The digital economy is real, and it is transforming the paper and packaging industries

Five technology trends have converged into the digital economy

Hyperconnectivity, supercomputing, cloud computing, a smarter world based on outcomes, and cybersecurity. The resulting pace of change is staggering. In the next 10 years, 40% of the S&P 500 will no longer exist3 if they do not keep up with these technology trends.

Today, every business is a technology business. The road map to relevance is to reimagine business models and proactively evolve before new digital competitors emerge.

Leaders are emerging quickly, and from unexpected places

The industry boundaries are already blurring. What was previously a relatively secure domain owned by paper producers is being challenged by new players. For example, advertising is shifting from print media to electronic media, and large players like Google are already market share leaders. While paper producers have been engaged in electricity generation for decades, both private consumers and utility companies are now engaging in generation of sustainable energy. However, expansion can also take place in the other direction, such as textile fibers being made from wood as an alternative to cotton or polyester in clothing or sheets. Paper and packaging companies are asking themselves how they can sustain and grow customer relationships and how to identify attractive market spaces.

It’s not about you – it’s about your customer

For many paper companies, creating high-quality products is the prime goal. But, of course, these products have to be bought by someone, and the selling process itself gains greater importance for delivering value to the customer beyond the products being sold. Customers expect a new type of experience: one that is frictionless, where commerce is seamless, and where technology is invisible – one that makes their lives easier.

Early adopters are winning

Research shows, companies that embrace the digital world and execute on their digital strategy outperform their average industry performance by 6-9%.4

Key questions paper and packaging companies have to ask themselves include:

  • What business segments allow market leadership and/or differentiation?
  • Which tasks are better allocated to a partner in the network?
  • How do we adapt continuously to changing market conditions?
  • What are profitable business models based on these new technologies?
  • How do we capitalize on the demand for green products, like recyclable packaging goods, while using or even generating sustainable energy at the same time?
  • Which trends and technologies from adjacent industries, such as consumer products or utilities, are influencing the paper market?

Do you have the right strategy? Start by reimagining your paper and packaging company with business outcomes and customers at the center.

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81% of paper and packaging CEOs believe that technological advances such as the digital economy, social media, mobile devices, and Big Data will transform their business over the next five years.

Over 40% of executive hires fail within 18 months, showing the paper industry needs to carefully choose new talent.

The pulp, paper, and packaging industry value chain is transforming, driven by various global trends.

  • Increasing regulation: In addition to incurring fines, violations can impact brand, image, and social license to operate
  • Energy and resource constraints: Create more output with fewer raw materials and lower environmental impact
  • Skilled workforce: The paper industry competes with more attractive industries for talent
  • Smart equipment: Machines provide much data that can deliver increased efficiencies
  • IoT and digitization: New technologies allow for innovative business models and processes
  • Customer expectations: Customers expect instant answers and easy-to-use channels
  • Globalization: Unify platform, data, and processes to help manage global sourcing and complex supply chains

Each of these transformation drivers is forcing companies to reimagine how they do business and run their businesses. Multiple drivers can impact at the same time, increasing the urgency for transformation.

Consider new business models to extend or reinvent your business. This could include:

  • Innovative products: Greener products
  • Small lot sizes and individualization: Tailored solutions
  • Customer collaboration for products: Strengthen relationships
  • Value-added services: Drive new revenue opportunities
  • Disintermediation: Open additional markets

Examples of reimagining business processes include:

  • Operational efficiency: More accurate predictions and faster decisions
  • Organizational innovation: Impactful R&D for patentable ideas and products
  • Real-world sensing of demand: Real-time demand data increases planning accuracy and improves decision support
  • Energy efficiency: Less energy used to achieve the targeted quality level
  • Customer service: Access to detailed product data during order processing
  • Manage talent and recruiting: Simplification across the entire talent acquisition, training, and retention spectrum
Reimagine Business Models

Reimagine Business Models

Digitization, regulations, and globalization destroy established business models and make the road ahead less clear. Alternative business models, like production of carbon fiber or dissolving pulp, will see increased popularity, but some innovative models can become even more profitable through digitization:

  • Creating innovative goods like intelligent packaging
  • Manufacturing individual products at small lot sizes
  • Enhancing customer collaboration
  • Value-added services
  • Disintermediation
Reimagine Business Processes

Reimagine Business Processes

Changing business models and digital technology drive business process efficiency and innovation that inspire new business approaches and accelerate breakthrough technology in production, storage, services, transportation, and distribution.

Reimagine Work

Reimagine Work

The fundamental transformation to digital paper and packaging profoundly changes what people do, how they learn, interact, engage, and grow. Many tasks will become automated, but people will be an even greater asset in shaping the customer experience as their roles change.

Do you have the right platform?

Leaders are investing in digital capabilities that are congruent with their strategy. The shift to digital business will provide all participants the right platform to drive efficiency, accelerate energy innovation, and develop new business models. We ensure solutions align to desired outcomes. SAP’s digital business framework is based on the five key pillars of a digital strategy:

  1. Customer experience across all channels
  2. Supplier collaboration across all spend categories (maintenance, repair, services, and expenses)
  3. Core business processes (finance, procurement, supply chain, and work management)
  4. Workforce engagement, including employees and contractors
  5. Assets, Big Data and the Internet of Things to drive realtime insights and new business models

ROI drives this significant phase of the transition to digital. It’s not about any one of the above five pillars, but rather how they all interconnect to achieve business outcomes. We apply Design Thinking as our key approach during the reimagining phase. Design Thinking can be described as a discipline that uses the designer’s sensibility and methods to match business needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.

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