Stock and Cuts in Piteå : Standardization vs. Customization in the pulp and paper industry

Abstract: A major challenge for companies is to find the appropriate balance between standardization and customization. Today, Smurfit Kappa Pite˚a manufactures Kraftliner paper with a great range of grades, grammages, widths and diameters which increases complexity and total costs. The purpose of this work is to identify what savings potential may lie in reducing the number of articles. In this project we focused on the costs incurred in trimming and stocking. A standardization tool has been designed to be able to look at different standardization scenarios. The results show that if Smurfit Kappa Pite˚a were to standardize and only produce reels with a diameter of 1400mm, they would be able to reduce their required safety stock and the number of trim reels needed to fulfill demand. Thereby annually reducing their inventory costs by 316 440 EUR and the possibility of gaining 4 020 462 EUR in net value by selling the minimized waste and trim reels as ordered reels to European customers.