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CRAIG CAMPBELL
is a partner in Pricewater-houseCoopers' Global Forest Paper Practice.
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E-Business and the competitive advantage
The following is based on Mr. Campbell's speech given at Pulp & Paper's Paper/Forest Products Global Outlook Conference in New York this past November.
THE FOREST AND PAPER INDUSTRY HAS received criticism for being an e-business laggard. Although 82% of paper companies are online, only 6% of companies have product availability data online and just 5% sell products through their Web sites.
In PricewaterhouseCoopers' recent survey of the Web sites of the top 100 global forest and paper companies, only five were considered best in class when judged on functionality, overall strategy, and visual impact. Thirty-seven companies received scores of less than 50 out of a possible 100 points. It would, therefore, be useful to learn the lessons of the industry's few success stories by examining those sites.
TOP OF THE CLASS. Based on survey criteria, Boise Cascade, Domtar, and Mead have successful Web sites oriented toward e-business:
Boise Cascade Corp. (www.bc.com)
The most successful e-business forest and paper site belongs to Boise Cascade. The company was chosen number one by PC Week's 1999 list of Fast Track Manufacturing Innovators, PC Computing magazine named Boise Cascade Office Products one of the top ten business-to business companies across all industries, and the editors of Dow Jones Business Directory praised the site. Customers are now placing 11,000 orders each day on the company's e-business sites.
Reasons for success:
- The initiative has the support of the CEO
- The company has made a significant investment in its information technology (IT) platform
- IT is embraced across all business units and linked to business processes
- The company has a history of applying e-commerce in the form of electronic data interchange (EDI) over many years.
Domtar (www.domtar.com) Domtar launched the first comprehensive transaction Web site in the paper industry in January 2000. The site allows customers to place orders, check order status and make trades, print invoices, and determine the status of custom orders. One-hundred percent of Domtar's target accounts have signed up as e-business customers.
Reasons for success:
- In the mid-1990s, Domtar made large investments in robust back office systems (for example, SAP and i2).
- Senior management recognized early on that e-business solutions would allow Domtar to differentiate itself from competitors in a commodity business.
Mead Corp. (www.mead.com) Ranked number one among North American forest and paper companies by PC Week magazine, Mead Corporation's paper and packaging e-business initiative has been a boon to the way the company interacts with its customers and suppliers. Eighty percent of Mead's consumer and office orders are now handled electronically, 30% of its paper business is processed electronically, and fully half of all procurement is now electronic.
Reasons for success:
- Like Domtar, Mead credits its strong IT systems with the company's success in e-business. The company has invested more than$100 million in its back-office enterprise resource planning (ERP) system. As with the other companies, Mead cited the commitment to e-commerce from CEO down as key to its achievements.
BECOMING A WINNING E-BUSINESS. In studying the above Web sites, along with many other less successful e-business ventures in the forest industry, PricewaterhouseCoopers has identified four keys to transform traditional companies into winning e-businesses.
1. Start with a strategy and start now. Customer needs must drive the e-business. A strong IT champion is a must, but having the explicit backing of the CEO and senior management is equally important.
2. Determine markets quickly. Companies must define the customers and markets they wish to pursue.
3. Build a robust platform. Forest and paper companies need to build customized applications that can integrate with robust "back-office" systems.
4. Manage change. New business processes will need to be designed while others will need to be fixed. Never forget how the technology will influence your people.
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