Strategic Turnaround in the Paper Industry: A New Model for the Procurement of Recycled Paper

Abstract

In recent decades, the paper industry has undergone many changes, making this industry more lucrative, “greener”, and thus more attractive. Today, recycled paper is a key raw material for paper production. However, this intense growth has also increased the number of market players, making competition more intense and dynamic and causing frequent turmoil. In such an environment, planning procurement and forecasting the price of recycled paper is a big challenge, even for highly experienced procurement managers. In addition, paper production itself is a dynamic process that requires all key grades of recycled paper to be available at all times. Accordingly, managing the optimal level of recycled paper stocks is also a difficult task faced by the procurement unit. The goal of this paper is to address these challenges by developing a new model for the sustainable procurement of recycled paper in the paper industry with the help of the principles of strategic management. Specifically, we aim to enhance our understanding of the factors driving the complexity of recycled paper procurement management. To this end, we conducted a comparative case study in four European companies. To build cases, we collected secondary data on the sampled companies as well as primary data from interviews with top executives at these companies. On the basis of the results from the comparative case study, we propose a new model for the procurement of recycled paper that helps increase the accuracy of forecasting price trends and by extension overall procurement performance. In a nutshell, this paper seeks to improve procurement processes by reducing the complexity of the enterprise procurement unit as well as by offering guidelines for the maintenance of optimal stock levels of recycled paper.