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Southern Pulp Ad Paper

Southern Pulp & Paper (pursuing flexibility)

Case Summary
This case focuses on the Toccoa mill from Southern Pulp and Paper. The mill manufactures paper and pulp. This is a product-focused operation with high capital equipment cost. The mill itself has a pulping section, which supplies two paper machines #5 and #6. Paper machine #5 produces market pulp for further processing in other mills. The product range for market pulp on machine #5 is very limited (only 3 products) and product switches are quite uncommon (one product =96% of production. Machine # 6 on the other hand produces a wide variety of bleached board paper. On this machine changeovers are quite common.

Key Issues:
• Southern Pulp and Paper executives are expecting improvements in output, profitability and quality at the Toccoa location. Shelton does not know which improvement project to support in order to achieve these goals.
• The Toccoa plants paper machines are of an advanced age. They are no longer capable of competing on cost against competitors with much larger machines and greater capacity. Toccoa needs to start competing on flexibility.

Root Cause:
Toccoa uses the wrong measurement of success. The measurement used is capacity utilization. This measurement does not promote flexibility. It rewards long runs of one product and ignores the potential benefits of flexibility.

Options:
1. Purchase the CIM upgrade for the Toccoa plant in order to increase the productivity.
2. Change the measurement for success and introduce a new scheduling system.

Assumptions:
1. SPAP uses capacity utilization as a measurement of success.
2. Currently SPAP's schedules according to product first then grade.
i. The cost of a grade change is proportional to the net pulp weight change.
ii. The selected job sequence is representative of the current changeover process.
3. The cost of grade change is linearly proportional to difference of the two grades.
4. To deactivate the...