Annual Report 1998

30
RAW MATERIALS AND LOGISTICS
Synergistic effects of joint purchasing have reduced costs by approximately SEK 600 million.
Raw Materials and Logistics is responsible for exploiting
and developing synergies between the Hygiene Products, Packaging
and Graphic Paper business areas.
Since its inception in 1997, the goal of the Raw Materials
and Logistics organization has been to reduce costs by SEK 1.2
billion during a four-year period. After the first two years, cost
savings total approximately SEK 600 M, of which SEK 500 M
pertains to 1998.
Raw Materials and Logistics supervises several project
groups from different business areas which cooperate via coordinated
internal networks. These groups exploit synergies resulting
from purchasing cooperation and reduce the costs of
purchasing materials, services and equipment. Awareness of
materials used by the Group increases, which helps ensure that
products and services purchased are of the proper quality.
A key aspect of the organization’s strategy is to develop
close cooperation or partnerships with selected suppliers. By
working with a limited number of suppliers, SCA will develop
and improve products and services purchased by the Group.
In addition to lower costs, coordinated shipments yield
positive environmental effects through reducing the total number
of transports.
Raw materials
SCA’s annual purchases of pulp, recovered paper, chemicals and
other materials are valued at approximately SEK 15 billion.
SCA is one of Europe’s largest consumers of recycled fiber
and also uses a large proportion of fresh wood fiber in its production.
It is also the largest player in the European market for
recovered paper. In addition, SCA’s net purchases of pulp on
the open market are in the range of 600,000 tons annually. During
the year, SCA reduced the number of pulp suppliers it deals
with, which lowered overall costs.
SCA Recycling supplies the Group with recycled fiber via
wholly owned collection operations and direct purchases. As
recycled-fiber supplier to the Group’s various operations, SCA
Recycling is one of the few companies that recovers a very
broad range of recovered paper for production of hygiene
products, packaging and printing paper.
The company is represented in eight European countries. In
Total wood Felling Degree of selfconsumption
own forest sufficiency
8.3 million m3 3.9 million m3 Of which, Sweden
47%
1:
5.8 million m3 3.9 million m3 68%
SCA’s degree of self-sufficiency
Total recycled Own Degree of selffiber
consumption collection sufficiency
2.9 million tons2 2.3 million tons2 80% 2
1998, it handled 3.1 million tons of paper for recycling, corresponding
to 9% of the European recovered-paper market. As a
result of its strong market position, SCA can trade within and
between different markets, which is a great advantage. SCA
Recycling also plays an important role in the Group’s closedloop
philosophy, a cornerstone of the SCA business concept
and the marketing of its products.
Energy
SCA is a major purchaser of energy in the European market,
consuming 15 TWh annually. That amount is equivalent to the
electricity produced by two nuclear reactors and the total
natural-gas consumption in Sweden in one year. By means of
co-generation and other techniques, SCA also produces
enough energy of its own to meet 50% of its total requirement
(see further under “Environment,” page 40).
SCA takes advantage of the deregulation of the European
electricity and natural-gas market. SCA’s agreements regarding
energy delivery are being renegotiated in several European
countries. Nearly all purchasing of electricity for SCA plants in
Sweden has been renegotiated and the prices indexed to a
Nordic electricity exchange. In 1999, SCA’s overall energy
costs are expected to decrease by an additional SEK 150 M
compared with 1998.
Transports
SCA’s land and sea freight operations transport 15 million tons
of products annually. SCA Transforest is mainly responsible
for handling these extensive transports between Scandinavia
and Europe.
Coordination of transport requirements have reduced costs
considerably while improving punctuality and service. Earlier
agreements with suppliers have been renegotiated and better
planning has reduced the number of transports with less than a
full load.
These measures have succeeded in reducing the environmental
impact of the company’s transports. As of 1998, SCA
also uses oil with low sulfur content in all ships. Measurements
of the environmental impact of the transports show that sulfur
dioxide emissions declined by slightly less than 70%.
1 Net consumption, less own sawmill chips. 2 Incl. Aylesford. 3 Excl. sales of market pulp.
Integration of pulp (million tons)
Total Short-fiber Long-fiber
Consumption 1.4 0.6 0.8
Production 0.9 0.3 0.6
Net3 0.5 0.3 0.2