Responding to COVID-19 - How the forest products industry can navigate through disruption - Accenture
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Responding to
COVID-19
How the forest products industry
can navigate through disruption
May 2020
COVID-19: What to do Now, What to do Next NOW NEXT
1
As governments make significant interventions
in response to the coronavirus, businesses are
rapidly adjusting to the changing needs of their
people, customers and suppliers, while also
navigating financial and operational challenges.
With every industry, function and geography
affected, the amount of potential change to think
through can be daunting. But turning massive
complexity into meaningful change is possible
and essential.
2
For the forest products industry, COVID-19
is disrupting the entire value chain
To protect their people, organizations have While the length and severity of the impact is
implemented travel bans and restricted unknown, we do know that it has scaled quickly and
access to offices, mills, plants and timber appears to be far from over. Leaders must prepare
plantations—and implemented work-from- for the short term while also developing new
home programs—all while examining how capabilities and ways of working that will seamlessly
their workplaces operate and how people enable longer-term changes to how they operate.
will function in a post COVID-19 world.
This document provides forest products leaders
The impact varies widely by sector. Some with a perspective on the evolving situation and
mills and plants are experiencing implications for their businesses.
shutdowns, while others are doing what
they can to expand their capacity. But all
are experiencing unpredicted events.
3
The big picture:
Key considerations for framing your response to the crisis
In the current environment, forest products companies need to respond immediately to varied demand and
production challenges while laying out plans for the future. These actions fall into three categories:
1. Be prepared 2. Operate safely and reliably 3. Scale back with intent
NOW • Stringently review outcomes of your • Prevent employees and contractors • Review fixed costs (leases, rentals,
emergency preparedness plan from coming in sick services, etc.) to understand options
• What went well and not so well? • Manage entry with remote cameras • Reduce maintenance spend
and assess symptoms before workers • Stagger shift schedules to reduce
come to a site personnel overlap
NEXT • Update preparedness plans, fill • Increase social distancing in the • Shift more fixed costs to variable costs
gaps and run simulations workplace with connected worker while maintaining flexibility
• Adapt current actions to reflect technology • Increase automation, utilize remote
new plan • Establish work practices that keep monitoring and leverage predictive
distance between people analytics
NEW • Does the preparedness plan • Create a network of virtual operation • Prioritize long-term resilience, which
NORMAL actually work? command centers requires flexibility and a cost structure
• Was it a good plan, but poorly • Increase planning automation that can adapt to variable output
executed? for maintenance and production
• Audit, communicate and scheduling
practice often
4
In forest products, no sector is immune—
Forest products sectors are
but some have stronger defenses
struggling to gather relevant Impact of COVID-19 on the forest products industry
demand information that captures 110
the wild fluctuations that are
occurring across markets.
100
Industry indices rebased, Day 0 = 100
The towel and tissue segment Towel and tissue
has seen unprecedented demand,
but will customer use patterns 90
truly change?
Pulp
Packaging experienced drops due 80
to retail closures, but it is showing Paper
Packaging
a resurgence due to increases in
home delivery. Will this surge 70
continue throughout the year? Graphic
Crisis outbreak paper
While the challenges differ by
60
sector, building resilience is
critical for all. Doing this now will
help forest products companies
50
weather the storm of future
D+15
D-30
D+10
D-45
D-35
D-15
D+20
D-40
D+5
D-10
D+25
D-5
D-25
D+30
D-0
D-20
D+35
D+45
D+40
unpredictability that lies ahead.
Days before and after crisis breaks
Source: Accenture Research analysis of industry indices performance. Rebased day of outbreak (D0) = 100, and COVID-19 outbreak
date = 21 Feb 2020. To construct indices, share price and market capitalization were sourced from Capital IQ.
5
What should be happening now? Actions that help mitigate near-term operational risks and protect your people
Actions that should be happening now
Uncertainty and disruption force quick action and many forest products companies have already risen to the
challenge presented by COVID-19. Below is a comprehensive check list of suggested early actions to take.
Response People and Financial Operations Monitoring and
Governance workplace due diligence and supply reporting
chain
Act now to define your Ensure people are safe Evaluate risks and Reduce your operational Manage the situation with
culture and brand • Deploy innovative opportunities and be exposure passion and discipline
strategies to protect your ready to take swift • Implement and deploy a • Keep track of the health of
• Create and deploy a
people action rapid-response supply your workforce
response room composed
of senior leadership • Monitor your actions to • Assess your current chain task force • Monitor the sentiment of all
ensure they are helping meet financial position, • Assess and address your stakeholders,
• Stand up cross-functional
employees’ physical, mental looking at liquidity, potential supply chain including your suppliers
rapid response teams to
and relationship needs capitalization strategy, disruptions andcontractors
deal with emerging
revenue impact of
challenges, consider • Leverage remote operating
different scenarios, • Validate business • Continually assess internal
participation of external centers and continuity plans; engage and external indicators and
market valuation
parties such as suppliers, technology/mobile tools to suppliers, unions, have a mechanism in place
outlook, competitor
communityleaders and further reduce on-site communities and others to act swiftly
positioning andrisks
specializedconsultants workforce • Prepare to return to normal, • Develop a ramp-up plan
• Update your strategic
• Localize responses to • Provide access to needed but plan for disruptions and and update it on a regular
assumptions to stay ahead
communities in which you technologies and mobile delays basis
of your competitors
operate, and include your tools to ensure maximum • Challenge your workforce • Develop a risk assessment
people and vendors productivity • Mitigate risk and identify
opportunities that may to identify opportunities to and monitor it daily
• Ensure information • Be tolerant of initial reduce operational • Use applied intelligence to
arise from market volatility
security monitoring for inefficiencies, but do not impacts accelerate yourresponse
working from home compromise
7
What needs to happen next? Actions to capitalize on opportunities beyond the immediate future
Actions that need to happen next
In the current climate, the decisions you make
will determine how your organization fares in
the near term, which is critical. But they will also 1. Embrace remote ways of working
have a significant impact on how well you
operate in the future. 2. Anticipate unpredictable demand
This means that effective leaders should seize the
opportunity to take swift action to avoid business disruption 3. Figure out what to make and how
and potential revenue loss—and at the same time, forge new to source it
levels of trust with their workforce and position their
businesses for greater resilience and productivity in the
future. 4. Ensure inbound and outbound
Each company, industry sector and region will have
delivery
different needs and requirements for managing people, the
workplace, customer service, data management and 5. Rethink your assets
business continuity. But there are five major foundations
that all forest products organizations should consider as
they move forward:
9
Embrace remote ways of working What if…manufacturing sites
remain on lockdown for the rest of
2020 with only essential
employees allowed in or out?
These are uncomfortable times, and they provide an opportunity for Tips and accelerators
leadership to engage differently, increase communication, connect with
employees and show their support. 1. Improve connectivity. Make sure
that sites have good connectivity
and key data sources are speaking
What is a North Star for ways of working? to each other.
Embrace virtual work, upskill employees and automate workplaces for an 2. Invest in automation. Identify
elastic and digital future. processes that could be
automated to maintain physical
distancing between employees.
New workplace reality: elastic and digital 3. Use augmented reality (AR).
Explore how AR can help minimize
personnel (including contractors)
in manufacturing sites and
increase the use of remote
operations centers.
4. Clean up data. Ensure operational
data is centralized and shareable.
If there is opportunity to automate
data flow and management,
Culture and Elastic Virtual work Seamless Distributed Adaptive pursue it.
awareness collaboration environment networking continuity security
5. Upskill the workforce. Take
advantage of downtime to
Source: “Productivity in Uncertain Times through the Elastic Digital Workplace”, Accenture, 2020 train employees.
10Anticipate unpredictable demand What if…sanitary wipes remain in high
demand for the next three years due
to the increased focus on cleanliness
and widespread germaphobia?
Forest products End-to-end demand visibility in action
companies have started to Tips and accelerators
adjust behavior in the
1. Use social scraping. Identify non-
short term. But getting standard sources of information to
fresher demand signals as identify and monitor demand swells.
inputs to the production 5. Capture, 1.Anticipate 2. Augment decision-making. Prepare
planning process is a sense and and aggregate
classify data demand for things to change by building faster
major challenge. outputs using artificial intelligence
and predictive modeling.
What is a North Star for 3. Build agility. Leverage a digital
unpredictable demand? End-to-end Digital twin to create multiple manufacturing
planner engineer scenarios that deal with demand
Monitor information from fluctuations.
new sources that have a 6. End-to-
current pulse on end visibility 4. Build buyer portals. Maintain
4.Fulfillment and integrated 2. Concurrent transparent relationships with
consumer demand, create planning and business planning customers and understand
execution
end-to-end visibility and planning their needs.
connect with the right 5. Remember sustainability. Continue
partners to develop to rethink what happens to single-use
accurate demand products at their end of life.
3. Supply
sensing. ecosystem
polling
Source: Accenture Strategy
11Figure out what to make and What if…COVID-19 comes back
with a vengeance after shelter-in-
place orders are lifted, and the
how to source it world returns to another period of
social distancing?
Various types of volatility have destabilized demand signals and stability of supply
across the forest products industry, including greater demand fluctuations for Tips and accelerators
products such as toilet paper, unanticipated capacity constraints and limitations on
1. Implement a supply chain control
the supply of raw materials due to chemical companies shutting down. tower. Orchestrate the overall supply
chain from sensing demand to
What is a North Star for sourcing raw materials? delivery to customers.
Companies need to be able to react quickly and minimize the impact of this volatility. 2. Conduct simulations. Assess different
One way to do so is with a supply chain control tower, which allows a company to scenarios for demand-profile
manage the confluence of inputs to outputs. modeling by using a digital twin.
3. Change product mix. Produce the
right product for the right market to
Supply chain control tower better meet demand (e.g. at-home vs.
Process execution away-from-home toilet paper).
L3 execution Disseminating Monitoring Continuous
information and
action plans
execution
compliance improvement 4. Increase real-time visibility. Use
dashboards to track data as
circumstances change.
Root-cause, intelligence and rapid response
L2 analytics Root-cause Simulations, Risk analysis and 5. Improve flexibility. Create
response
analysis what-if-scenarios management relationships up and down the value
chain to speed response in a rapidly
changing environment.
Real-time visibility
L1 visibility External
Root-cause analysis Alarms generation
risks data
B2B integration
Source: Accenture experience
12Ensure inbound and outbound delivery What if…trucking supply continues
to decline through 2020 leading to
scarcity of transport options?
Forest products companies are experiencing a range of complications across Tips and accelerators
different modes of transportation due to country-to-country travel restrictions
and a lack of available containers. Import and export to China has slowed, 1. Map supply networks. Leverage
reducing the supply of process chemicals and demand for lumber and logs. companies, networks and data
sources to understand how supply
is flowing through the network.
What is a North Star for inbound and outbound delivery?
2. Create contactless handoffs.
Companies can increase resilience by using data analytics to map transportation Minimize person-to-person
networks and ultimately by implementing autonomous logistics. contact by investing in RFID to track
shipments.
3. Improve the pickup/delivery
experience. Create a space that is
sanitary and safe for drivers while
they wait outside their trucks.
4. Adjust pricing. Incorporate freight
rate changes into product pricing
and manage discounts or
promotions during high demand.
5. Partner with network. Engage with
suppliers, distributors, retailers and
customers to share transport,
minimize less-than-truckload
(LTL) shipments or ship direct
to customers.
13Rethink your assets What if…recycled paper becomes
temporarily unavailable putting a
strain on mill operations?
The COVID-19 pandemic is causing operational shutdowns, but Tips and accelerators
some forest products companies are adjusting by shifting to
production of essential medical equipment. 1. “Lean your mills.” Focus on
efficiencies such as decreasing raw
material usage (e.g. water,
• Mondi Gronau is working to provide straps that will fit more than chemicals and fiber).
one billion nonwoven face masks, which are in increasing 2. Invest in fast R&D. Design virgin
demand. The company is rapidly building up its capacity and fiber-based products to replace
volume by replacing rubber with soft elastic material that allows recycled cartonboard products
(e.g. corrugated boxes for home
its machines to run quicker.1 food delivery).
3. Evaluate M&A opportunities.
• Smurfit Kappa has developed a series of workplace dividers to Consider new business
separate workers from each other to help prevent infection in opportunities to ensure supply
various settings, including hospitals in Spain. It has also used capacity, increase access to
new markets and leverage new
corrugated boards for face masks, beds in temporary hospitals technologies.
and other styles of temporary furniture.2 4. Increase inter-asset
communication. Ensure that mills
What is a North Star for your assets? can meet new forecasted demand and
Continue to work toward product innovation beyond the crisis, stay open to support your needs.
looking at more sustainable inputs and improving your ability to 5. Adjust pricing. Work with suppliers
and buyers to adjust pricing to help
quickly pivot products. keep operations afloat during this
challenging time.
14New normal Revisiting ways of working and developing future strategies
North Stars for the new normal
The COVID-19 crisis has created an opportunity to renew for the future—to strategically re-evaluate business
models and be better prepared for the next “black swan” event. There are five North Stars for forest products
companies to work toward in the longer term.
Elastic and Demand Control Autonomous Product
digital future sensing tower logistics innovation
• Make data accessible in • Capture data through • Increase data points • Include more direct-to- • Increase resilience by
order to support new channels, such as and data gathering to customer shipping as competing in growing
increase in remote work social media deliver the full picture part of the standard market sectors
programs • Aggregate and analyze • Re-evaluate IT model • Reframe product
• Adjust employee work data through advanced strategy (e.g. • Map supply networks sustainability,
limitations for a more analytics software, hardware, • Work with retailers on recognizing that the
flexible and resilient • Respond to data on/off shore, cloud, transportation logistics price of recovered
workforce insights with flexible computers, cameras versus single-use paper
• Get to driverless
• Shift some variable operations and as-a-service will fluctuate
logistics where possible
costs to automation, programs) • Increase flexibility to
including: AI/machine • Increase visibility change product mix
learning, automated across the supply
vehicles and increased chain through
use of conveyors, visualization
palletizers and stackers • Create action-based
alerts to drive the
management of
materials
16Food for thought
The pandemic challenges us all to think differently and creatively. Below are a few questions to spark
brainstorming on some hard topics.
1 2 3 4
Product strategy Ways of working Autonomous Circularity
operations
How might we adjust our How might we grow virtual How might we reinvent our
product strategy for a more work models in order to: vision of circularity with health
resilient future? How might we leverage in mind?
• Engage younger autonomous operations or
• Will ecommerce see a generations in our remote operating centers to • Will cleanliness
permanent step-change workforce? reduce operational safety specifications be updated to
increase in volume? • Positively impact our concerns? include disease-related
• Did we cut out some SKUs employees’ work-life topics?
• Which processes are more
during the crisis? balance (commute time, suitable for remote • Will there be a shift to lock in
• What service changes made childcare, etc.)? operations management? more supply of virgin fiber?
life better for our customers? • Reduce our CO2 footprint • How can wearables and • How do you “build back
• What product changes through less commuting? hand-held devices be better,” leveraging
improve resilience during a incorporated for operators investments to address
health-related event? and tradespeople? climate change?
17References
1 “Mondi adapts production line in Germany to make much-needed face mask components,”
April 3, 2020, Mondi newsroom. Mondi is a global leader in packaging and paper,
contributing to a better world by making innovative, packaging and paper solutions that are
sustainable by design.
2 “Smurfit Kappa launches portfolio of corrugated solutions to help communities affected
by Covid-19,” April 9, 2020, Smurfit Kappa newsroom.
18Contact Us
Special thank you to Michael
David Burns Fredrik Engdar Amy Callahan Craig, Jason Malcolm and
Managing Director – Managing Director – Managing Director – North America Lucyann Murray for their
Global Natural Resources Lead Global Forest Products Lead Chemicals & Natural Resources Lead support in developing this
Accenture Accenture Accenture perspective.
david.b.burns@accenture.com fredrik.engdar@accenture.com amy.m.callahan@accenture.com
Accenture Natural Resources
To learn more about the Accenture Natural Resources industry group,
visit www.accenture.com/naturalresources.
19To help our clients navigate both the human and business impact of COVID-19, we’ve created a hub of all of our latest thinking on a variety of topics. Each topic highlights specific actions which can be taken now, and what to consider next as industries move toward a new normal. From leadership essentials to helping ensure productivity for your employees and customer service groups to building supply chain resilience and much more, our hub will be constantly updated. Check back regularly for more insights. VISIT OUR HUB HERE
About Accenture Accenture is a leading global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and operations, with digital capabilities across all of these services. We combine unmatched experience and specialized capabilities across more than 40 industries—powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. With 509,000 people serving clients in more than 120 countries, Accenture brings continuous innovation to help clients improve their performance and create lasting value across their enterprises. Visit us at www.accenture.com DISCLAIMER: This document is intended for general informational purposes only and does not take into account the reader’s specific circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in this presentation and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit, or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals. Copyright © 2020 Accenture All rights reserved. Accenture, its logo, and New Applied Now are trademarks of Accenture.
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