Sappi's reaction to the pandemic

With paper mills in Northern Italy, Sappi was heavily affected by the spread of COVID-19 especially at the beginning of the outbreak. 

The firm moved quickly to protect staff and keep production plants open, being in close contact with the Government and very fast by implementing the necessary measures to keep the spread under control. The implications on production have been minimal and the workforce has done a tremendous job to keep supply going.

Sappi put strict safety measures in place in its Italian plants as soon as the gravity of the situation became clear. Staff had their temperature taken before they could access sites, social distancing was employed, and other hygiene measures were implemented immediately. Kratochwill explains that it was a real 'battle' for the mills to get face masks at the beginning of the pandemic.  

As Sappi's plants in Italy experienced a new way of working, anything the team learnt was shared with other mills to help others adapt to the new situation as the same measures were enforced globally later, acting as One Sappi.

Leadership and staff evolution

COVID-19 has accelerated the adoption of new approaches in terms of Leadership, Safety, managing new challenges but also foster on team work and spirit. While not directly related to the pandemic, Sappi’s senior management team were already in the process of moving towards a new management style.

"We feel that the very ‘old school’ management styles that we sometimes see in our industry don’t work anymore, and we’ve been determined not to let that become Sappi’s future. We’ve focused on developing agile leadership, which translates to faster decisions and implementations thereafter, an organization where  people feel they can come forward and contribute more, end to end thinking process, adding value, and there’s more buy-in and solidarity from the whole team. I am convinced – and experience shows -  that companies with this leadership outlook, have fared better in the pandemic," explains Mr. Kratochwill. 

At the same time as focusing on agile leadership, the company has also looked to innovate how their staff operates. Mr. Kratochwill explains that Sappi are looking to make their workforce ‘multi-skilled’ which is to say that the team are given the opportunity to develop the scope of their professional proficiencies. Where a team member might once only have specialized in a certain area  today, Sappi have programs which train staff in other areas and Mr. Kratochwill explains it’s part of the company’s evolving philosophy. ‘Once a team member has a profound knowledge or skill, there’s no reason they can’t also learn about other machinery, operations or processes. This allows Sappi to have more knowledge in-house and equally, gives staff more flexibility and supports the end to end thinking process. We believe it will make the difference!.’

'One of the most challenging things about the Coronavirus and current situation is that it remains very difficult to say how consumer behavior will be impacted in the long-term. At the start of the pandemic, we saw significant changes in standard consumer buying patterns. These shifts came because some consumers stockpiled basics so that they didn't have to go to the supermarket so often. Panic buying also changed the standard buying patterns and many customers have switched to other brand labels due to non-availability. We will also see consumers’ income getting smaller and an increased savings behaviour. We don't know if these changes are permanent, if they will develop further or will revert back to 'normal' over time. As autumn and winter come to the northern hemisphere, we may see yet more new trends emerge. Certainly the next coming months will give us some more insights in how the consumer buying behaviour will change and then we need to adapt quickly within the whole value chain responding to the new normal but also look for innovation in terms of products to support the new consumer behavior, says Mr. Kratochwill.- Sappi is in a very good position to cope with these kind of  changes interacting with all the partners and being flexible enough to adapt.

Where Mr. Kratochwill doesn't think there will be change, is the industry and individual brand's commitment to sustainability. Particularly in Europe, the European Commission is openly looking to support investments into sustainable solutions. Sustainable packaging solutions, therefore, are likely to remain high on the agenda for many companies and so it will be for Sappi.

Preparing for the unexpected 

As part of Sappi's standard risk management policies, the firm has significant 'safety' stocks in case of issues with the supply chain or unforeseen events which meant they were unable to produce or obtain supplies. The company's robust planning undoubtedly assisted Sappi in the context of the pandemic. 

'Most importantly, our safety stocks but also our possibility to have paper machines which can run different kind of products in different countries is able to cover peak demand where required. Given the substantial volume that was required to cover additional demand - especially in the Packaging and Specialty paper sector which is heavily linked to consumer foods - our risk planning has worked successfully, even in the event of something as unexpected as COVID-19. Staying in close contact with our customers is one of the key elements for us to manage these kind of situations.  Being able to tell customers that we had enough stock to meet demand and that there wouldn’t be issues with suppling them was highly appreciated,' explains Mr. Kratochwill.

Priorities

The pandemic has undoubtedly been challenging for all firms in the paper and packaging sector, namely because standard order sizes and consumer behavior are no longer predictable. Practically, Mr. Kratochwill explains that Sappi is preparing to be flexible for whatever is next, especially for the months to come.

Looking forward, Mr. Kratochwill also believes that more collaboration along the total supply chain will be beneficial for all parties and key to resilience in the long-term, especially if the economic outlook remains challenging. 'For example, AR Metallizing and Sappi don't have a long supply chain. Together, both firms can take advantage of this, can increase communication and information sharing, to get early insights and feedback from customers and brand owners to plan accordingly for the future, understand trends and how to strengthen our business mutually. The more insight we can share in the supply chain, the better we can plan.

This also counts for innovation, which is at Sappi’s core. We must avoid that innovation simply stops as a result of the pandemic, so any collaboration and close sharing of knowledge is always appreciated, even if it’s not face to face like in the past anymore. We set up  a dedicated Innovation and Sustainability department in 2018 which controls the whole innovation process from R&D through to initial sales. That has made a big difference.’

While stability, controlling capital and retaining agility is essential, for Sappi, one thing remains unchanged: the firm's commitment to the safety and security of its people.

Sustainability

Sappi is also thinking about the future, particularly with regards to sustainability and changing demands for the packaging industry. ‘We’re committed to offering sustainable and recyclable solutions ourselves, but we’re also thinking about the bigger picture and want to contribute to the Circular Economy. Paper packaging and the high recycling rates needs to be highlighted and future packaging solutions should be measured on these recycling capabilities, helping the environment but also reducing the CO2 footprint considerably. We remain wholeheartly committed to sustainability, despite the pandemic, and we are looking constantly for new paper and board packaging solutions’ says Mr. Kratochwill.

Using digitalization

Sappi has also moved to use new tools to stay connected with customers and partners. The firm successfully established the Sappi Virtual Interpack (a digital trade show) to keep in touch with customers. The platform has also allowed the firm to demonstrate innovations and maintain contact with external parties who they'd usually see at fairs and exhibitions that have been cancelled. The project has been a resounding success. Looking forward, Mr. Kratochwill believes that the industry needs to innovate and introduce new ways of working together, especially for product development, when face-to-face contact and meetings are expected to remain challenging for some time. Again, he stresses that maintaining innovation and continuing to develop new solutions remains central to success for the industry. Digitalization should support such innovation.