Longkou Ahlstrom factory

The joy of segmentation

What’s at the heart of a hundred-year success story? Two successful companies, Metsä Group and Ahlstrom-Munksjö, with deep roots and an intense passion for customer satisfaction.

12/2017 TEXT: IAN FENTON, IMAGES: VELHOT/TUOMAS HARJUMAASKOLA & OLIVIER RAMONTEU

​Finland was founded as an independent nation in 1917, and thus 2017 is its centenary year, an event which has been celebrated widely in many shapes and forms across the country. For an entire century, Finland has both enjoyed that independence and worked to sustain it, thanks to its rich natural resources, chiefly among them its supply of excellent Nordic wood, and its clean fresh water. 

Metsä Group, of which Metsä Fibre is a key component, and Ahlstrom-Munksjö are two excellent examples of the companies that form the backbone of this successful nation. 

Times may change, and with them, company names and even ownership, but at heart these two firms remain strong Finnish businesses, weathering the storm thanks to solid, sustainable business practices, and, as we shall see, a common high regard for the customer’s viewpoints and, ultimately, their satisfaction.

Romain Baldi

Branching out

The origins of Ahlstrom go back further than the birth of Finland as a country, to Antti Ahlstrom’s establishment of a grain mill, rag paper mill and a ceramics workshop in 1851. He was quick to branch out even further, and soon the entrepreneur had also established a sawmill and acquired several ironworks, gaining a foothold in the shipping industry.

The company, at this point under Ahlstrom’s son Walter, began paper production in 1921, amongst a consistently diverse range of business interests. By 1931, Ahlstrom was Finland’s biggest conglomerate, with upwards of 5,000 employees.

Following sustained growth, during which time Ahlstrom became synonymous with the success story of Finnish industry, in 2013 parts of the group’s businesses were divested, with the Swedish buyer Munksjö looking to broaden its paper production. The two companies maintained close ties – sharing a sourcing pool for suppliers, for example – and the separation was not destined to last long.

With the businesses coming together once again earlier this year, Ahlstrom-Munksjö was reformed as a global leader in fibre-based materials, supplying innovative and sustainable solutions to customers worldwide. Today, its broad offering includes products as diverse as decor paper, filter media, release liners, abrasive backings, nonwovens, electro-technical paper, glass-fiber materials, food packaging and labelling, tape, medical fibre materials and solutions for diagnostics. 

“Our combined annual net sales are about EUR 2.15 billion,” says Romain Baldi,

Head of Sourcing Fibres at Ahlstrom-Munksjö, “and we employ 6,000 people around the world.” This entails production operations at 41 locations in 14 countries, eight of which are regularly supplied with Metsä Fibre’s pulp. 

Ahlstrom

A natural partnership

Baldi has been working at Ahlstrom-Munksjö since 2006, and was himself a part of the divestment and recombination of the business. Beginning in R&D, before moving to sourcing, he worked as part of the sourcing pool shared by the two companies in recent years, going on to take charge of it. Now, as head of sourcing fibres for the entire company, he has very strong opinions about how suppliers function, particularly Metsä Fibre, with whom he has helped to develop a unique partnership.

“We see Metsä Fibre as an interesting company for several reasons. Firstly, it’s clearly a really important player in fibres in Europe. Secondly, they are a supplier that is still making investments. But perhaps most importantly they are the first one with whom we have been piloting an initiative to decommoditise business relationships with our suppliers. Indeed, together we are working to move from a transactional model to a value-based one.”

“Metsä Fibre,” he goes on to explain, “was one of the first companies to try to create a different approach beyond the simple metric of purchasing price, and to explore the kind of value we can create together. To us, they have the right attitude, and the right behaviour to act as a foundation for an interesting cooperation.”

Just as Metsä Fibre segments its customers, to ensure that each receives support and attention according to their specific needs, Ahlstrom-Munksjö segment their suppliers. “We should not behave the same way with each supplier,” Baldi explains. “We have base suppliers, and we have more strategic suppliers – one size does not fit all. You need to segment them, and when you realise that the focus is mutual: that you are the premium customer of your own strategic supplier, it’s a good starting point to do something different.”

Paper mill

New ways to collaborate

This particular “something different” was the result of a strategic seminar, with key account managers from both companies present in addition to those in charge of sourcing on Ahlstrom-Munksjö’s part. The discussion revolved around how to combine the strengths of Metsä Fibre as a supplier with the opportunity Ahlstrom-Munksjö represents as a customer, to establish a project with abundant value for both.

The key strategic initiatives that resulted from this conversation has already yielded at least one success story. Asked for an example of the collaboration in action, Baldi is quick to refer to Ahlstrom-Munksjö’s Longkou mill in China’s Shandong Province.

“A very pressing question at the time of our initial workshop was how to succeed in Asia,” explains Baldi. “There are very particular challenges for a European company working in this region, and with the commissioning of the Longkou mill in 2011, we were starting from scratch. The aim of this operation was to produce in China exactly what we produce in France (where we also have Metsä Fibre as a supplier). With a complex supply chain from Europe, which means long transport times and even longer customs processes, this ambition takes special planning to achieve.”

Commercially, technically and logistically, Metsä Fibre provided dedicated assistance and streamlined processes to ensure the new mill would be a success.

For instance, the company developed a more agile logistical approach, with more flexibility built in for the customer. A buffer of available stock was kept on Chinese soil, to improve the fluidity of supply. 

In addition, the Metsä Fibre Technical Customer Service team were present monthly to educate mill personnel, support them during the commissioning, fix any issues, and ensure that all processes went smoothly.

Frank Sun

Partners in perpetuity

Frank Sun, General Manager of the Longkou mill, which operates as Ahlstrom-Munksjö YuLong Specialty Paper Company Limited, shares Baldi’s positive response to the collaboration with Metsä Fibre.

“Throughout the mill’s operations, we have had visits from their Technical Customer Service personnel, based in Shanghai, three to four times a year. This always generates very useful discussion with our own technical team, helping them to solve problems, optimise production, and even proposing new pulp types for the plant.”

Sun is also keen to point out that these feelings are shared at every point of contact. “When I talk to our purchasing team and our technical team, both have the same feedback,” he says. “They believe Metsä is our best pulp supplier.”

“What our two companies have in common, perhaps more than any other factor, is our shared focus on the customers’ needs,” Sun elaborates. “If you look at the details, both companies concentrate heavily on providing products of consistent quality, strong technical service, and supplied in an agile, flexible manner.”

Perhaps this is why, after all these years, two veterans of the Finnish industrial sector are still going strong, with the seeds sewn for a lasting, mutually beneficial partnership to come. Here’s to another century.

Paper mill

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