Aftermarket Agreements will reduce the mill total cost and increase the production uptime
Agreements are a very effective way to tackle some of the challenges the paper industry faces today. Challenges such as rising costs, hard-to-find skilled labor, increasing demands and global competition. Valmet has almost 1400 professionals in North America able to deliver comprehensive lifecycle services such as roll and workshop services, mill improvements, parts and consumables, fabrics and filters and energy and environmental services. Today, approximately 30% of the North American paper mills have already an agreement with Valmet.
Valmet started offering these agreements ten years ago, first with paper and board producers. Recently, this trend has expanded and now the tissue producers have also started to show interest towards Valmet’s agreements.
A typical Aftermarket Agreement that Valmet provides is from three to five years long and always tailored to your needs. Each agreement is based on customer’s goals and KPIs. This enables a win-win concept where Valmet is a partner who can deliver the best suited program.
Finding the right partner is important and should allow the customer to remove their current limits and create the wanted transparency. Most importantly, you as a customer should find a partner who is willing to share your risks. In Valmet’s case this meant re-evaluating our way of doing business and move to the state where we are able to both give and keep promises, based on shared targets with our partners.
Agreements aren't about the lowest costs, but instead they are about the lowest total cost. At Valmet we drive to this by finding and assembling all of the pieces of your tissue-making puzzle.
In 2014 a study was performed among companies which either had already an aftermarket agreement or were considering undertaking one. These companies were asked to prioritize three agreement characteristics. This study revealed that the most important driving factor for an aftermarket partner was peace of mind, with cost control being the least important.
Valmet has currently over 100 different Agreements in North-America. While none of them are identical, we can still modularize them and sort them to different categories.
- Rolls and Workshop Agreements can be simple pricing agreements. Or they can be a more comprehensive aftermarket partnership where Valmet manages everything from establishing best practices to shutdown planning, etc.
- Product Agreements include specific products or product groups. These agreements are usually based on fees or flat rates. With the flat rate approach a mill can accurately budget the following year as they know beforehand how much the agreement product will cost them
- Purchasing Agreements are normally frame agreements. These can also be limited to certain products or product families but purchasing agreements can also be unlimited and basically cover the entire Valmet services portfolio.
- Outsourcing Agreements are maintenance agreements or other at-the-mill type agreements. An example of this would be your roll shop operated by Valmet with Valmet’s own personnel in place.
- Performance Agreements involve choosing an element such as safety, quality, cost reduction, production, etc. and partnering with Valmet to improve the chosen feature.
The chart above shows the difference between a traditional maintenance concept and and a Performance Management concept. In a traditional maintenance concept the hours used for maintenance typically start lower and creep upward when the production line gets older (more corrective maintenance is needed as the technology ages). With Valmet’s Performance Management concept we look at long term cost optimization right from the start. This approach might require more hours at the beginning but over the years it has proven to be a better and more cost effective method. This is due to fewer failures occurring throughout the lifetime, with higher efficiency and quality than is typical with a traditional maintenance approach.
One example of how Valmet’s Performance Management differs from the traditional model is the way the different mill groups and operations interact. On the above chart a typical tissue mill is shown at the top where each mill occupation has their own specific function. In Valmet’s Performance Management model, below, we have broken down these silos and the orange color represents Valmet's experienced and trained personnel at the mill forming a working positive buffer between the different departments.
Maintenance is a critical success factor in tissue making. With Valmet’s Aftermarket Agreements, mills have been able to lower their maintenance costs by up to 30% and at the same time reduce the unplanned maintenance-related shutdowns by as much as 80%.
Performance Agreements are the latest addition to Valmet’s Aftermarket Agreement portfolio. In this approach, the customer and Valmet together choose a performance factor to be improved. The roadmap for better performance is created and supported by Valmet’s global know-how. Typically a Performance Agreement starts with Valmet personnel performing the necessary audits & bottleneck studies and then benchmarking the results globally. This provides the baseline for the performance in question and also typically leads to first improvements, finding and picking those low hanging fruits and removing the first initial bottlenecks. During the second phase, Valmet concentrates more on continuous long term development by fine-tuning and optimizing the chosen processes.
Typically Valmet’s Performance Agreements are three to five years long and are based on monthly fees. Each monthly fee is then further tied to achieve results and improvements, meaning if for some reason Valmet has not been able to improve the performance as expected and agreed, there's reduced no payment to Valmet that month. Now that's a true partnership!
Valmet has a proven track record when it comes to identifying the needed improvements that will increase your production line’s performance. Aftermarket Agreements are a major part of this approach and have become the new norm of doing business within the paper industry. Valmet looks now to bring these concepts to the attention of tissue making operations.
For more information on agreements, please contact Mikko Viljamaa at firstname.lastname@example.org.