leading to higher worker productivity and better service levels. Asset reliability has also improved with more proactive planning.
Tembec relied on Indus partner Inventory Management Analysis, Ltd (IMA) to clean and standardize spare parts inventory and create a central catalog system. This has decreased inventory levels, significantly reduced carrying costs, and freed up working capital.
Regionalizing purchasing allowed Tembec to monitor the total cost of ownership, purchase the most cost-effective items, and lower sourcing costs by consolidating suppliers and spending.
When the solution was integrated with Tembec's Enterprise Resource Planning (ERP) systems, the unified, comprehensive view of the company's operations helped improve productivity, reduce the costs of maintenance, repair, and operations, and keep management apprised of the status of highly dispersed assets.
As a leading provider of Service Delivery Management (SDM) solutions, Indus helps clients in a broad array of industries optimize the management of their customers, workforce, spare parts inventory, tools, and documentation. The Indus goal is to help companies achieve best-in-class performance. It's about increasing customer satisfaction, improving the visibility and performance of the organization's assets, optimizing the workforce, and maximizing the bottom line.
Pictures courtesy of Tembec.
