The role of trial runs in manufacturing - DiVA-Portal

Linköping University | Department of Management and Engineering Master Thesis, 30 hp

Master of Science –Energy –Environment –Management

Spring term 2022 | LIU-IEI-TEK-A--22/04349—SE

The role of trial runs in manufacturing

-A case study at a packaging company

Emy Anspach

Johanna Jensen

Supervisor: Johan Vogt Duberg

Examiner: Erik Sundin

Linköping University

SE-581 83 Linköping, Sweden

013-28 10 00, www.liu.se

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Abstract

As the world puts increasing demands on sustainability, each organization has a responsibility to act,

not only for its business to stay relevant but also for the world. It is possible to work towards

sustainable development by replacing fossil-based materials with renewable and recyclable materials.

Being able to match the customer requirements with new developments is important for companies,

but before they can do that, manufacturing companies need to test that the developments they supply

fulfill the performance requirements. Trial runs enable companies to internally test developments,

usually through a considerable number of iterations, before supplying them to customers.

The objective of this thesis has been to gain a larger understanding of the role of trial runs in product

development as well as to investigate the economic effects of trial runs. The objective has been fulfilled

by conducting a case study at a packaging company. The studied case is a production line where the

production of paperboards with both dispersion and extrusion technology is performed. Dispersion

technology, which enables a protecting layer for liquid and food packaging is a relatively new

technology enabling better recycling opportunities than substitute technologies. The production line

can produce paperboard with either dispersion or extrusion technology as the company aims to

combine the two technologies in the future. Research question A aimed to investigate the role of trial

runs from three different internal viewpoints: sustainability, strategic, and operational. Research

question B aimed at investigating the economic effects of trial runs. Research question A was answered

through a literature and interview study while research question B has been answered through a

literature study, unstructured interviews, and a quantitative cost analysis. Quantitative data from

Enterprise Resource Planning (ERP) systems were collected to perform a cost analysis on trial runs

as well as a comparison of time utilization between trial runs and ordinary production.

For research question A, the results from the interview study show that trial runs are an important

tool for a company to stay competitive. Analysis has shown that trial runs help a company fulfill the

needs of the future, act as a driver for innovation, and help actualize business strategies by testing new

developments in production facilities. There are thus many aspects motivating trial runs, but there are

however also many challenges affecting the role of trial runs within a packaging company. The most

prominent challenges are different depending on the viewpoint of the interviewee. From the

sustainability viewpoint, one of the most mentioned challenges was the balancing of customer

requirements with the technical feasibility of the products. The most prominent challenges mentioned

by the strategic viewpoint were the efficiency of the facility while performing trial runs as well as the

need to work in different time horizons simultaneously. Lastly, the most prominent challenges for the

operational viewpoint was communicative misunderstandings and challenges as well as the high degree

of manual work when performing trial runs.

For research question B, the value adding activities constitute 78% of the total cost per produced ton

for trial runs, while set-up, ramping up, and stop constitute 12%, 1%, and 9%, respectively. The

analysis shows that trial runs cause significantly more set-up and stop time than ordinary production.

For trial runs, value adding activities are taking place 57% of the time while for ordinary production,

value is added 86% of the time, which confirms the result from the interview study about trial runs

resulting in efficiency challenges for the facility.

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Sammanfattning

När efterfrågan på mer hållbara alternativ ökar så behöver alla organisationer agera, både för att hålla

sig konkurrenskraftiga och för att ta sitt ansvar i att uppnå en hållbar utveckling. Det är möjligt att

stötta en hållbar utveckling genom att ersätta fossilbaserade material med förnybara eller

återvinningsbara material. När sådana nya material eller teknologier utvecklas måste företag testa sina

nya produkter för att försäkra att de uppfyller kundkraven och är tekniskt genomförbara.

Provkörningar möjliggör att företag internt kan testa nya utvecklingar, ofta genom flertalet iterationer,

innan de kommersialiseras och finns tillgängliga för deras kunder.

Syftet med detta arbete är att få en ökad förståelse för provkörningars roll i produktutveckling, samt

att undersöka dess ekonomiska effekter. Syftet har uppfyllts genom en fallstudie på ett företag som

tillverkar förpackningar. Det studerade fallet är en produktionslina där barriärer tillverkade med

extrusions- och dispersionsteknologi produceras. Dessa teknologiers syfte är att utgöra ett skyddande

lager i förpackningar, och dispersion är en relativt ny teknologi som möjliggör högre återvinningsgrad.

Anledningen till att produktionslinan kan producera med dispersions- eller extrusionsteknologin är att

företaget har som mål att kombinera de två teknologierna i framtiden. Arbetet har besvarat två

frågeställningar, varav den första, frågeställning A, syftade till att undersöka provkörningars roll, från

tre interna perspektiv: hållbarhet, strategiskt och produktionsnära. Frågeställning B syftade till att

undersöka provkörningars ekonomiska effekter, detta gjordes med hjälp av data från företagets

affärssystem, vilket även innefattade data för att jämföra tidsutnyttjandet mellan provkörningar och

ordinarie produktion. Frågeställning A har besvarats genom en litteraturstudie samt en intervjustudie

med semi-strukturerade intervjuer, och frågeställning B har besvarats med hjälp av litteraturstudien

tillsammans med ostrukturerade intervjuer och en kvantitativ kostnadsanalys.

Resultatet från intervjustudien visade att provkörningar är ett viktigt verktyg för att producerande

företag ska hålla sig konkurrenskraftiga. Analysen visade att provkörningar hjälper företag att uppfylla

framtida kundkrav, driva innovation, bidrar till att uppfylla affärsstrategier vilket uppfylls genom att

testa de nya utvecklingarna i produktionsanläggningarna. Även om det finns många faktorer som

motiverar provkörningar, finns det även flera utmaningar som påverkar provkörningars roll i ett

förpackningsföretag. De största utmaningarna förknippade med provkörningar skilde sig utifrån vilket

perspektiv som tillfrågades. Från hållbarhetsperspektivet var en av de främsta utmaningar oftast att

balansera kundkrav med vad som är tekniskt genomförbart. De mest framträdande utmaningarna från

det strategiska perspektivet var hur provkörningar sänker produktionsanläggningarnas effektivitet

samt att det finns behov att arbeta mot flera tidshorisonter samtidigt. Till sist visade det sig att de

främsta utmaningarna från det produktionsnära perspektivet var kommunikation och missförstånd,

samt det manuella arbetet som ofta krävs vid provkörningar.

Det visade sig att de värdeadderande aktiviteterna tillsammans utgör 78% av de totala kostnaderna för

provkörning per producerat ton, medan inställning, upprampning och stopp utgör 12%, 1% respektive

9%. Analysen för frågeställning B visade att provkörningar ger upphov till betydande mer

inställningstid och oplanerade stopp än ordinarie produktion. För provkörningar sker värdeadderande

aktiviteter under 57% av tiden, medan det under ordinarie produktion adderas värde under 86% av

tiden. Detta bekräftar vad som framkom i intervjustudien om effektivitetsutmaningar med

provkörningar.

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Acknowledgments First, we want to say a big thank you to Sofia, our supervisor at the company. We have truly enjoyed

the weekly status checks with you, your feedback and help with directing us to relevant people within

the company have been crucial for this thesis. You have always responded fast to all our countless

questions and showed such great support. We would also like to thank the other employees at the

studied facility that often joined in on the weekly status checks with useful inputs and encouraging

words. Also, for a warm welcome during our visit to the production facility. Of course, we would also

like to show our gratitude to all the interviewees that took their time to participate in our interview

study.

Next, we want to thank our supervisor at Linköping University, Johan Vogt Duberg, for your support

along the way. Your, always, fast feedback on our drafts and our weekly discussion has helped us to

achieve a constant forward momentum in our work. We also want to thank Erik Sundin, our examiner,

for your helpful comments and perspectives. We are also truly grateful for our opponents Jonas

Jansson’s and Herman Holmberg’s insightful feedback and our chats during all coffee breaks.

We would also like to send some love and gratitude to all our friends and family for the support you

have given during this thesis, as well as during our entire time at Linköping University. Lastly, we also

want to thank each other, for taking turns keeping the motivation up and having someone to share

both the joy of progress and frustration of writer’s cramp. It has truly been a pleasure to end our five

years of university studies like this.

Without the support from all the great people around us, this would not have been possible.

Thank you!

______________________________ ______________________________

Emy Anspach Johanna Jensen

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Table of Content 1 Introduction ............................................................................................................................................... 1

1.1 Background ........................................................................................................................................ 2

1.2 Problem description .......................................................................................................................... 2

2 Objective and objective breakdown ....................................................................................................... 5

2.1 Objective ............................................................................................................................................ 6

2.2 Research question A – The role of trial runs in manufacturing ................................................. 6

2.3 Research question B – The economic effects of trial runs ......................................................... 6

2.4 Summary of objective breakdown .................................................................................................. 6

2.5 Delimitations ...................................................................................................................................... 7

3 The strategy of the company ................................................................................................................... 9

3.1 Company description ...................................................................................................................... 10

3.2 The studied segment in the product portfolio ............................................................................ 10

4 Theoretical frame of reference .............................................................................................................. 13

4.1 Strategic sustainability ..................................................................................................................... 14

4.2 Innovation as a driver for sustainability ....................................................................................... 15

4.3 Portfolio management .................................................................................................................... 17

4.4 Production and product development processes ....................................................................... 17

4.4.1 Manufacturing flexibility ........................................................................................................ 19

4.5 Cost accounting ............................................................................................................................... 19

5 Methodology ............................................................................................................................................ 23

5.1 Research process ............................................................................................................................. 24

5.2 Research method ............................................................................................................................. 25

5.3 Collection of data ............................................................................................................................ 26

5.3.1 Literature study ........................................................................................................................ 26

5.3.2 Interview study ........................................................................................................................ 27

5.3.3 Financial and manufacturing data retrieval ......................................................................... 30

5.3.4 Observations at the studied production facility ................................................................. 30

5.3.5 Summary of data collection method .................................................................................... 31

5.4 Analysis method .............................................................................................................................. 31

5.4.1 Thematic analysis .................................................................................................................... 32

5.4.2 Cost analysis ............................................................................................................................. 33

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5.5 Summary of methodology .............................................................................................................. 36

5.6 Reliability and validity ..................................................................................................................... 38

6 Current state of the studied case ........................................................................................................... 41

6.1 Production line at the studied facility ........................................................................................... 42

6.2 Cost objects in the studied production line ................................................................................. 43

7 The role of trial runs in manufacturing ................................................................................................ 45

7.1 Compilation of the interview study .............................................................................................. 46

7.1.1 Additional interviews regarding market condition and internal evaluations .................. 51

7.2 Analysis of the role of trial runs .................................................................................................... 52

7.2.1 Fulfill the needs of the market .............................................................................................. 52

7.2.2 Drive innovation ..................................................................................................................... 54

7.2.3 Actualize business strategies .................................................................................................. 55

7.2.4 Test developments in production facilities ......................................................................... 57

7.2.5 Summary of the role of trial runs ......................................................................................... 59

8 The economic effect of trial runs .......................................................................................................... 61

8.1 Cost accounting results ................................................................................................................... 62

8.1.1 Cost distribution...................................................................................................................... 62

8.1.2 Comparison between trial runs and ordinary production ................................................. 64

8.2 Interpretation and analysis of cost accounting results ............................................................... 64

9 Discussion ................................................................................................................................................. 67

9.1 Discussion of the role of trial runs and their economic effect ................................................. 68

9.2 Method criticism .............................................................................................................................. 72

9.3 Generalizability ................................................................................................................................ 73

9.4 What is sustainability allowed to cost? ......................................................................................... 74

10 Conclusions and recommendations .................................................................................................. 75

10.1 Conclusions ...................................................................................................................................... 76

10.2 Recommendations to the company .............................................................................................. 77

10.3 Future research ................................................................................................................................ 78

References ......................................................................................................................................................... 79

Appendix I – Interview guide ........................................................................................................................ 85

Appendix II – Detailed result figures ........................................................................................................... 86

Appendix III – Assumptions made in the cost accounting ....................................................................... 89

Appendix IV – Interviewees’ role at the company ..................................................................................... 90

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List of Figures

Figure 1: Summary of the objective and research questions of this case study. ...................................... 7

Figure 2: Illustration of a barrier and what it protects the packaging from. .......................................... 10

Figure 3: Overview of the products that the study focuses on. .............................................................. 11

Figure 4: Three horizons framework, adapted from Baghai et al. (1999). ............................................. 16

Figure 5: Illustration of this thesis’ research process. ............................................................................... 24

Figure 6: Overview of how the different analyzes of this thesis provide a larger understanding of the

role of trial runs. ............................................................................................................................................... 32

Figure 7: Illustration of how the costs have been allocated or traced to the different activities. ....... 34

Figure 8: A process map of the production line at the studied facility, where the dotted line shows

the added equipment enabling dispersion technology................................................................................ 42

Figure 9: Summary of the analysis of the role of trial runs from sustainability, strategic, and

operational viewpoints. ................................................................................................................................... 59

Figure 10: Cost objects’ distribution of fixed and variable costs per produced ton for the period

September 2021 to February 2022. ............................................................................................................... 62

Figure 11: Cost objects’ distribution of fixed costs per produced ton for the period September 2021

to February 2022. ............................................................................................................................................. 63

Figure 12: Cost objects’ distribution of variable costs per produced ton for the period September

2021 to February 2022. ................................................................................................................................... 63

Figure 13: (a) Each cost object’s average distribution of total time for dispersion trial runs, based on

data for products A, B, and C from September 2021 to February 2022. (b) Each cost object’s average

distribution of total time for ordinary production, based on data from January 2022. ......................... 64

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List of Tables

Table 1: Examples of internal and external drivers for why organizations engage in sustainability

strategy. Based on Lozano (2015) .................................................................................................................. 15

Table 2: Key search words used when searching sources in the literature study .................................. 27

Table 3: Overview of interviewees including which interview method was used, the date of the

interview, and if the interview was recorded or not. .................................................................................. 29

Table 4: The costs which have been included in the fixed and variable costs for the studied production

line. ..................................................................................................................................................................... 30

Table 5: Data collection approaches for each research question of this study. .................................... 31

Table 6: Summary of the methodology of this thesis, describing each activity, its goal, and a short

description of the execution. .......................................................................................................................... 37

Table 7: Summary of the methodology of this thesis, describing each activity, its goal, and a short

description of the execution. .......................................................................................................................... 38

Table 8: Shows the identified cost objects for each category in the studied production line. ............ 43

Table 9: Driving forces to conduct trial runs according to the interviewees ......................................... 46

Table 10: Sustainability aspects motivating trial runs according to the interviewees ............................ 47

Table 11: Customer expectations to consider when conducting trial runs according to the

interviewees.. ..................................................................................................................................................... 47

Table 12: Challenges with trial runs according to the interviewees ......................................................... 48

Table 13: The balancing of the short-term and long-term perspective of trial runs according to the

interviewees. ...................................................................................................................................................... 49

Table 14: The balancing of the short-term and long-term perspective of trial runs according to the

interviewees ....................................................................................................................................................... 50

Table 15: How product portfolio strategy is considered when performing trial runs according to the

interviewees.. ..................................................................................................................................................... 50

Table 16: How product portfolio strategy is considered when performing trial runs according to the

interviewees. ...................................................................................................................................................... 51

Table 17: Recommendations for the company to prioritize and initiate first. ....................................... 77

Table 18: Recommendations for the company to proceed with after the intial recommendations. .. 78

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Terms and abbreviations

Barrier Protecting surface on liquid and food packaging, to keep moisture, oxygen, or oil within or outside the packaging (Tyagi, et al., 2021)

Coating concept Solution that is applied on paperboard to create a barrier, depending on desired properties can ingoing components and amounts vary

Cost object

Object, such as a product, project, machine, activity, or process, that costs can be allocated to (Horngren, et al., 2005)

Dispersion technology Water-based surface technology to enable needed protection for paperboard when dried

Downtime Time when the machines are not operating during scheduled production hours. Opposite to uptime below

ERP system Enterprise Resource Planning system: software system that enables organizations to manage their business

Extrusion technology Technology where a firm plastic film is laminated on paperboard to form a barrier

GRI Global Reporting Initiative: international organization that aim to standardize how organizations report their sustainability performance (Global reporting initiative, n.d.)

KPI Key Performance Indicator: quantifiable measurement to assess long-term performance for an organization

LCA Life Cycle Assessment: method that aims to calculate the environmental impact of a product’s or service’s entire life cycle

Non-value adding activities Activities where the machines are standing still and not producing any output. Opposite to value adding activities below

NPV Net Present Value: method to determine the present value of upcoming cash flows (Corporate Finance Institute, n.d.)

Paperboard

Material used for consumer products that contain either food or liquids

PMI Project Management Institute: project management organization

Production line Set of machines that together are used to produce certain products

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R&D Research and development: functions within companies to develop new products and services

Set-up time Time when the machines are stopped and no production is taking place to readjust for a new product or process (Olhager, 2013)

SMED Single Minute exchange of Die: a lean approach to minimize set-up time (Benjamin et al., 2013)

UN United Nations: intergovernmental organization that aims to achieve international peace

Uptime Time when the machines are operating during scheduled production hours. Opposite to downtime above

Value adding activities

Activities where production is taking place and output is created. Opposite to non-value adding activities above

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1 Introduction The following section aims at introducing the topic of this thesis by first giving a background to

sustainability and the need for more sustainable packaging alternatives, followed by an introduction

to the studied problem.

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1.1 Background

The term sustainable development was introduced in the Brundtland Report (1987) as development

that will not affect the life quality of future generations. Sustainability can be described as the balance

between environmental protection, social wellbeing, and economic growth (Glavič & Lukman, 2007).

Furthermore, the term sustainability is often associated with the “triple bottom line” expression, which

was first introduced by Elkington (1994). The triple bottom line thinking implies that an organization’s

performance should, above the traditional financial bottom line, also take social and environmental

aspects into consideration (Norman & MacDonald, 2004). Since the introduction of these concepts,

an increasing number of companies have understood the strategic importance of working with

sustainability issues (Khan et al., 2016). The increased awareness of sustainability issues in society has

opened up new business opportunities for companies that can manage sustainability issues with a

strategic approach (Werbach, 2011). Furthermore, organizations must address sustainability

holistically, even though different organizations are driven by different factors when approaching

sustainability issues (Lozano & von Haartman, 2018).

One of the sustainable development goals for 2030 is to ensure sustainable consumption and

production patterns (United Nations, 2022). The world can work towards sustainable development by

replacing fossil-based materials with renewable and recyclable materials (Olivetti & Cullen, 2018). For

bio-based materials and products to become stronger, safer, and more moldable, the Swedish Forest

Industry (2022) argues that research is required on how to attain the correct qualities. The materials

that are replacing fossil-based plastics are mainly focused on fiber-based products (Swedish Forest

Industries, 2022). The fiber-based developments work towards more bio-based materials, lighter

packages as well better use of resources, without losing their abilities which could lead to more food

waste (Swedish Forest Industries, 2022). When businesses engage in the process of developing new

materials it could be due to changed customer preferences, increased competition, advances in

technology or if they want to exploit on a new opportunity (Trott, 2012). However, to achieve the

desired qualities in a material and ultimately develop new products, the innovations need to be tested

and go through trial runs when in development. Without testing developments in trial runs, there is a

risk of supplying products to customers that do not hold sufficient quality, which can ultimately result

in unsatisfied customers.

1.2 Problem description

The company studied in this thesis, from here on called ‘the company’, is a leading worldwide provider

of renewable solutions in packaging, biomaterials, wooden construction, and paper (The company,

2021). The company consists of several different divisions, where this master thesis is written within

the division focused on packaging materials. The division for packaging materials develops and

produces materials that are both recyclable and generates low carbon emissions, which could

contribute to replacing fossil-based materials in the packaging used to for example eatables,

pharmaceuticals, and transportation (The company, 2021).

One of the company’s strategic initiatives toward increased sustainability is taking place in the

packaging material division. In the last couple of years, the packaging material division has started to

produce new materials, using dispersion technology that enables a protecting layer, for consumer

products. In consumer products, such as food and liquid packages, barriers can protect the package

against moisture and oil (Tyagi et al., 2021). The technology which has traditionally been used for the

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same purpose as dispersion is called extrusion. The new dispersion technology, according to the

company (2021), enables better recycling opportunities, a smaller carbon footprint as well as

opportunity to be composted in industrial facilities.

In 2020 the company invested in one of its sites located in Sweden that now has an innovative focus.

At the studied facility, the primarily produced material is paperboard with extrusion technology but

since the investment, the facility has added new machine equipment to an existing production line

enabling the production of paperboard with dispersion technology as well1. The products produced

with dispersion technology are commercialized and sold to some of the company’s customers. Before

being commercialized, the paperboards have gone through trial runs to find the correct properties of

the products and are continuously going through minor improvements at the facility. Since the

production processes for dispersion technology are relatively new to the facility, the manufacturing

process is not standardized and therefore the personnel at the facility are continuously improving and

tweaking the processes to improve the efficiency of the production line. With the above in mind, the

production line that produces paperboards with both dispersion and extrusion technology will be the

studied case in this thesis.

The production line at the studied facility is a continuous flow. Therefore, to test new products and

concepts, ordinary production must be stopped. According to a business developer at the company1,

there are several drivers behind stopping ordinary production to change or test different aspects in

other products, in so-called trial runs. The trial runs could involve new products as well as mature

products where the process needs tweaking. The business developer1 describes that several

environmental drivers are pushing the development of new products. Environmental drivers could

for example be plastic reduction, improved recycling, easier collection, and enabling composting,

where improved recycling is the most prominent incentive in the dispersion technology case.

Innovation drivers could also motivate trial runs, such as testing new concepts or technologies which

could open new business opportunities1. Efficiency drivers are also motivating trial runs, such as new

settings or processes which for example make the production process faster1. Trial runs can also be

customer-specific, because of new end-use areas that require, in this case, a modified concept. What

is being tested in these trial runs are for example runnability, barrier properties, and how it affects

convertibility, printing, and end-use1.

The company describes trial runs as an important step in their product development process, and

something that they need to continue doing. However, the problem is that the role of trial runs from

different viewpoints within the organization as well as the economic impact have not been thoroughly

investigated by the company. By studying the role of trial runs, the company can gain a larger

understanding of how trial runs affect the profitability of the production facility as well as the future

potential of product developments.

1Business developer at the company, 2021, personal communication, 16th of December.

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2 Objective and objective breakdown The following section presents the thesis’ objective, research questions, and delimitations.

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2.1 Objective

In this thesis, the objective is to:

“Gain a larger understanding of the role of trial runs in manufacturing as well as

to investigate the economic effects of trial runs in a packaging company.”

The objective will be fulfilled by studying the impact of trial runs of barriers for packaging performed

at one of the company’s production sites in Sweden. To be able to fulfill the objective of this thesis,

it has been broken down into two research questions, where the second one is further divided into

sub-questions.

2.2 Research question A – The role of trial runs in manufacturing

To gain knowledge about trial runs, the study includes insights from sustainability, strategic, and

operational viewpoints. Thus, the first research question follows:

A. How are trial runs viewed, within a packaging company, from sustainability, strategic, and operational viewpoints?

2.3 Research question B – The economic effects of trial runs

To be able to investigate “the economic effects of trial runs”, the second research question is

formulated as:

B. What are the economic effects of trial runs in a packaging company?

To be able to answer this, the second research question has been broken down further to clearly state

what has been included in “economic effects”. To calculate the cost of trial runs and analyze the

economic effects it is first necessary to decide what should be included in the calculations. Hence, the

first sub-question is:

B.1. Which cost objects are included in the economic effects caused by trial runs and what is

the cost distribution between these?

One consequence of trial runs for the company is, as mentioned, that the production line needs to

stop its ordinary extrusion production when producing the dispersion products. To compare trial runs

with ordinary production, the following sub-question will be answered:

B.2. How does the time distribution of cost objects differ between trial runs and ordinary

production in a production line?

The identified costs will be analyzed and discussed according to the next sub-question:

B.3. How can insights from the identified costs help gain a larger understanding of trial runs?

2.4 Summary of objective breakdown

A compilation of the objective breakdown is illustrated in Figure 1. The purpose of the study has been

broken down into two research questions, one focused on the role of trial runs and one focused on

the economic effects of trial runs with three sub-questions connected to the second research question.

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Figure 1: Summary of the objective and research questions of this case study.

2.5 Delimitations

In this thesis, the following delimitations have been set:

− The word “packaging” (as seen in the objective and research questions) includes materials used for consumer products such as food and liquids

− The role of trial runs is investigated from an internal manufacturing perspective

− The economic effect of trial runs is investigated through an internal manufacturing perspective, and not taking previous or succeeding parts of the value chain into consideration

The objective of this thesis work is to gain a larger understanding of the role of trial runs in

manufacturing as well as to investigate the economic effects of trial runs in a packaging

company

A

B

How are trial runs viewed, within a packaging company, from sustainability, strategic,

and operational viewpoints?

B.1 Which cost objects are included in the economic effects caused by trial runs and what is the

cost distribution between these?

B.2 How does the time distribution of cost objects differ between trial runs and ordinary

production in a production line?

B.3 How can insights from the identified costs help gain a larger understanding of trial runs?

What are the economic effects of trial runs in a packaging company?

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3 The strategy of the company The following section presents a brief overview of the company and its strategy, as well as a

description of the studied segment of products.

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3.1 Company description

The company employs around 22 000 people, has sales in over 50 countries and owns around 2 million

hectares of land, making the company one of the largest private forest owners in the world (The

company, 2021). The company describes developing products and technologies that are based on

renewable materials as an important part of their strategy, and that they often provide products that

are low-carbon substitutes for products made from fossil-based or other non-renewable resources

(The company, 2021). The focus area for the company is innovation where they aim at meeting

customer demand for more eco-friendly and circular solutions (The company, 2022). The company’s

strategy is to focus on packaging materials and solutions, building solutions, and biomaterials

innovations as they expect high demand for sustainable packaging, see attractive opportunities in the

wooden buildings market, and are targeting growth in new applications and markets.

The company’s long-term goal is that all of their solutions should be regenerative by 2050, which they

define as renewable and circular solutions contributing to reducing climate impact and supporting

biodiversity restoration (The company, 2021). As there is high demand for plastic-free and eco-friendly

circular packaging, the company has identified packaging material as one of the divisions with the

highest growth potential (The company, 2022). The strategy for the packaging materials division is to

lead through innovation and sustainability. The upcoming strategic choices for packaging are

connected to growth opportunities for plastic-free and circular packaging as well as attractive

investment options for packaging materials.

3.2 The studied segment in the product portfolio

There are two types of technologies used for barriers that are produced at the studied facility, called

extrusion and dispersion. Barriers protect the material, in this case paperboard, from moisture, oxygen,

and grease, see Figure 2 below for an illustration of a barrier. In the long run, the company is planning,

to combine dispersion and extrusion technology to replace the aluminum film used in packaging with

longer shelf life and hence higher barrier requirements.

Figure 2: Illustration of a barrier and what it protects the packaging from.

PACKAGING

GREASE

MOISTURE

OXYGEN

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Dispersion products have been possible to produce at the mentioned site since May 2021 but have

been produced by the company for a few years at external production sites. The investment enabled

the production of dispersion products at the studied facility, which gave the company the possibility

of maintaining the established market position in barrier development. According to a research advisor

working with dispersion technology at the company (2022, personal communication, 26th of January),

dispersion technology enables up to 100% recycling of the fibers in the paperboards, depending on

the recycling facility. For extrusion technology, it is not technically possible to achieve a 100%

recycling rate.

The dispersion technology represents a specific segment in the facility’s product portfolio. In the

dispersion segment, there are three different types of products with dispersion technology that are

produced, here labeled as products A, B, and C. See Figure 3 below for an overview of the studied

segment in the product portfolio. The difference between the three studied products is that A and B

are treated on both sides of the paperboard while product C only is treated on one side. A one-sided

layer entails that the paperboard has to be treated to stay flat, hence making the production process

more complicated. The difference between products A and B is that they use different coating

concepts on the outside of the paperboard. Product A is the most developed of the three studied

products, where the standardization of the process has come the furthest. The coating concept used

for product B tends to stick more onto the machines, resulting in an increased need for cleaning.

Figure 3: Overview of the products that the study focuses on.

Dispersion technology

Paperboard

Product A Product B Product C

12

13

4 Theoretical frame of reference In the following section, the theoretical frame of reference used in this study is presented. Initially,

information regarding a strategic perspective on sustainability is presented, followed by theory

regarding innovation, portfolio management, production, manufacturing flexibility, and lastly cost

accounting.

14

4.1 Strategic sustainability

Strategy is a term that has been defined in many ways. Rumelt (1980), describes strategy as a

compilation of plans and intentions that make up the scope of an organization and how it aims to

survive and be successful. According to Porter (1996), strategy is about finding a competitive position

that adds value differently in comparison to the competitors. However, it is difficult to address if a

business strategy is optimal or even suitable, but it should generally fulfill the following criteria:

consistency, advantage, feasibility, and consonance (Rumelt, 1980). “Consistency” is about not

presenting conflicting targets. The strategy also needs to provide a competitive “advantage” and be

“feasible” for available resources. “Consonance” is about reacting and adapting to changes in the

external environment, which leads us to the strategic sustainability perspective.

The triple bottom line, initially introduced by Elkington (1994), expresses the integration of the

environmental, social, and economic aspects, where all three aspects are considered equal in order to

achieve sustainable development. The triple bottom line acts as a framework for measuring the

performance of a firm and its success using economic, social, and environmental aspects.

Furthermore, several standards and frameworks exist aiming to compile which sustainability aspects

organizations could and should take into consideration, for example, the Global Reporting Initiative

(GRI) and UN’s Global Goals. It is important to have knowledge of and be able to incorporate a wide

range of sustainability aspects to develop sustainability strategies in line with a pronounced

sustainability profile (Baumgartner & Ebner, 2010). Baumgartner and Ebner (2010) present resource

utilization, recycling, emissions to air, water, or ground, waste, biodiversity, and the life-cycle impact

of a product as some of the most reoccurring environmental impact categories of corporate

sustainability. Similarly, Dong and Hauschild (2017) have discovered seven impact categories that were

common for all studied methods when investigating different environmental assessment methods.

The seven categories are climate change, freshwater use, impact on biodiversity, acidification,

eutrophication, chemical pollution, and ozone depletion.

Through an extensive literature study, Lozano (2015) has made a compilation of motives behind a

company’s sustainability strategy, categorizing the drivers as internal or external. Lozano (2015)

describes internal drivers as aspects connected to processes within a company, and external drivers as

aspects related to stakeholder relationships. One such example is that brand- and reputation-building

is a major external driver for sustainability strategy, as Ditlev-Simonen and Atle (2011) describe.

Another source used in Lozano’s (2015) compilation is Fukukawa and Moon, (2004), who argue that

sustainability strategy could for many companies be a “license to operate” in the eyes of their

stakeholders. In Table 1 below, additional examples from that compilation are presented. As seen in

Table 1, working with sustainability as a company is not only an approach to minimize risks, but it can

also fuel innovation (Whelan & Fink, 2016). According to Whelan and Fink (2016), redesigning

products due to environmental standards or legal requirements can open new business opportunities.

According to Hallstedt et al. (2013), it is difficult for companies to find a balance between all three

sustainability aspects when incorporating a strategic sustainability perspective on product

development. For example, reducing the environmental impact of a product often implies extra costs

(Hallstedt et al., 2013).

15

Table 1: Examples of internal and external drivers for why organizations engage in sustainability strategy. Based on

Lozano (2015).

Internal drivers External drivers

Boost innovation Avoid legal sanctions

Manage risk Improve external stakeholder trust

Reduce cost (by improving efficiency or reducing waste)

Get access to new markets and customer segments

Attract employees Build brand reputation

Generate more profit by improving performance

Meet stakeholder expectations

Implementing sustainability initiatives are, according to Epstein (2018), fundamentally different than

other strategic changes. The goal of balancing and performing well in all three main sustainability

aspects is much harder to measure than other strategic goals where there often is a clear link to solely

profitability. But what is similar to corporate strategy, in general, is the importance of having a

systematic approach when implementing a new strategy, and not making isolated efforts (Galpin et

al., 2015). Epstein (2018) argues that it often takes much longer, if at all, for sustainability initiatives

to show financial benefits making it harder to measure the impacts of the environmental performances

and to quantify the resulting benefits. Furthermore, the sustainability area is constantly changing, at

the same time many sustainability efforts have long time horizons in contrast to some other strategic

initiatives (Epstein, 2018). It could also be problematic that consumers which are positive towards

sustainability initiatives, for some reason do not always choose the sustainable option (Grunert, 2011).

Consumers not choosing the sustainable option could for example be due to tradeoffs against other

preferences, lack of communication about the sustainability efforts from the company selling the

product, or that the motivation at the time of choice is simply lacking (Grunert, 2011).

To deploy strategic initiatives, Saunders et al. (2008) claims that communicating the initiative,

achieving acceptance from stakeholder, aligning actions, continuous learning, creating enabling

infrastructure, and understanding the driving forces and available options are seven leading practices.

Whereof communication functions as a key to succeed with achieving acceptance from stakeholders

and aligning actions. Two-way communication between management and stakeholders within an

organization could increase the sense of ownership and an understanding of the initiative throughout

an organization, which in turn could increase the acceptance and simplify the alignment of actions

(Saunders et al., 2008).

4.2 Innovation as a driver for sustainability

As presented in Table 1 above, boosting innovation could be an internal driver to conducting

sustainability strategy. Innovation is a term with many definitions. One attempt to compile the many

definitions, by Baregheh et al. (2009), summarizes innovation as a process where new ideas in some

ways are used to develop or improve either products, services, or processes to gain competitive

advantages. Innovation has been recognized as a key to renewal, which for many organizations is

crucial for both growth and survival (Bessant et al., 2005). Furthermore, it is possible to categorize

innovation with the help of different frameworks. One example of this, by Henderson and Clark

(1990), divides innovations based on if the innovations change a core concept or not, and if the

linkages between different core concepts are altered or not. The two most featured categories, radical

16

and incremental innovations, are characterized by if the core concept and its linkages are completely

overturned or retained and improved. The other two categories in Henderson and Clark’s (1990)

framework either change the core design concept, called modular innovations, or how the core

concepts are put together, called architectural innovations.

The three-horizon framework, first introduced by Baghai et al. (1999), is a commonly used framework

used to analyze how companies work strategically with innovations to balance future opportunities

with current performance. The framework has become popular due to its simplicity and ability to

simplify the understanding of complex contexts (Sharpe, 2020). As seen in Figure 4, the framework

consists of a two-dimensional figure, where the horizontal axis represents the time perspective, and

the vertical axis indicates the prevalence of a particular pattern. The first horizon (H1), from the three-

horizon framework, shows the current core business of a company, that provides profit in the present

but is predicted to lose its relevance in the future. Incremental innovations are a reoccurring method

of how firms try to sustain this horizon and increase short-term revenues (Sharpe et al., 2016). Horizon

two (H2) visualizes future opportunities emerging from the current business. These opportunities are

predicted to be profitable in a rather close future but will in most cases require comprehensive

investments (Coley, 2009). The third horizon (H3) represents a future emerging pattern with long-

term potential to fully replace the pattern of the first horizon (Sharpe et al., 2016). The change from

H1 to H3 is often driven by radical innovations disrupting the present way of doing things (Sharpe et

al., 2016). As seen in Figure 4, companies need to work with more than one horizon, and hence

different kinds of innovations, simultaneously. This implies a need of balancing different products

and projects. However, Brook and Pagnanelli (2014) discuss the challenge of balancing the short-term

and long-term investments when it comes to innovation and sustainability. The long-term

opportunities which can be seen are usually based on trends without taking into consideration the

existing markets and customers to improve the short-term performance of the firm.

Figure 4: Three horizons framework, adapted from Baghai et al. (1999).

Time

Prevalence

H1: sustain and

harvest profit from

current business

H2: build on

emerging

opportunities

H3: develop new

future possibilities

17

4.3 Portfolio management

According to the Project Management Institute (PMI) (2008), a portfolio is a collection of projects

that are clustered together to enable effective management of projects to meet strategic business

objectives. Furthermore, portfolio management is the centralized management of one or more

portfolios (Project Management Institute, 2008). Portfolio management, according to PMI (2008),

includes identifying, prioritizing, authorizing, managing, and controlling projects to achieve specific

strategic business objectives. Ölundh and Ritzén (2004) similarly mention that portfolio management

includes the selection of development projects to secure the competitiveness of the business. Cooper

et al. (1999) refer to portfolio management as a company’s strategic choice. By operationalizing the

company’s business strategy, it decides which products, technologies, and markets the business will

enter. The choices that are done will determine what the business will look like in the future. One

important aspect is the management’s involvement, which can direct companies and ensure resource

allocation and portfolio balance (Jugend & Luis da Silva, 2014). Likewise, the PMI (2008) mentions

that portfolio management ensures that the projects are reviewed to prioritize resource allocation and

that the focus of management is consistent with and aligned to business strategies.

Ölundh and Ritzén (2004) state that portfolio selection is an action where decisions affecting the total

environmental performance of an organization’s products are made. The environmental performance

indicators are most commonly based on management indicators such as cost, time, effectiveness, and

quality (Villamil & Hallstedt, 2018; Cooper et al., 1999). Silvius and Schipper (2015) mention that the

integration of sustainability considerations in projects is often requested by stakeholders and when

successful, it can lead to enhanced stakeholder satisfaction. Nevertheless, sustainability considerations

are usually perceived to cost both money and time and are therefore usually not prioritized as a

selection criterion in the portfolio selection process. However, more focus on sustainability within

portfolio management has arisen lately. Based on interviews and workshop results, Villamil et al.

(2021) define sustainable portfolio management as “a process to set a company platform of solutions,

i.e., a cluster of products, services, technologies, and/or customized options, based on the company

strategic plan and assessed by a strategic sustainability perspective”. Hallstedt and Villamil (2020)

mention that some of the most commonly used assessment methods to integrate sustainability into a

sustainable portfolio are the UN Sustainable Development Goals, Life Cycle Assessments (LCA), and

Net Present Value (NPV). Exploring different assessment methods can contribute to the firm staying

ahead of competitors, adapting to customer demand, and can bring economic incentives (Hallstedt &

Villamil, 2020). Hallstedt and Villamil (2020) also mention that it is important to explore different

ways of assessing and selecting portfolios to include both short-term and long-term views. By doing

this, it is possible to identify how the firm’s strategy aligns as well as how the portfolio can add value.

4.4 Production and product development processes

Production can be defined as an activity needed to fulfill society's and individuals’ need for goods and

services (Olhager, 2013). Another definition is that production is the process of manufacturing

products or services with the help of different resources (NE, n.d). A production or manufacturing

system can be defined as a setup of humans, machinery, and equipment that transform inputs in form

of raw materials, energy, and information into outputs like finished goods, scrap, or information

(Caggiano, 2014). In a continuous production system, items are processed by flowing through a

sequence of operations (Tanenbaum & Holstein, 2020). Continuous manufacturing is generally

18

suitable for large volumes and a few different products (Olhager, 2013). A weakness with continuous

manufacturing, according to Bapir and Luo (2012), is that machine breakdowns affect the whole flow.

The term uptime refers to the time where a machine, tool, production system, or similar is operating

and can be given as a percentual share by dividing the time when the manufacturing object is operating

by the total scheduled production time (Alkhalefah et al., 2021). On the contrary, downtime is when

the manufacturing object is scheduled to operate but for some reason is not, for example, due to

machine breakdowns (Alkhalefah et al., 2021).

Process mapping is a tool that can be used to help explain how a process or a manufacturing flow

works by illustrating it graphically (Jacka & Keller, 2009). Damelio (1996) states that mapping a process

can help make work visible and increased visibility can lead to improved communication and

understanding. Mapping a process is, however, by itself, not a comprehensive analysis, but rather a

helpful tool to understand the process as a whole (Jacka & Keller, 2009).

During the process of developing new products, it is necessary to do some test batches where different

product performance indicators and production feasibility are tested to ensure that customer needs

are satisfied and that process is ready to be scaled up (Cooper & Kleinschmidt, 1994). Trial runs can

be seen as the step in a product development process where the future commercial production is being

tested to gain experience and insights on how the process works when operating on a full scale (Neal,

2009). According to Olhager (2013), a new product goes through the following steps when developed:

1. Development of concept 2. Product planning 3. Detail construction 4. Pilot production 5. Launch and volume production

Trial runs can in other words be seen as one of the last steps in the process of new product

development. New product development can be defined as the set of activities that are performed

when creating and commercializing a new product (Ulrich & Eppinger, 1995). There are several

approaches when initiating new product development (Ulrich & Eppinger, 1995). The approach of

technology-push starts with the development of a specific technology and then the search for an

appropriate market begins. Another approach when initiating new product development is market-

pull, which first includes identifying a market opportunity and then developing an appropriate way of

fulfilling the customer need.

Trott (2012) mentions that there is a significant number of internal reviews and testing within a new

product development generation. The testing and internal reviews can include concept testing,

prototype development as well as product testing. Trott (2012) also mentions that the steps usually

include a considerable number of iterations. The developed product concepts are made in prototypes

and then they are usually redeveloped succeeding technical feedback from research and development

as well as from production (Trott, 2012). Customers could also be included in the product

development process and should according to Brockhoff (2003) be involved based on aspects such as

market power, the complexity of the development, and expertise. Included customers could have

different roles, such as testing the developments, contributing with ideas, or co-developing technical

solutions (Eslami & Lakemond, 2016). However, customer involvement in product development

should lead to a higher level of success but that can never be assured (Brockhoff, 2003).

19

One applicable production term connected to trial runs is set-up time. Set-up time is the time needed

for example to readjust the machines or change tools, in other words, the time when the production

is paused to set up for a new process or product (Olhager, 2013). Furthermore, set-up time can be

divided into internal and external. Internal set-up activities can only be executed when the machines

are turned off, while external set-up activities can be performed simultaneously as the machines are

running (Shingo, 1985). Another category of time when the machine is not running is equipment

breakdown or failure (Greeff & Ghoshal, 2004). For example, sudden and unplanned stops due to

complications in the machine, meaning that no output is produced. Breakdowns are the most common

contributor to efficiency loss in manufacturing (Kiran et al., 2013). Thus, both stops and set-up will

in this thesis, according to the previously presented definition of downtime, be categorized as

downtime, as the production, during scheduled production hours, is paused.

4.4.1 Manufacturing flexibility

Flexibility is generally defined as a company’s adaptive response to an environment that is uncertain

(Gupta & Goyal, 1989). It is, together with cost, time, and quality, the general attributes considered

when making strategic manufacturing decisions (Chryssolouris, 2013). Miltenburg (2005), in a similar

way, describes cost, quality, performance, delivery, flexibility, and innovativeness as strategic outputs

of a factory.

Furthermore, Gerwin (1993) states that flexibility has an important proactive function that can be

used to stay ahead of competitors. Zhang et al. (2002) define flexibility as an organization’s ability to

meet a new and increasing variety of customer expectations without additional loss in time,

performance, or costs. Manufacturers and researchers have agreed, according to Gerwin (1993), that

flexibility is strategic imperative for managing uncertainty. Manufacturing flexibility is, therefore, an

organization’s ability to manage production resources and ambiguities to meet customer expectations

(Zhang et al., 2002). Increasing flexibility in the production system is often an investment in the long

run, while it might affect productivity negatively in the short-run (Olhager, 1993). In the long run,

investments in flexibility could entail an ability to introduce new products and production methods by

being able to integrate them into the current system (Olhager, 1993).

According to Jain et al. (2013), there are two main approaches to increasing a manufacturing system’s

flexibility. One is called the software approach, where management efforts are put into, for example,

personnel’s skills, company culture, and relationships with suppliers and customers in order to make

the entire system more flexible. The other, more tangible, so-called design approach involves

modifications like installations of parallel production lines, multi-purpose stations, or other hardware

changes. Increased machine flexibility, which can be described as the machine’s ability to perform

desired operations with limited set-up times, could contribute to increasing a manufacturing system’s

total flexibility (Chen et al., 1992).

4.5 Cost accounting

The American Accounting Association defines accounting as “the process of identifying, measuring,

and communicating economic information to permit informed judgments and decisions by users of

the information” (Drury, 2008). Horngren et al. (2005) define cost accounting as the act that measures

and reports financial and non-financial data related to the company’s consumption of resources.

Horngren et al. (2005) state that cost accounting provides information for both management

20

accounting and financial accounting. Financial accounting is concerned with the provision of

information to external parties while management accounting concerns the provision of information

to people within the organization to help fulfill the goals of the organization (Drury, 2008; Horngren

et al., 2005).

Management accounting, according to Horngren et al. (2005), aims to provide information for the

following functions:

− Formulating business strategy

− Planning and controlling activities

− Decision making

− Efficient resource usage

− Performance improvement and value enhancement

For managers to be well-informed and make elaborated decisions, it is of relevance to know how

much a certain product, project, machine, activity, or process costs (Horngren et al., 2005). These are

also called cost objects. Furthermore, costs can be classified into fixed and variable costs (Horngren

et al., 2005; Drury, 2008). A variable cost changes in proportion to changes in the volume or activity

and a fixed cost remains constant despite changes in the volume or activity. To perform the

management accounting functions mentioned above, it is of relevance to assign costs to cost objects

(Drury, 2008; Horngren et al., 2005). The first step to assigning costs to cost objects is called cost

accumulation (Horngren et al., 2005). Cost accumulation is, according to Horngren et al. (2005), the

collection of cost data in a systematized way through an accounting system. The next step is called

cost assignment, which both traces and allocates the accumulated costs to a cost object. The costs that

are traced to cost objects are direct and the costs that are allocated to a cost object are indirect.

Direct costs are for example direct material, manufacturing supplies, and energy consumption. The

direct costs can directly be linked, or so-called traced, to a specific cost object (Drury, 2008). Direct

costs can be both fixed and variable, but the majority of direct costs are variable. Indirect costs do not

have a direct relationship to a particular cost object. Therefore, indirect costs are allocated to the cost

object using a cost allocation method. Firstly, in one of the most used cost allocation methods, the

direct allocation method, the cost driver needs to be identified (Drury, 2008). A cost driver is a factor that

affects the total costs, and a change in the level of the cost driver will result in a change in the level of

the total cost related to that cost object (Horngren et al., 2005). Commonly used cost drivers are direct

labor hours or machine hours, as identified by Drury (2008). The direct allocation method, therefore,

assumes that direct labor hours or machine hours have a substantial impact on the level of indirect

costs in the long term (Drury, 2008). Secondly, when the cost driver is identified, the accumulated

costs are allocated to cost objects using the identified cost driver (Drury, 2008). Indirect costs can also

be both fixed and variable but tend to be fixed.

21

Summary of steps to assign costs to cost objects, based on Horngren et al. (2005) and Drury

(2008):

1. Cost accumulation: a collection of cost data 2. Cost assignment

a. Direct costs: directly traces the accumulated costs to a cost object b. Indirect costs: allocates accumulated costs using a cost allocation method

i. A cost driver needs to be identified (e.g., machine hours or labor hours) ii. The accumulated costs are allocated to cost objects using the cost driver

22

23

5 Methodology In the following section, an overview of the applied research process and research method is

presented, followed by a description of data collection methods, the analysis methods as well as a

discussion on reliability and validity.

24

5.1 Research process

A research method is needed to systematically solve a problem (Kothari, 2004). For the methodology

to be evaluated by others, it is important to state what decisions were made (Kothari, 2004). Each

research methodology needs to be developed according to the specific problem to be solved (Kothari,

2004). This thesis was carried out according to the research process depicted in Figure 5 below. The

steps in the research process are further explained in the following sections.

Figure 5: Illustration of this thesis’ research process.

Problem

description and

formulation of

objective

Understanding

of current state Literature study

DelimitationsObjective

breakdown

Plan collection

of data

Create method

of analysis

Collection of

data

Process data and

present results

Analysis with

method of

analysis

Discussion and

presentation of

end results

25

5.2 Research method

The objective of this thesis was addressed by studying a particular case at a specific company. Hence,

a research method suitable to draw conclusions from a specific case was needed for this thesis. Yin

(2018) describes case study research as a suitable method when a study’s research questions ask “why”

or “how” questions, the research subject is of contemporary nature, and when there is no or little

possibility to affect behavioral events. Further, case studies are favorable in exploratory research,

where new knowledge is generated rather than tested (Gerring, 2006). Research question A in this

study is formulated as a “how” question, see section 2.2. However, research question B is a “what”

question, see section 2.3, but due to it being exploratory, it still fits Yin’s (2018) and Gerring’s (2006)

description of research questions suitable to investigate using case study research. Furthermore, the

two research questions in this study investigate contemporary events that the thesis’ authors have no

control over. Hence, fulfilling Yin’s (2018) two other requirements for when a case study is suitable.

Therefore, case study research was considered a suitable research method for this thesis.

Benbazat et al. (1987) have compiled five different definitions of case study research into one

definition, which will be used for this study, “[…] a phenomenon in its natural setting, employing

multiple methods of data collection to gather information from one or a few entities (people, groups,

or organizations)”. Either case study research can consist of different cases from the same organization

when studying different issues, or the same issue in a variety of settings in the same firm (Voss et al.,

2002). One of the challenges often mentioned with case study research is its high time consumption

(Stake, 1995; Leonard-Barton, 1990; Zainal, 2007). Another challenge with case study research is the

need of being careful with drawing generalizable conclusions (Voss et al., 2002). A single case study

provides a greater depth of observations than multiple case studies (Voss et al., 2002; Gerring, 2006).

However, multiple case studies can, as mentioned by Voss et al. (2002), improve a study’s

generalizability and external validity, but in the case of resource constraints, it will reduce the depth of

observations, and a single case study is preferred. This study was carried out in a resource-constrained

setting, both regarding the time of the study and the number of available facilities where trial runs are

performed. Consequently, it was considered appropriate to perform a single case study that can lead

to a deeper understanding of the role of trial runs and their economic effects. In this thesis, the studied

case is a production line where paperboards with both dispersion and extrusion technology are

produced.

Yin (2018) has developed a step-by-step guide with six different phases that are needed to complete a

case study. The six phases include several sub-steps each, but can be summarized as the following:

1. Plan: identify the appropriate situation for doing a case study 2. Design: identify the case and establish the research questions and research method 3. Prepare: prepare data collection 4. Collect: collect empirical data 5. Analyze: display, interpret and analyze data 6. Share: conclude from results and findings

The general features of each phase have been taken into consideration when creating the research

process of this thesis found in Figure 5.

26

5.3 Collection of data

Case studies usually collect data by multiple means (Voss et al., 2002; Zainal, 2007; Leonard-Barton,

1990). In research methodology, data collection approaches are grouped into qualitative and

quantitative methods. The qualitative data collection approach, as Kaplan (1986) describes, can for

example include personal interviews, personal observations as well as qualitative descriptions of the

company. If the study aims at gaining new insights rather than finding validation for standing theories,

the collection of qualitative data can, according to Kuada (2012), be very effective as it allows

participants to express their feelings and perspectives in their own words. Kaplan (1986) also mentions

that quantitative data sources can be incorporated into a case study. Quantitative data is according to

Kuada (2012), more effective when the aim is to find numerical answers to detailed elements in the

research questions. Quantitative data sources could also, according to Bonoma (1985), provide a larger

picture of the unit which is being studied. Quantitative data sources can for example include financial

data, market performance data, and quantities of personnel, materials, and products (Bonoma, 1985;

Kaplan, 1986).

The objective of this case study is to provide a larger understanding of the role and economic effects

of trial runs which is done by collecting data by multiple means, resulting in both qualitative and

quantitative data. The collection of data was performed using four different methods: literature study,

data retrieval from internal Enterprise Resource Planning (ERP) systems, interview study as well as

observations, all described in detail below.

5.3.1 Literature study

To some extent, it is always necessary to relate and develop to earlier studies when conducting research

(Snyder, 2019). Hence, relating to earlier research, in a literature study, was necessary to create the

theoretical frame of reference presented in section 4. Creating the theoretical frame of reference was

also important to gain the understanding needed to pass the planning and design phase of case study

research.

The primary source of data for the literature study was scientific articles and books. The literature was

mainly found by searching in scientific databases such as Google Scholar, Scopus, and ScienceDirect,

using the key search words presented in Table 2 below. To create the theoretical frame of reference,

the key search words were chosen based on the author’s understanding of the problem description

and current state which was achieved during the planning and design phase of the case study research.

Similar formulations, synonyms, and combinations of the key search words in Table 2 were also used.

For example, combinations such as “manufacturing flexibility set-up time”, “corporate sustainability

strategy”, and “product portfolio strategy” were used. Relevant literature has also been found by

“snowball selection”, that is, by searching the references of relevant sources found. By doing so,

relevant sources could be used to drive the study forward (Wohlin, 2014).

27

Table 2: Key search words used when searching sources in the literature study.

Key search words

Sustainable product portfolio Cost allocation Cost accounting

Dispersion technology Strategy Corporate sustainability

Innovation Production system Set-up time

Trial runs Flexibility in manufacturing Product Introduction Process

Continuous manufacturing system

Product portfolio Portfolio management

Product development Extrusion barrier Coating barrier on paper

5.3.2 Interview study

The purpose of interviews is to enable the researcher to gain a deeper understanding of the research

field by understanding the point of view of the interviewee and allowing clarification of questions

(Hammond & Wellington, 2021). According to Hammond & Wellington (2021), interviews can be

sorted into three categories. Structured interviews follow a planned questionnaire and are in general

suited when there are many interviewers and interviewees (Hammond & Wellington, 2021). The

opposite, unstructured interviews, have no set questions which means that the output of the interview

varies in each case (Hammond & Wellington, 2021). Unstructured interviews are however suitable for

explorative phases of a case study since they can lead to new perspectives and insights (Saunders et

al., 2019). Semi-structured interviews are, according to Hammond & Wellington (2021), more

manageable than unstructured ones and more flexible than structured ones since a set list of questions

is used but in a more open way which allows the interview to move into different paths.

For research question A, semi-structured interviews were used as the major source of data regarding

different viewpoints on trial runs. Semi-structured interviews were used as they allowed the interviews

to move in different directions depending on which viewpoint the interviewee represented. The semi-

structured interviews were recorded when permission was given by the interviewee. The interview

questions were created from the previously gained knowledge from unstructured interviews early in

the research process as well as through the theoretical frame of reference. The interview guide used

in the interview study can be found in Appendix I. Through discussion together with the supervisor

from the company, interviewees were chosen to include employees from different units and with

different viewpoints on trial runs and product development. The interviewees have been categorized

into sustainability-, strategic- or operational viewpoints depending on the interviewees’ role at the

company and which understanding they have of trial runs and product development. This means that

the employees within a certain viewpoint has a role within the company connected to that certain

viewpoint, but the employees could still have knowledge and opinions connected to another

viewpoint. For example, an interviewee from the operational viewpoint could contribute with insights

regarding sustainability. In other words, the viewpoints sustainability, strategic and operational solely

describe the context with which they work with. Each interviewee, for research question A, has been

labeled with a letter, A through K, throughout the thesis to anonymize the employees. Besides these

interviews, two additional interviews were held to confirm data from the interview study as well as to

gain an even more comprehensive view of the role of trial runs. A regional sales director and two

controllers working with innovations and R&D, which includes NPV calculations, were interviewed

to get more insights on the market condition as well as the internal evaluations.

28

For research question B, the interviews held were unstructured with a focus on gaining an

understanding of the production line and were used as a complement to the data retrieval that is

explained in section 5.3.3. For example, an unstructured interview with a research advisor at the

production site was performed to get a deeper understanding of the studied production line early in

the process. The unstructured interviews have been used to fulfill the purpose of the planning and

design phases in the case study research. By interviewing different people at the company, it was

possible to identify relevant cost objects (research question B.1) as well as how the insights about the

cost of trial runs could help the company in the future (research question B.3). The unstructured

interviews were not recorded as they were held in an informal meeting-like context, the authors did

however take notes during all the interviews to not miss any information.

The interviewees in this study are all employees at the company with different positions, see Table 3

below. The role of each interviewee from the interview study and the length of the interviews can be

found in Table 19 in Appendix IV.

29

Table 3: Overview of interviewees including which interview method was used, the date of the interview, and if the

interview was recorded or not.

Interviewee Type of interview Date Recorded

Interviews connected to research questions A and B

Business Developer and supervisor of the

thesis Unstructured

Continuous meetings

No

Interviews connected to research question A

Sustainability viewpoint

A Semi-structured 2022-03-01 Yes

B Semi-structured 2022-03-30 Yes

Strategic viewpoint

C Semi-structured 2022-02-28 Yes

D Semi-structured 2022-03-01 Yes

E Semi-structured 2022-03-02 No

F Semi-structured 2022-03-09 Yes

G Semi-structured 2022-03-18 No

Operational viewpoint

H Semi-structured 2022-03-03 Yes

I Semi-structured 2022-03-09 Yes

J Semi-structured 2022-03-10 Yes

K Semi-structured 2022-03-21 Yes

Additional interviews connected to research question A

Regional Director Sales

Semi-structured 2022-03-22 Yes

Innovations and R&D controllers

Unstructured 2022-03-23 No

Interviews connected to research question B

Research Advisor Unstructured 2022-01-26 No

Production Support Unstructured 2022-02-04 No

Controller Unstructured Unstructured

2022-02-10 2022-02-23

No No

Senior Process Engineer

Unstructured 2022-02-25 No

30

5.3.3 Financial and manufacturing data retrieval

Financial and manufacturing data used to conduct the cost analysis, needed to answer research

question B, was retrieved from the company’s ERP systems. Thus, this could be seen as a part of the

data collection phase in case study research. During the study, two internal ERP systems have been

used to collect manufacturing and financial data from the production line. One of the ERP systems

included data directly transferred from the machine equipment in the production line. The transferred

data were time-stamped and showed the different activities in the manufacturing process. The specific

activities of the machine equipment shown in the ERP system included set-up time, time for the

machine to accelerate to full speed (ramp-up time), stops caused by machine breakdowns, production,

as well as the time when production was disturbed. The staff at the production facility can code and

write comments in the system explaining the cause of, for example, machine breakdowns. These

activities are explained further in section 6.2.

In the second ERP system, it was possible to obtain financial accounting data. Monthly production

costs could be found for each product code for the studied products. The production costs were

categorized as fixed and variable in the financial accounting system. In Table 4 below, it is shown what

costs the company has included in fixed and variable costs for the studied production line and hence

will be included in the cost analysis in this study. The three fixed cost categories in Table 4 cover all

fixed expenses for the studied products of the company. For example, rent, IT services, insurance,

and other necessary costs are included in these categories.

Table 4: The costs which have been included in the fixed and variable costs for the studied production line.

5.3.4 Observations at the studied production facility

To confirm and complement information about the studied production line, ocular observations were

made during a visit to the production facility. A guided tour of the studied production line together

with information from unstructured interviews enabled the creation of the process map that can be

found in section 6.1. During the ocular observation, the studied production line and its machines were

presented by an employee working at the facility. The observations and the information provided by

the guide were used to gain a larger understanding of the production line and to validate the

information from the previously held unstructured interviews.

Observations are most commonly used in behavioral studies but can also be used in other types of

studies since one of their main advantages, according to Kothari (2004), is that they allow the

researcher to verify statements from respondents in the study. Observations could also be useful to

move the research forward: by observing a situation, insights could be gained on what to study further

Fixed costs

Personnel

Maintenance

Depreciation

Variable costs

Chemicals

Packaging

Electricity

31

(Jonker & Pennink, 2010). Therefore, observation of the production line was also a method to validate

and complement the input regarding which cost objects to include in the cost analysis given by

employees at the company prior to the visit to the facility.

5.3.5 Summary of data collection method

Table 5 below shows a compilation of which data collection methods have been used for each sub-

question, respectively.

Table 5: Data collection approaches for each research question of this study.

Research question Data collection method

A. How do different units within a packaging company consider the role of trial runs from strategic, operational, and sustainability viewpoints?

Semi-structured interviews and literature study

B. What are the economic effects of trial runs in a packaging company?

B.1. Which cost objects are included in the economic effects caused by trial runs and what is the cost distribution between these?

Ocular observation of production line, unstructured interviews, and data retrieval from ERP systems

B.2. How does the time distribution of cost objects differ between trial runs and ordinary production in a production line?

Data retrieval from ERP systems

B.3. How can insights from the identified costs help

gain a larger understanding of trial runs?

Unstructured interviews and literature study

5.4 Analysis method

After data have been collected, data must to be processed and analyzed in line with what is stated in a

study’s purpose (Kothari, 2004). In this study, the analysis method aimed at utilizing qualitative and

quantitative data to fulfill the study’s objective. There are two main analyzes, one connected to each

research question, that together contribute to fulfilling the objective of this thesis. The analysis model

can be seen below in Figure 6.

32

Figure 6: Overview of how the different analyzes of this thesis provide a larger understanding of the role of trial runs.

5.4.1 Thematic analysis

The collected data from the interview study is qualitative which, according to Bryman et al. (2019),

can be challenging to analyze, mainly because the empirical data is unstructured. The empirical data

from the interview study is in the form of written notes from the interviews. The notes taken during

the interviews were validated through the recordings of the interviews. According to Bryman et al.

(2019), one of the most commonly used methods to analyze qualitative data is thematic analysis.

Therefore, to analyze the qualitative data in this thesis, a thematic analysis has been performed. Clarke

and Braun (2012) define thematic analysis as a method for “systematically identifying, organizing, and

offering insights into patterns of meaning (themes) across a data set”. The thematic analysis allows the

researcher to identify and make sense of collective or shared meanings and experiences from the

interviewees. It is of importance that the patterns which are identified are relevant to the objective and

research questions of the study (Clarke & Braun, 2012; Bryman et al., 2019). According to Bryman et

al. (2019), the themes which are identified can be defined in four ways:

The objective of this thesis work is to gain a larger understanding of

the role of trial runs in manufacturing as well as to investigate the

economic effects of trial runs of a packaging company.

Analysis of the role of trial

runs in manufacturingCost analysis

Process mapping

Identification of relevant

cost objects

Cost calculation

Thematic analysis

of retrieved

information from

the company

Compilation of analysis result to gain a larger understanding of

the role of trial runs as well as their economic effects

Theoretical

frame of

reference

Interviews ObservationsQuantitative

data from the

company

33

− It is identified as a theme during the data collection

− It is related to the research questions and objective of the study

− Coded data from transcripts

− It is related to the theory which is used for the objective of the study

The interviews which have been executed during the interview study have been analyzed according to

research question A and the objective of the study. The thematic analysis was therefore based on the

viewpoints (sustainability, strategical and operational) that research question A raise. The variety of

knowledge from the interviewees about trial runs lead to both separate and similar viewpoints, but for

the answers to be categorized as a theme, they needed to be connected to research question A and the

objective of the study.

Bryman et al. (2019) mention that to validate the analysis, a separate analysis can be performed by

more than one author. Therefore, in this study, the analysis was done separately by the two authors to

identify themes and was later discussed together to reach a consensus on the analysis. Additionally,

the interview notes were used to manually code the data to identify themes that related to research

question A.

5.4.2 Cost analysis

To analyze the economic effects of trial runs and answer research question B, a calculation of the costs

of trial runs was conducted. This was done according to the following steps:

Step 1: Identifying cost objects

The first step included identifying relevant cost objects. In one of the company’s ERP systems, data

from the machines are logged as intervals of time according to which activity is taking place. These

activities, which are presented and explained in section 6.2, were together with employees at the

studied facility considered to be relevant cost objects to allocate or trace all costs to.

Step 2: Retrieval of accumulated fixed and variable costs

Accumulated cost data were retrieved from the company’s financial accounting system, divided into

fixed and variable costs for the studied products for the studied time periods. Data were retrieved

from six production cycles, from September 2021 to February 2022. The costs included in fixed and

variable costs can be found in Table 4 in section 5.3.3 above. In this thesis, the variable costs are costs

that are directly related to a specific cost object while the fixed costs are costs that cannot be directly

linked to a specific cost object. For example, the cost “Chemicals”, under variable costs, is solely

needed during the value adding activities, production, and disturbed production, while the cost “Personnel”,

under fixed costs, is needed during the entire production time and cannot be directly linked to a

specific activity. Therefore, the variable costs are treated as direct costs. Hence, traced to the value

adding cost objects while fixed costs are allocated to all the cost objects. Some of the costs that the

company has categorized as variable costs, such as “Electricity”, could compose a cost during other

activities than just the value adding ones. However, since these variable costs are estimated to mainly

arise during the value adding activities, an assumption has been made in this thesis to only allocate the

variable cost to the value adding activities.

34

Due to how the company performs its financial accounting, both fixed and variable costs were given

in euros per ton in the financial accounting system. However, the fixed costs have originally been

calculated by the company based on the time consumption (cost per hour) of each product but are

then recalculated due to the financial accounting system. An average cost, in euros per ton, for the

studied months has been retrieved and used for fixed and variable costs. An average cost for the

studied production cycles is used due to variations in costs because of aspects not related to the trial

runs or studied products, such as unusually large depreciation for specific time periods. The unusually

large depreciation costs would have given a misleading result for some periods. Hence, an average

cost per ton for the studied production cycles is used.

Step 3: Compilation of time data

The next step is cost assignment, which includes tracing and allocating costs to specific cost objects.

To allocate fixed costs to the identified cost objects, in this case activities, it was first necessary to

compile the cost driver, in this case the amount of time each activity had consumed. This was done

by first retrieving time-stamped data from the ERP system mentioned in the previous step. The data

were then color-coded in an excel spreadsheet to specify which product (A, B, and C) and which

activity (or cost object) each time interval represents. The color coding simplified the summation of

time each product and activity constituted during each studied time period. The spreadsheet is not

appended to this thesis due to confidentiality reasons. The result of this step was in other words a

summation of time consumed by each activity and product for the six studied production cycles. To

conduct this summation of time for each activity, it was, however, due to unclarities or absence of

information in the ERP system, necessary to make some assumptions, see Appendix III.

The fixed costs were allocated to all activities, both value adding and non-value adding activities, based

on the time they consumed. The variable costs were traced to the value adding activities (when

production is taking place) based on the number of produced tons during the specific activity. See

Figure 7 for an illustration of the tracing and allocation of costs.

Figure 7: Illustration of how the costs have been allocated or traced to the different activities.

Variable costs -Traced based on produced tons

Fixed costs -Allocated based on time

Non-value adding activities

Value adding activities

35

Step 4: Convert cost per ton to hourly cost

As mentioned, the fixed costs were given in euros per ton, but the production data for the activities

were given as intervals of time. To allocate the fixed costs based on time, the fixed cost needed to be

converted to an hourly cost. With the help of a production support employee, it was possible to obtain

data for the average produced ton per hour for the three products dring the studied period of time.

This was inserted in Equation 1 to achieve a fixed hourly cost:

𝐹𝑖𝑥𝑒𝑑 ℎ𝑜𝑢𝑟𝑙𝑦 𝑐𝑜𝑠𝑡 [𝑒𝑢𝑟𝑜

ℎ] = 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑡𝑜𝑛 [

𝑒𝑢𝑟𝑜

𝑡𝑜𝑛] × 𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑡𝑜𝑛 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟 [

𝑡𝑜𝑛

ℎ] (1)

Step 5: Calculation of fixed costs

The fixed hourly cost calculated using Equation 1 was then multiplied by the time consumption of

each activity, compiled in step 2. In other words, each activity was allocated a fixed cost according to

Equation 2:

𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦′𝑠 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 [𝑒𝑢𝑟𝑜] = 𝑇𝑖𝑚𝑒 [ℎ] × 𝐹𝑖𝑥𝑒𝑑 ℎ𝑜𝑢𝑟𝑙𝑦 𝑐𝑜𝑠𝑡 [𝑒𝑢𝑟𝑜

ℎ] (2)

Step 6: Retrieval of the total produced tons

The variable costs were traced to the value adding activities depending on how many tons that were

produced during that activity. Hence, a retrieval of the total produced tons during the studied

production cycles was done from one of the ERP systems.

Step 7: Calculation of produced tons during each value adding activity

In the ERP system, it was not possible to retrieve information regarding how many of the total

produced tons were produced in the two different value adding activities, production versus disturbed

production. So, to trace the variable costs, it was necessary to estimate this using two equations. This

was done by first calculating the produced meters of paperboard with dispersion technology during

the activity production, see Equation 3 below.

𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑚𝑒𝑡𝑒𝑟𝑠 [𝑚] = 𝑇𝑖𝑚𝑒 𝑑𝑢𝑟𝑎𝑡𝑖𝑜𝑛 [ℎ] × 𝐵𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 [𝑚

ℎ] (3)

This activity, as well as the other value adding activity, disturbed production, is explained further in section

6.2. To calculate the produced meters during production, the machines were assumed to be operating at

the budgeted production rate, which was retrieved from a production support employee.

The produced meters during production, calculated in Equation 3, were then put into Equation 4 below

to calculate the number of tons produced during the activity production. For the width of the paperboard

and the coating surface weight, needed in Equation 4 below, average numbers from the studied

production cycles were used.

𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑡𝑜𝑛𝑠 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛[𝑡𝑜𝑛] = 𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑚𝑒𝑡𝑒𝑟𝑠 [𝑚] × 𝑊𝑖𝑑𝑡ℎ [𝑚] × 𝑆𝑢𝑟𝑓𝑎𝑐𝑒 𝑤𝑒𝑖𝑔ℎ𝑡 [𝑡𝑜𝑛

𝑚2] (4)

36

To compute the number of tons produced during disturbed production, the number of tons produced

during production was then subtracted from the total amount of produced tons during the entire studied

time period, available in the ERP system, see Equation 5.

𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑡𝑜𝑛𝑠𝐷𝑖𝑠𝑡𝑟𝑢𝑏𝑒𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛[𝑡𝑜𝑛] = 𝑇𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑡𝑜𝑛𝑠 [𝑡𝑜𝑛] − 𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑡𝑜𝑛𝑠𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 [𝑡𝑜𝑛] (5)

Step 8: Calculation of variable costs

As mentioned, the variable costs were traced to the value adding activities based on produced tons

during the activity. The variable cost of the value adding activities was calculated according to

Equation 6:

𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦′𝑠 𝑣𝑎𝑟𝑖𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 [𝑒𝑢𝑟𝑜] = 𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑡𝑜𝑛 [𝑡𝑜𝑛] × 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑡𝑜𝑛 [𝑒𝑢𝑟𝑜

𝑡𝑜𝑛] (6)

Step 9: Summation of costs

In the next step, fixed and variable costs were merged giving each activity’s total cost using Equation

7. Note that the variable cost is equal to zero for the non-value adding activities.

𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦′𝑠 𝑡𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 [𝑒𝑢𝑟𝑜] = 𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 [𝑒𝑢𝑟𝑜] + 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 [𝑒𝑢𝑟𝑜] (7)

Step 10: Convert total cost to cost per produced ton

To decrease the impact of variations in between the studied production cycles, as well as to suit the

company’s accounting system, the costs calculated in step 9 were then divided by the produced tons

during the studied production cycles to provide a cost per produced ton.

Step 11: Comparison between dispersion trial runs and ordinary production

To answer sub-question B.2. “Which cost objects are included in the economic effects caused by trial

runs and what is the cost distribution between these?”, data with time intervals for different activities

were retrieved for ordinary production using extrusion technology, in the same way, that has been

done for the dispersion trial runs, see step 2. This enables a comparison between how much time is

being consumed in the different activities by trial runs versus ordinary production. A shorter studied

period of time than for trial runs, is assumed, to be sufficient to draw accurate conclusions on ordinary

production due to longer production cycles and a standardized production process with few

abnormalities. Therefore, one month of data has been used to study ordinary production. This

assumption was also supported by employees at the production facility.

5.5 Summary of methodology

The methodology of this thesis is summarized below in Table 6 and Table 7Error! Reference source

not found., where each activity is briefly described together with the goal of each activity. This table

can be used as a complement to Figure 5 to get an overview of the research process and method of

this thesis.

37

Table 6: Summary of the methodology of this thesis, describing each activity, its goal, and a short description of the

execution.

Activity The goal of the activity Execution

Background problematization

Get an understanding of the background to the issues that lead to this study

Unstructured interviews with involved employees at the company

Formulate the aim of the study

Creating a clear purpose of the research which specifies the goal of this thesis

Formulate an objective that connects to the background and problematization

Describe current state

Get a deep understanding of the current state of the company to create a theoretical frame of reference

Unstructured interviews with employees at the company, ocular observations, and review of material from the company

Literature study

Create a frame of reference that makes up a theoretical foundation

Collect data through a literature study, searching for relevant sources using scientific portals

Choose system boundaries

Clarify what should be included in the study

By discussion with supervisors choose appropriate products to do a cost analysis on, and decide on other necessary delimitations to fit the time frame of this thesis

Objective breakdown

Specify the objective by creating research questions that also imply what data needs to be collected

Using background problematization and unstructured interviews with the supervisor at the company to formulate research questions

Plan collection of data

Plan and ensure that data needed to answer the research questions can be collected

Compile unstructured interviews with employees at the company and theoretical frame of reference to plan which data need to be gathered and how

Create a method of analysis

Create a systematic way to combine theory and results

According to the theoretical frame of reference and the objective breakdown, develop a method to analyze the results

38

Table 7: Summary of the methodology of this thesis, describing each activity, its goal, and a short description of the

execution.

Activity The goal of the activity Execution

Collection of data

Gather the data needed to answer the research questions

Collect quantitative data from the company’s ERP systems and qualitative data from semi-structured interviews with employees as well as literature review

Process data and calculate costs

Evaluate the cost of trial runs and create a picture of the role of trial runs

Follow the cost accounting system when calculating the cost of trial runs, and compile data regarding the role of trial runs

Analysis

Analyze how the results can be used to fulfill the objective

According to chosen analyses methods, analyzing how identified costs and perspectives on the role of trial runs can help gain a larger understanding

Discussion and present end-result

Discuss and summarize results to finalize recommendations

Answer the research questions by summarizing and discussing the results and analysis, also discuss how the results can be generalized

5.6 Reliability and validity

Two important aspects when conducting a study are reliability and validity. Reliability describes how

trustworthy the results are, in other words, a study has high reliability if the result were similar when

repeating the study, independently by whom (Hammond & Wellington, 2021). Validity represents how

appropriate a measure or method is for the purpose (Hammond & Wellington, 2021).

The interview study aimed to answer research question A includes eleven employees all with different

roles, where some are directly connected to the studied facility, and some have more general

knowledge about trial runs, product development, manufacturing and strategy. Since the interview

study is based on the personal opinions of employees, there is a risk that the reliability of the study

has suffered. Furthermore, it is, in general, more challenging to achieve reliability in qualitative

research, as it to a higher degree than in quantitative research is affected by the one conducting the

study (Shenton, 2004). However, by including employees from different areas within the organization,

the study has achieved a variation in answers, which could potentially decrease this risk.

A method to increase the validity of this study was that all semi-structured interviews where the

interviewee approved, were recorded to not miss any information. When there was any unclearness

about information, the interviewee was contacted again to explain further. By also interviewing a sales

manager and two controllers, it was possible to increase the validity by confirming specific topics with

39

them that were brought up in the interview study by other interviewees. One approach to validating

information using different methods and sources is called triangulation (Bell, 2015). Triangulation was

applied in both the literature- and interview study. In the interview study, the same questions were

asked to different interviewees to confirm information, and in the theoretical frame of reference,

different sources were used to explain the theories.

40

41

6 Current state of the studied case The following section provides an understanding of the current state by presenting a description of

the production line at the studied facility as well as a description of the cost objects in the studied

production line.

42

6.1 Production line at the studied facility

The studied case is a production line where the production of paperboard with both dispersion and

extrusion technology is produced. Before the investment, the facility consisted of two production lines

enabling extrusion technology on paperboards. Coating capacity, including coating preparation and

drying capacity, were added to one of the two existing production lines during the investment, enabling

the production of paperboards using dispersion technology as well. See Figure 8 for a process map of

the entire production line and the scope of this case study, marked by the dotted line.

Figure 8: A process map of the production line at the studied facility, where the dotted line shows the added equipment

enabling dispersion technology.

The studied production facility has a limited capacity of how much paperboard can be produced,

measured in produced tons. The studied facility, like the company’s other production facilities, is

measured and internally rated on efficiency and produced tons. For the studied facility, there is a

budgeted capacity for trial runs every month. The demand for the company’s ordinary products

manufactured with extrusion technology is high, meaning that the studied production line, in general,

is fully booked even before trial runs have been scheduled. Since the company wants to be able to

meet the demand of the customers, it entails that, in order to perform both trial and ordinary

production, some ordinary production is being outsourced to external production facilities. According

to a controller at the company, production at an external site entail a significantly higher cost than

producing the same amount internally.

The personnel at the facility are responsible to plan and use the budgeted capacity to fit the production

schedule of the other products. During the studied period investigated in this thesis (September 2021

– February 2022) the goal was to perform trial runs with dispersion technology in one consecutive

period per month. When it comes to the procedure for trial runs, it is fairly similar from time to time.

However, if a completely new material or chemical is used there are administrative processes that need

to be completed. The administrative processes could for example include getting permission to use a

specific chemical in the production facility. Consequently, due to unplanned occurrences, such as an

urgent demand for other materials or administrative processes, it is not always possible to perform

trial runs in a consecutive period or in an identical way every time.

Extrusion line Extrusion lineDrying capacity

Coating capacity

Coating

preparation

43

6.2 Cost objects in the studied production line

The activities that have been identified to drive the cost of trial runs for dispersion products, and thus

been included in the cost analysis, are based on the information in the ERP system providing

production times. The activities that could be seen in the ERP system have further been categorized

through discussion with employees at the company.

When the production of paperboard with dispersion technology is planned to start, the production of

extrusion products stops, and the coating capacity is prepared and set up. Through observation and

unstructured interviews, it has been identified that the preparation phase includes the activity Start of

the coating units which includes the set-up of the machines such as installing the coating concept and

rearranging the paper track. See all activities for the production process in Table 8 below.

Table 8: Shows the identified cost objects for each category in the studied production line.

Category Activity

Preparation Start of coating units

Set-up

Widening

Change of coating concept

Other

Ramp-up Ramping

Production Production

Disturbed production

Stop

System and electric failure

Web break

Cleaning

Leakage

Other

Afterward Cleaning

The set-up category includes widening of machines, change of coating concept, and an activity named other

which includes activities that are either unspecified in the ERP system or is a process that is not

commonly used in the production line. During production with dispersion technology, traces of the

coating concept are left on the machinery. The coating that is spilled on the machinery needs to be

cleaned before producing other products. Therefore, an activity named Widening is used to cover the

time when the machine equipment is prepared for a wider paperboard. The properties of the coating

concepts are different for different products and therefore, the coating concept needs to be changed

between products that need different coating concepts. An activity named Change of coating concept is

therefore included to cover for this time.

When the machines are ready, the machines start slowly and work themselves up to the budgeted

target speed which is pre-installed by the manufacturers in the facility. During this activity, called

ramping, there is no production of paperboard. When the production line has ramped itself up to the

budgeted target speed, the activity Production takes place, where paperboard with dispersion technology

is produced. During production, sometimes the machines are not able to produce paperboard at the

intended budgeted target speed, which results in the activity Disturbed production.

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During production, sometimes, the machinery needs to be stopped for various reasons. During

production at the studied facility, sometimes there are system and electrical failures, coating leakages that

require cleaning of the machines, web breaks, and other activities which were rare or unspecified in the

ERP system. Leakages can result in defects in the product, as well as imply an extra need for cleaning.

The activity named Web breaks occurs when the paperboard tears apart in the middle of the production

line and can cause extensive delays in production.

After the production of paperboard with dispersion technology, thorough cleaning of the machine

equipment needs to be performed to remove all coating concepts from the machines, hence naming

the last activity Cleaning.

For extrusion technology, some activities are different. Extrusion technology does not require a

change of coating concept or time-consuming cleaning after each production cycle. Some of the

underlying causes of the stops are different for the technologies as well as the start of the machines

before a production cycle.

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7 The role of trial runs in manufacturing In the following section, the results connected to research question A are presented. Initially, a

compilation of the results from the interview study can be found, followed by an analysis of the data

obtained in the interview study.

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7.1 Compilation of the interview study

During the interviews, several topics were discussed where all questions asked can be found in

Appendix I. The tables below show a compilation of the interviewees’ answers structured after the

discussed topics. To answer research question A, which aims to investigate “How are trial runs viewed,

within a packaging company, from sustainability, strategic, and operational viewpoints?”, it was

considered relevant to ask employees from these different viewpoints within the company which

driving forces they saw to conduct trial runs. In Table 9 below, the interviewees’ take on aspects

motivating trial runs can be found.

An “X”, in Tables 9 – 11, implies that the aspect in the left column was mentioned by the interviewee

during the interview. The tables do not show which aspects were regarded as more or less important

but are rather a pattern of what different functions within the company consider. Since the

interviewees are anonymous, each interviewee is represented by a letter from A to K, see Table 3 for

more information regarding each interviewee.

Table 9: Driving forces to conduct trial runs according to the interviewees. The interviewees are sorted according to if

they have a role with sustainability, strategic or operational viewpoint.

Sustain-ability

Strategic Operational

Driving forces to conduct trial runs A B C D E F G H I J K

Being able to fulfill the needs of the future X X X X X X X

Keep portfolio future proof – stay competitive X X X X

Match customer expectations and demand X X X X X X

Drive product development X X X X X

Test the products' performance indicators in full scale

X X X X

Finding new ways to add value, like innovation, and sustainability, besides cost leadership

X

Nurture customer relationships X

Gain internal knowledge X X

Develop more mature products to keep margins X

Test new raw materials, chemicals, and coating concepts

X X

Test what the machines can handle X

Improve recycling X

Replacing materials (such as aluminum) X

Since sustainability is a large part of the company’s strategy, the interviewees were also asked what

sustainability aspects are currently motivating trial runs within the company. In Table 10, the aspects

brought up by the interviewees are presented.

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Table 10: Sustainability aspects motivating trial runs according to the interviewees. The interviewees are sorted according

to if they have a role with sustainability, strategic or operational focus.

Sustain-ability

Strategic Operational

Sustainability aspects motivating trial runs A B C D E F G H I J K

Plastic reduction X X X X X X X X

Recyclability X X X X X X X X

Circularity X X X X

Chemical use X

CO2-footprint X X X

Material replacement X X X

Reduce food waste X

EU goals and targets X X

Legal incentives, e.g. single-use plastic-directive X X X X X

Retrain data for life cycle assessments X

No correlation between trial runs and sustainability aspects

X

Compostability X

One aspect brought up, by employees at the company, early in the process of conducting this thesis

was how different customer expectations are motivating trial runs. To further investigate what was

meant by this, the interviewees were asked which customer expectations and demands they believe

are considered when conducting trial runs. In Table 11 below, the different customer expectations

discovered in the interview study are presented.

Table 11: Customer expectations to consider when conducting trial runs according to the interviewees. The interviewees

are sorted according to if they have a role with sustainability, strategic or operational focus.

Sustain-ability

Strategic Operational

Customer expectations to consider when conducting trial runs

A B C D E F G H I J K

Financial demands X X X

Performance of product - Long shelf life, light transmission

X X X

Products with low environmental impact X X

Recyclability X X X X X

Low carbon footprint X X X X X

Products with no plastic X X X X

Develop products that can be recycled in customer recycle centers

X

To further investigate the role of trial runs in manufacturing products, the interviewees were asked

about the challenges with trial runs. The answers given to this question were more elaborated and

more difficult to present in a table like the ones above. Therefore, the answers given to this question

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can be found in Table 12 below in the form of extracts from the interviews or slightly rewritten for

the understanding of this thesis.

Table 12: Challenges with trial runs according to the interviewees. The interviewees are sorted according to if they have a

role with sustainability, strategic or operational focus.

Challenges with trial runs

Sustainability

− Sacrifices need to be done – Balance quality, performance, and sustainability

− Aligning the customer requirements and the technicality of the product

− Difficult to take sustainability into consideration

Strategic

− The market situation – the demand (for ordinary production) is large

− Administrative barriers – long and tedious processes to perform trial runs

− Balancing capacity between ordinary production and trial runs

− Need to use less fiber and energy – connected to the environmental goals

− Need to work in different time horizons simultaneously

− Innovations and trial runs drive down the efficiency of the facility

− Expanding the portfolio brings down the efficiency

− It is complex to decide on how to budget trial runs

− End-users behavior is not reflecting their interest

− There are large variations of trial runs – it varies how easy they fit into the production schedule

Operational

− Complex planning phase before a trial run

− The planning schedule fails

− Balancing capacity between ordinary production and trial runs

− A lot of manual work with trial runs

− There is a risk of losing a customer if the products they demand are not delivered

− Communication – introducing new things can create misunderstandings and it is time-consuming when everyone does not know what to do

− Not taking enough time to evaluate results afterward

− ERP systems are not compatible with trial products

− Seems as if business cases are not always performed – is it worth the time and resources on all trial runs?

− A lot of different products are produced and therefore the utilization of the facility is not as good as other facilities – which is seen as a disadvantage for the facility

Furthermore, the interviewees were asked about how short- and long-term effects of trial runs are

balanced. The question is aimed at investigating how trial runs are managed with both current and

future businesses in mind. The results from this interview question are presented in Table 13 and

Table 14.

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Table 13: The balancing of the short-term and long-term perspective of trial runs according to the interviewees. The

interviewees are sorted according to if they have a role with sustainability or strategic focus.

Balancing short-term and long-term

Sustainability

− It is essential to look at potential markets and the technical aspects before starting a new project

− Trial runs and product development are always linked to profitability

− The advantages and the implications always need to be weighed against each other

Strategic

− Trial runs should be seen as any other investment

− A decision is based on a business case where profitability, volumes, price etcetera are investigated and how the new product fits into the strategy

− Even though a trial run can bring a lot of waste it can also form a new sustainable product that can bring competitiveness

− If a facility can put aside capacity for trial runs it is easier to balance the trade-off, otherwise, it is much more difficult

− Cheaper to do trial runs at a smaller facility (like the studied one)

− The market demand needs to be tested before increasing the quantity

− The studied company is high in innovation compared to other paper and paper pulp industries but around the same compared to the chemical industries

− The new products which are produced today are not going to solve the future of the company

− The product launches are not perfect, but they are one step in the right direction

− The products may be good in one sustainability aspect but worse in another.

− We need to work in three time-horizons (short-, mid- and long-term perspective)

− We also need to work disruptively

− The plastic industry is also making huge progress

− In 10 to 20 years, we do not solve the problem by consuming paper instead of plastic

− Performing New Present Value calculations helps prioritize between the different projects

− It is always good to perform trial runs on a smaller scale

− When initiating a trial run, the products should have been thoroughly evaluated and be as close to the end results as possible (as trial runs are expensive and take up resources)

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Table 14: The balancing of the short-term and long-term perspective of trial runs according to the interviewees. The

interviewees are sorted according to if they have a role with operational focus.

Balancing short-term and long-term

Operational

− The demand of customers decides the number of trial runs

− Trial runs are needed to survive

− Short-term and long-term perspectives are not evaluated against each other – not clear how business cases are calculated

− If the product portfolio needs growth, there are incentives to spend time and resources on trial runs and product development

− Decisions are taken too fast sometimes – there are no business cases behind the decisions

− Sometimes it is required to spend time and resources to scale up later

− The most important aspect is that the trial products bring added value in the end

Lastly, to further be able to answer what role trial runs have in a company developing packaging

products, the interviewees were asked to explain how they view the link between product portfolio

strategy and trial runs. The answers are similar to those in Table 13 and Table 14 presented above

by extracts from the interviews, see Table 15 and Table 16.

Table 15: How product portfolio strategy is considered when performing trial runs according to the interviewees. The

interviewees are sorted according to if they have a role with sustainability focus.

Product portfolio strategy

Sustainability

− New developments need to be in line with our sustainability targets

− The impact of the product is being tested before development

− All sustainability claims are based on calculations and evidence

− Sustainability targets are always in mind – often both bottom-up and top-down

− Feels as if there is strong support for portfolio renewal

− Technical recyclability is always a requirement

− The internal guidelines are followed and focused on

− The sustainability implications need to be evaluated

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Table 16: How product portfolio strategy is considered when performing trial runs according to the interviewees. The

interviewees are sorted according to if they have a role with strategic or operational focus.

Product portfolio strategy

Strategic

− New products need to fit into the current product portfolio

− The new products also need to work in the current production process (technical feasibility)

− The efficiency of the facility is important

− There are criteria and stage gates that a product needs to pass to be developed further

− The portfolios are reviewed monthly

− Fairly clear which sustainability criteria need to be met

− Maturity of technology and market together with regulations and trends are important

− Trial runs test existing capabilities – what can we do today and what do we need to invest in to drive development

− If there is free capacity in the facilities, trial runs are important

− New developments need to be in line with sustainability targets

− It is not always possible to look at all customer needs and therefore they have to look at a business perspective and what projects fit into the current business

− Most of the product developments are based on incremental innovation

− The goal is to do incremental steps to achieve 100% renewability

Operational

− Investments are decided by the management and sometimes focuses on short-term performance

− Ideally, the new product development originates from a specific customer which enables a more deliberate plan and strategy

− New products and ideas are more difficult to “sell in” internally than externally

− The new products also need to work in the current production process (technical feasibility)

− The efficiency of the facility is important

− New developments need to be in line with sustainability targets

− There is sometimes a lack of business cases for the chosen trial products

− Management decides what to focus on – does not always seem reasonable from the facilities’ point of view

7.1.1 Additional interviews regarding market condition and internal evaluations

The interviewed regional sales director confirmed information mentioned by many interviewees in the

interview study about the market asking for new alternatives to current solutions, and that there is a

need from the company’s perspective to expand their product portfolio. The sales director also

confirmed that customers’ demands have increased when it comes to environmental performance,

due to for example the single-use plastic directive and increased recycling fees. The sales director did

further explain that the development of sustainability performance is a step-by-step process and that

it is sometimes challenging to convey to the customers what is possible from products currently going

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through trial runs. It is also, according to the sales director, a challenge to convey what is possible

regarding performance indicators and available production capacity. Another challenge, related to trial

runs, is that the sales director sometimes experiences that decisions are made too far from the market

situation and the customers.

The interview with the two controllers gave insights on what is done before trial runs are initiated.

Before the development of products, a high-level calculation is performed to provide an understanding

of what product developments make sense to invest in from a profitability perspective. The high-level

calculation is part of a more detailed evaluation, so-called a business case, mentioned by some of the

interviewees in the interview study above. For developments, specific data about the products are

inserted in a template, resulting in an NPV and a payback time, which is also part of the business case.

Examples of data that are inserted are costs, such as for trial runs or machine investments, variables

needed to decide the price of the products, and how other products’ production capacity will be

affected when the new product is scaled up. These kinds of calculations can also be performed when

changing something in an already developed product, such as which chemicals are used in the coating

concept. These business cases are performed for investments, such as developments of new products,

and not for every specific trial run. Some trial runs are not considered costly enough to perform a

business case. This means that business cases are performed in most cases but not in all, depending

on the type of trial run. One of the challenges with completely new products is that some detailed

data, such as for trial runs, are missing and hence assumptions need to be done. Thus, the calculations

are a continuous process where data are updated after a product has started to be developed and tested

more thoroughly. Another challenge mentioned is how the NPV calculations should be combined

with the sustainability assessments of a product, giving a better understanding of how possible

investments and developments go in line with the strategy of the company. Combining NPV and

sustainability assessments is still in the planning stage, but the ambition is to be able to weigh NPV

against sustainability aspects by developing sustainability key performance indicators (KPIs).

7.2 Analysis of the role of trial runs

In the following sections, results from the interview study are analyzed. The result from the interviews,

found in Table 9 to Table 16, have been thematically categorized within the four following sections

focusing on market needs, innovation, business strategy, and testing developments in production

facilities. These themes have been selected according to how thematic analysis is described in section

5.4.1, and are based on the sustainability, strategic and operational viewpoints covered in the interview

study. Thus, the following sections aim to answer research question A. “How are trial runs viewed,

within a packaging company, from sustainability, strategic, and operational viewpoints?”.

7.2.1 Fulfill the needs of the market

The role of trial runs, from what was found in the interview study, can largely be seen as an important

step to fulfill the needs of the market which is further elaborated on in this section. Reacting to market

changes to gain competitive advantages is, according to Rumelt (1980), two of four elements needed

in a suitable business strategy, whereof reacting to the changes in the environment is one and

possessing a competitive advantage is the other. By manufacturing goods or services, the purpose of

production is to fulfill the needs of society (Olhager, 2013). Hence, the purpose of production, in

other words, could be to fulfill the needs of the market.

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Meeting current and future customer needs is an aspect reflected throughout the company, as it was

mentioned as a driving force to conduct trial runs by interviewees from the sustainability, strategic and

operational perspectives. The customer expectations mentioned in the interviews were mostly

connected to sustainability and performance indicators, where several sustainability indicators such as

material replacement to more sustainable options, low carbon footprint, and high recyclability were

used as examples. This was also confirmed by the interviewed regional sales director. According to

the sustainability, strategic and operational viewpoints, the current market is motivating trial runs as

increasing demands on previously mentioned performance indicators make it necessary for the

company to develop their current products while also developing entirely new products. This is in line

with the external drivers to make a strategic sustainability initiative by Lozano (2015), who gives

examples such as meeting stakeholder expectations and finding new market opportunities. However,

it was described as a challenge, mentioned by the sustainability viewpoint, to align customer

expectations with what is technically feasible, hence possibly increasing the need for trial runs. In some

cases, it is not technically feasible to meet material requirements of specifically advanced end uses

without applying a protective barrier, for example, the traditional extrusion technology. Not being

able to deliver what the customer requires in the trial runs was mentioned as a concern from the

operational viewpoint, as it could potentially lead to losing the customer’s trust.

So, how does the current market affect the performed trial runs within the company? Mentioned

aspects, from the sustainability, strategic and operational viewpoint, during the interview study, were

regarding demand versus production capacity. The market demand was said to be evaluated before

allowing a product to go through trial runs or increasing the production volumes. Additionally, when

deciding how many trial runs to perform, the market demand is a regarded aspect. However, the

demand for the company’s current products was described as high from the strategic viewpoint. For

now, mature products bring revenue while trial runs cause expenses, and increasing demand for

mature products makes it more difficult to motivate trial runs, which was an opinion that all viewpoints

shared. Consequentially, increasing demand for mature products complicates the capacity trade-off

between trial runs and ordinary production. Another challenge with trial runs connected to demand,

brought up by the strategic viewpoint, was how development efforts are not yet reflected in the

behaviors of the final consumers of the packaging. For example, almost all the interviewees mentioned

sustainability when asked about customer expectations, but one interviewee from the strategic

viewpoint expressed how sustainability is not reflected in the final consumers’ willingness to buy. The

interviewee stated that the interest in sustainability is often present amongst the final consumers, but

that most do not have the willingness to pay more than for traditional packaging. The reason why final

consumers do not always choose the sustainable option could for example, as Grunert (2011)

mentions, be because there are other preferences more important or a lack of motivation at the

moment of decision. Therefore, the interviewee stated that the responsibility to purchase more

sustainable packaging lies on the brand owners, which are the company’s customers. Brand building

is a common motivator for sustainability efforts (Ditlev-Simonen & Atle, 2011). But if it is not

reflected in the final consumer’s willingness to buy, does it then provide the competitive advantage

that is, according to Rumelt (1980), necessary for a business strategy? Most likely not, as sustainability

apparently does not add enough value for the final customer compared to other demands, such as

cost.

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Additional market aspects mentioned by the strategic and operational viewpoints were whether it is

more favorable to take a wide approach to the market or to proceed from specific customers when

performing trial runs. As Brockhoff (2003) mentions, customer involvement should be favorable

when developing products, but at the same time, it depends on the context and involvement. Different

customers, with different prerequisites and expectations, could be involved with varying roles in

different steps in the development process, such as co-developing or contributing with ideas (Eslami

& Lakemond, 2016). One interviewee with a strategic viewpoint explained how it sometimes is not

possible to consider every customer’s demand, but instead, it could be more favorable from a strategic

perspective to choose the development projects that have the best fit with the portfolio, which could

be seen as Ulrich and Eppinger’s (1995) definition of technology-push. However, from the operational

viewpoint, it is more favorable to proceed from specific customers and their expectations when

developing products and performing trial runs, which in other words is more similar to the market-

pull approach described by Ulrich and Eppinger (1995). Proceeding from a specific customer enables

a more elaborated strategy for which trial runs are needed to fulfill the needs of the customer. The

same operational interviewee explained that, when there is a development without a specific customer

in mind, it is more challenging for the development to be permitted internally than it is to convince

the customers to buy the development.

7.2.2 Drive innovation

The interview study highlights that innovation is a significant factor for the company. This goes in

line with what Bessant et al. (2005) suggest about innovation being a key to renewal, which is a must

to survive in the long run as a company. As mentioned by an interviewee from the strategic viewpoint,

it is important for the company to actively strive to find new ways to add value, where new innovative

solutions could be one way. This was supported by one of the interviewees with a sustainability

viewpoint, who experienced strong support to work with product portfolio renewal and innovation.

Working with improving sustainability performance could, according to Lozano (2015), contribute to

new innovations. Hence, the company could be an example of this, as sustainability and innovation

both are described as focus areas in its business strategy. It was also pointed out, from the strategic

viewpoint, that being innovative is important from a competitive point of view. The company is,

according to one of the strategic interviewees, at the forefront when it comes to innovation in

comparison to other companies within the same industry. However, potential substitute industries,

such as the plastic industry, is according to the same interviewee also making progress, specifically

regarding the sustainability aspects of their products. This can potentially impose a risk for the studied

company since a large part of the developments in the packaging materials division focuses on plastic

replacement. This implies that the company needs to continue developing new innovative products

within different time horizons to not lose its market position in the long future.

What can also be concluded from the interview study, mostly by input from the strategic viewpoint,

is that the company needs to work with innovation and thus trial runs in different time horizons

simultaneously. Managing the different time horizons is also recognized as a big challenge in working

innovatively and performing trial runs. Several interviewees from the strategic viewpoint discussed

innovation and product development through a short-, mid-, and long-term perspective, which is

similar to Baghai et al.’s (1999) three horizons framework. Mentioned aspects regarding the short term,

or the first horizon, was that most of the developments and trial runs taking place are based on

incremental innovation. In other words, keeping the concept of, and improving already developed

55

solutions (Henderson & Clark, 1990). The company’s goal with these incremental innovations is, as

mentioned by the strategic viewpoint, to offer only 100% renewable products. As of now, the

company is, according to several of the strategic interviewees, aware that many of the recent product

launches are far from perfect when it comes to that goal, but the developments are rather seen as

necessary steps in the right direction. The interviewees within the sustainability and strategic viewpoint

also highlighted how the company requires all new developments to be aligned with their stated

sustainability targets. However, it is unclear to what extent the products need to be aligned with the

sustainability targets for the development to pass the stage-gates requirements. How the company

views these step by step developments confirms what was said by Sharpe et al. (2016) about

incremental innovations being a common strategy to sustain already developed concepts and increase

short-term advantages.

A good example of how the company manages the mid-term perspective, or the second time horizon

according to the framework, is the studied dispersion technology in this thesis. In the second horizon,

the innovative focus is developing new solutions based on current business, which in many cases

requires some investments (Coley, 2009). The dispersion technology fulfills the same purpose as the

extrusion technology but with higher sustainability performance as well as it entailed an investment

for the company. A major challenge with these short- and mid-term innovations, brought up by an

interviewee within the strategic viewpoint, is how innovations and trial runs decrease the efficiency of

the facilities where the trial runs are performed. However, as mentioned by several interviewees from

different viewpoints, innovations, and consequentially trial runs, are required to survive.

Consequentially, the question arises of how much resources is ideal to spend to both keep the

efficiency of the facility at a decent level while also driving product development.

There is a general understanding within the company that the products developed and going through

trial runs today will not secure the long-term profitability of the company. As described by one of the

strategic interviewees, sustainable development for the entire society will not be achieved by just

replacing all plastic packages with packaging made of paper fibers. Instead, there will always exist a

need to develop completely new solutions that do not deplete the earth’s resources. The same

interviewee also mentioned the need of working with radical innovations to secure the long-term

future, also called the third horizon in the framework. This is similar to how Sharpe et al. (2016)

describe the shift from the patterns of the first horizon which is eventually abandoned when new

disruptive patterns are being developed.

So, it can be concluded from the interview study that the role of trial runs in innovation is of great

importance for the company. It is, according to many of the interviewees, crucial to innovate and drive

product development with different time horizons in mind, and to succeed it is also crucial to test the

new innovations on larger scales, through trial runs.

7.2.3 Actualize business strategies

The interview study highlights that trial runs have a large role in keeping the portfolio future-proof.

According to the interviewees, trial runs can help the company to stay competitive by finding new

ways to add value as trial runs can contribute to finding new, mature products which ultimately, can

be sold with a higher margin. This goes in line with Porter’s (1996) theory that strategy is about finding

a competitive position that adds value differently compared to the competitors. Hence, trial runs can

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be seen as a tool to actualize the business strategy. According to the operational viewpoint, trial runs

are used to develop more mature products to keep margins which can be connected to one of Lozano’s

(2015) internal drivers behind a company’s sustainability strategy, generating more profit by improving

performance. Similarly, an interviewee within the sustainability viewpoint mentioned that product

development is always linked to profitability. The most important aspect regarding trial runs, according

to an interviewee within the operational viewpoint, is that the developments bring added value.

However, not all trial runs lead to new products. To decide if a development should be invested in or

not, there are business cases performed before developments go through trial runs.

The goal of a business case is to decide if an investment is going to be beneficial for the company in

the future. In other words, business cases are performed in order to detect if developments can add

value to the company. Business cases investigate both the financial aspect of the development and if

the development goes in line with the strategy of the company. A business case includes aspects such

as profitability, what volumes can or should be produced, and what the costs of the product are. The

financial aspect is investigated through an NPV calculation, which is one of the most common

portfolio assessment methods (Hallstedt & Villamil, 2020). During the interview with the two

controllers from the company, it was stated that LCA, a tool to measure the environmental impact

and one of the most prominent assessment methods in sustainable portfolio management (Hallstedt

& Villamil, 2020), is also used when deciding if a development should be invested in or not. Since the

focus areas of the company are innovation and sustainability, LCA can be regarded as a tool in

portfolio management which confirms that the innovations invested in help achieve specific business

objectives, in this case, a reduced environmental impact. However, the environmental aspect of a

product is not an integrated part of the NPV but is rather an isolated fragment when deciding if the

product should be invested in or not. Through discussion with the two controllers from the company,

their team is now working on integrating the environmental aspects of the products and investigating

to what extent the product aligns with the company’s business strategy with the NPV. This will allow

the sustainability aspects to take a bigger part of the investment decision of a development.

Several interviewees from the operational perspective questioned if and how business cases are

performed before developments go through trial runs. The operational viewpoint mentioned that they

are not informed how business cases are performed and why some developments are invested in,

making them question if some trial runs are worth the time and resources they take up. Several

interviewees also mentioned that decisions on investments are taken by the top management and that

these decisions usually focus on short-term performance. Additionally, the operational interviewees

mentioned that the decisions from management do not always seem to make sense from the facility’s

perspective. This contradicts the role of management which, according to Jugend and Luis da Silva

(2014), has an important role when ensuring resource allocation and balancing the portfolio. It is also

contradictory to the importance of, according to Baghai et al. (1999), working with different time

horizons simultaneously. Further, is this also a sign that the company has the potential to improve

when it comes to Saunders et al.’s (2008) leading practices for implementing strategic initiatives. By

improving the internal communication, it is possible to achieve improved internal acceptance,

alignment of actions as well as increased internal knowledge (Saunders et al., 2008).

Business cases assess if a product should be invested in. However, according to the interview study, it

is still difficult to prioritize between performance, quality, and sustainability of a product. It is

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especially difficult according to an interviewee within the sustainability viewpoint, to consider

sustainability in product development. According to the sustainability viewpoint, sacrifices need to be

done as it is not possible for the company, with today’s technology, to develop packaging products

for food and drinks that both meet all sustainability requirements and at the same time the desired

technical performance. From a portfolio management aspect, Silvius and Schipper (2015) state that

sustainability considerations are usually perceived to cost money and time and are usually not

prioritized in the portfolio selection process. In the case of the company, it instead seems as if all

sustainability demands are not technically possible, without sacrificing other performance indicators.

Consequentially, this becomes an aspect for the customers to consider. The customers need to decide

which performance and sustainability indicators are the most important for their products and their

company. However, though sacrifices need to be done with today’s technology, it does not mean that

the company should stop searching for new innovative developments. However, sustainability is an

extensive part of the company’s strategy and a way to keep its market position, and it is considered

significant to spend time and resources on product development with sustainability as a focus.

An interviewee within the strategic viewpoint stated that trial runs should be seen as any other

investment. The studied facility has a responsibility to perform trial runs to drive product

development, stay competitive and keep the company’s market position within barrier products. Since

the studied facility can produce products with either dispersion or extrusion technology, the facility

has the opportunity to be more flexible than a facility whose infrastructure can only support the

production of one technology. Olhager (1993) states that investments in flexibility could entail the

ability to introduce new products and production methods that can be integrated into the current

system and as the studied facility can produce a variety of different and new products it can be seen

as a flexible facility. Producing a variety of different products as well as many new products brings

down the efficiency as there are a lot of time-consuming activities such as cleaning and maintenance

that increase the downtime, as well as the employees not being used to the procedures around the

production of new products. The efficiency of the studied facility is measured according to the number

of tons of paperboard produced without taking into consideration how many different types of

products are produced.

7.2.4 Test developments in production facilities

Much of what has been brought up and discussed in the interview study and has been discussed so

far is the role of trial runs from a long-term company strategic perspective. However, trial runs also

play a vital role and affect current performance at the company’s different production facilities. This

short-term and close-to-production perspective was, naturally, mainly mentioned by the interviewees

with an operational focus.

The operational interviewees described the role of trial runs, from their perspective, mainly as a way

to test new and different things. For example, trial runs could test the performance indicators of new

developments in full scale, how the performance could be improved by changing for example an

ingredient or adjusting the machines as well as test the machines’ capability. All these tests could help

the company understand what is possible in the current production lines and what investments need

to be done to drive development forward. Evaluating performance indicators and technical feasibility

is in general necessary before commercializing a product (Cooper & Kleinschmidt, 1994). Increasing

the internal knowledge about the production processes and improving sustainability performance

58

indicators such as recycling rates were also mentioned by the operational and sustainability viewpoint

as driving forces for why trial runs are currently conducted. Gaining experience on how new

production processes operate at full scale is often an important step in the product development

process, as the learnings can be useful in future commercialization (Neal, 2009).

Before being allowed to go through trial runs, the interviewees described how the new products are

tested and evaluated on a smaller scale. For example, the product’s environmental impact is evaluated,

as well as if the product fits into the current production processes. It was also mentioned, by an

interviewee with the strategic viewpoint, that the company always tries to achieve results as close to

the wanted end result as possible before starting trial runs, which is done to save both money and

resources. This is done in machines intended for small-scale testing, costing less than using capacity

in ordinary production facilities. These, and other steps, that need to be performed before initiating

trial runs could be a possible explanation for some of the frustration expressed by a couple of the

interviewees within the operational viewpoint. For example, it was stated from the operational

viewpoint, that the planning phase before trial runs is complex and that it is a long and tedious process

before being allowed to perform trial runs. This could be due to the ERP systems not being

customized for trial runs as well as increased administrative work connected to trial runs. However,

the fact that trial runs are perceived as a complicated process from the operational viewpoint is not

unexpected, as Trott (2012) describes new product development as a process with many activities that

often need to be iterated. Furthermore, one operational interviewee also mentioned that there are

more communicational challenges with trial runs compared to ordinary production as not all

employees know exactly what and how to do the procedures, which results in misunderstandings.

From the operational viewpoint, it became clear that two of the largest challenges with trial runs are

how they should be planned and performed to balance the capacity between trial runs and ordinary

production as well as to maintain the efficiency of the production facilities. The trade-off between the

short- and long-term interests of the company was described to be much easier when there is a specific

production capacity available for trial runs. In other words, when flexibility has been considered and

planned for. This kind of planned flexibility could be a strategic management tool to deal with

uncertainties (Gerwin, 1993). The planning of trial runs and setting aside capacity for trial runs is,

however, according to several operational interviewees, not easy. The planned production schedule

for trial runs is not always possible to follow as trial runs require more manual work, are not

standardized processes, and come in many different variations.

The flexibility and ability to utilize capacity for either ordinary production or trial runs could be an

important aspect to meet customer expectations (Zhang et al., 2002). Being flexible and setting aside

capacity for trial runs could hence be of strategic importance for the company, but as Olhager (1993)

describes, increasing manufacturing flexibility imply decreased productivity for a short time. The

efficiency of each production facility was mentioned as an important aspect by both the strategic and

operational interviewees. When many different products are produced as well as when trial runs are

conducted at a facility, it brings down the efficiency of the facility. This is, as pointed out by several

interviewees, experienced as a disadvantage and a challenge for the facilities appointed to perform trial

runs as the production facilities are measured and rated according to how efficient they are. However,

it is, from the strategic viewpoint, favorable to perform trial runs in smaller facilities with lower

volumes since it minimizes the impact of a decreased production efficiency for the company.

59

7.2.5 Summary of the role of trial runs

The role of trial runs has, through the analysis of the interview study, been compiled as necessary to

fulfill the needs of the market, and in the innovation process, as a part of a business strategy, and to

test developments in the actual production facilities. A summary of what the different viewpoints from

research question A, sustainability, strategic and operational, contributed to the four different themes

can be seen in Figure 9.

Figure 9: Summary of the analysis of the role of trial runs from sustainability, strategic, and operational viewpoints.

Fulfill the needs of

the market

Drive innovation

Actualize business

strategies

Test developments

in production

facilities

-Increasing demand on cost

and performance and

sustainability indicators

generates need of more trial

runs

-However, challenging to align

customer requirements and

technical feasibility

-Increasing demand on cost

and performance and

sustainability indicators

generates need of more trial

runs

-Development efforts made by

the company are not always

reflected in end consumers

behaviors

-Sometime needed to develop

products without taking

customer demand in

consideration

-Increasing demand on cost

and performance and

sustainability indicators

generates need of more trial

runs

-More favorable to drive

development from specific

customer expectations

-Developments without a

specific customer - more

difficult to internally pitch the

development

-In trial runs it is not always

possible to deliver what the

customer is expecting

-There is a strong internal

support for innovation and

portfolio renewal

-However, new innovations

need to be aligned with

sustainability targets

-All new developments should

increase profitability, does

however need to compromise

between quality, performance

and sustainability

-Difficult to take sustainability

in consideration in product

development

-New developments that goes

through trial runs have been

evaluated in a business case

-Need to find new innovative

ways to add value and stay ahead

of competitors

- Innovations in different time

horizons – incremental and

radical innovation

- Testing innovations in trial

runs affect the facility’s

efficiency negatively

-Innovate and test innovations

in trial runs to be able to fulfill

future needs and expectations

-Actualize company strategy,

where trial runs are viewed as

any other investment needed to

proceed with the strategy

-Necessary for keeping

portfolio updated and future

proof

-New developments that goes

through trial runs have been

evaluated in a business case

-Develop mature products to

keep margins and strengthen

current revenue streams

-New developments should add

value

-New developments that goes

through trial runs have been

evaluated in a business case

-Questioned if business cases

always have been done before

trial runs, or is the

communication insufficient?

-Some decisions do not make

sense from the facility’s point

of view

-Need to test sustainability

performance indicators and

how it could be improved in the

production facilities

-The efficiency of production

facility is of importance, and it

is affected negatively by trial

runs

-Develop products as much as

possible before initiating trial

runs to decrease negative

impact from them

-Test, for example performance

indicators, on a larger scale

-Increases internal knowledge

about the production processes

-Introducing new things can

lead to communicational

problems

-Important efficiency of

production facility is decreased

-Complex and tedious

processes to initiate trial runs

Sustainability Strategic Operational

60

61

8 The economic effect of trial runs In the following section, the economic effect of the studied case is presented. This includes the

distributional costs of each activity per produced ton for products A, B and C. Further, a comparison

of each activity’s distribution of total time between dispersion trial runs and ordinary production is

presented. The identified cost distribution and activities’ share of the total time are interpreted and

analyzed.

62

8.1 Cost accounting results

In sections 8.1.1 and 8.1.2 below, the identified activities that are shown in Table 8 in section 6.2, have

been merged into five categories to create an overview of the cost accounting. The activities in the

categories preparation, set-up, and afterward have been merged into the cost object set-up, while the

activities happening in the category production have been separated creating the cost objects production

and disturbed production. Henceforth, the cost objects presented in the following sections, 8.1.1 and

8.1.2, are set-up, ramping, disturbed production, production, and stop.

8.1.1 Cost distribution

To answer research question B.1: “Which cost objects are included in the economic effects caused by

trial runs and what is the cost distribution between these?”, the cost objects’ distribution of fixed and

variable costs has been investigated for products A, B, and C. In Figure 10 below, the distribution of

costs of each cost object per produced ton is shown. The chart presents an average for all three studied

products (A, B, and C) for the studied time period (September 2021 – February 2022) as well as the

cost distribution for the studied products (A, B, and C) separately.

Figure 10: Cost objects’ distribution of fixed and variable costs per produced ton for the period September 2021 to

February 2022. The upper left corner shows an average for the three studied products (A, B, and C), the upper right

corner shows an average for product A, the lower-left corner shows an average for product B and lower right corner

shows an average for product C. The lighter shade of blue and grey in Production and Disturbed production represents the

variable costs.

In Figure 11 and Figure 12, the distribution of fixed and variable costs per produced ton are presented

respectively. The percentages in the figures are thus the activities’ share of the total fixed and variable

cost per produced ton.

8%0%

9%

79%

4%

Product A

7% 2%

43%

36%

14%

1%

10%

61%

14%

Product B

2%8%

42%

19%

14%

1%

22%

55%

9%

Set-up Ramping Disturbedproduction

Production Stop

Product C

13%

9%

26%

29%

12%

1%

12%

66%

9%

Average

9%26%

40%

3%

Cost objects’ distribution of fixed and variable costs per produced ton

63

Figure 11: Cost objects’ distribution of fixed costs per produced ton for the period September 2021 to February 2022.

The upper left corner shows an average for the three studied products (A, B, and C), the upper right corner shows an

average for product A, the lower-left corner shows an average for product B and lower right corner shows an average

for product C.

Figure 12: Cost objects’ distribution of variable costs per produced ton for the period September 2021 to February 2022.

The upper left corner shows an average for the three studied products (A, B, and C), the upper right corner shows an

average for product A, the lower-left corner shows an average for product B and lower right corner shows an average

for product C.

Cost objects’ distribution of fixed cost per produced ton

23%

1%6%

51%

18%

Set-up Ramping Disturbedproduction

Production Stop

Average

28%

2% 4%

39%

28%

Set-up Ramping Disturbedproduction

Production Stop

Product B

23%

1%

15%

45%

16%

Set-up Ramping Disturbedproduction

Production Stop

Product C

16%

1% 3%

73%

8%

Product A

0% 0%

14%

86%

0%

Set-up Ramping Disturbedproduction

Production Stop

Product A

0% 0%

16%

84%

0%

Set-up Ramping Disturbedproduction

Production Stop

Product B

0% 0%

31%

69%

0%

Set-up Ramping Disturbedproduction

Production Stop

Product C

0% 0%

18%

82%

0%

Average

Cost objects’ distribution of variable cost per produced ton

64

8.1.2 Comparison between trial runs and ordinary production

To answer research question B.2, “How does the time distribution of cost objects differ between trial

runs and ordinary production in a production line?”, a comparison of utilized time for different

activities was conducted between dispersion trial runs and ordinary production. In Figure 13 below,

each activity´s share of the total time is presented for dispersion trial runs and ordinary production.

For dispersion trial runs, (a), the numbers in the chart are an average for all three studied products (A,

B, and C) for the studied time period (September 2021 – February 2022). The chart for ordinary

production, (b), is based on the production time in one month (January 2022). According to the

employees at the company, the procedures and processes around ordinary production are considered

standardized. Therefore, it was considered adequate to use one month of time data for ordinary

production when comparing the distribution of time for ordinary production to trial runs.

The used time for each activity is linear with the fixed costs since they are given in euro/h, meaning

that the figures below could be used to give an understanding of how the allocation of costs for

personnel, maintenance, and depreciation varies between dispersion trial runs and ordinary

production.

Figure 13: (a) Each cost object’s average distribution of total time for dispersion trial runs, based on data for products A,

B, and C from September 2021 to February 2022. (b) Each cost object’s average distribution of total time for ordinary

production, based on data from January 2022.

8.2 Interpretation and analysis of cost accounting results

As seen in Figure 10, the value adding activity production represents, on average for product A, B, and

C, 66% of the total costs of trial runs. This includes variable costs, such as chemicals needed to

produce the final product, as well as fixed costs such as maintenance and personnel. The activities set-

up and disturbed production, on average for products A, B, and C, each stand for 12% of the total cost of

trial runs. This leaves the activities stop and ramping which respectively take up 9% and 1% of the total

cost of trial runs.

When observing the differences for the studied products, A, B, and C, the activity production’s share of

the total cost ranges from 55% to 79%. The activity production stands for 79% of the total costs for

product A, 61% for product B, and only 55% for product C, which can be seen in Figure 10. Product

Time distribution of cost objects

22%

1%

7%

50%

20%

(a) Dispersion trial runs

6%

2%

27%

59%

5%

(b) Ordinary production

65

A has the largest share of costs for production, hence being the most efficient, which is not surprising

as product A is the most standardized product of the three. The cost accounting results shows that

product C is the least efficient, which could possibly be explained by the one-sided coating being

complex to maintain flat.

When only studying the distribution of fixed cost per produced ton, shown in Figure 11, production

stands, on average, for 51% of the total cost per produced ton. This result shows that the activity

production, on average, stands for around half of the fixed cost per produced ton. Consequently, since

the fixed cost is linear to consumed time, production takes up half of the consumed time, which also

can be confirmed by Figure 13. However, looking at the difference between products A, B, and C, the

fixed cost per produced ton differs. For product A, the share of production’s cost is 73% while for

products B and C, production takes up 39% and 45% respectively of the total fixed cost. For the activity

stop, there is also a noticeable difference in the activities’ share of fixed costs. The activity stop’s share

ranges from 8% for product A to 28% for product B, while on average stop constituted 18% of the

fixed costs. The cost of stops is the highest for product B, which is likely because the coating concept

applied on the outside of the paperboard, in general, increases the need for cleaning and maintenance

in comparison to the other two products. However, this is not possible to conclude by looking at the

detailed result figures in Appendix II, as the stop - cleaning activity’s percentual share of the total cost is

approximately the same for all three products. But as the stop – other category carries up to twice the

total cost for product B in comparison to products A and C, it is possible to assume that some of the

uncategorized stops in the ERP system consist of cleaning and maintenance.

In the detailed result charts, found in Figure 14 in Appendix II, it is possible to observe that the start

of coating units and the cleaning after dispersion trial runs together stand for 7% of the costs of trial

runs. These are activities that are required to perform when using dispersion technology which

indicates that it could be favorable, by decreasing the preparation and afterward set-ups’ share of the

total time, to have longer but fewer production cycles with dispersion trial runs. The remaining set-up

cost is represented by widening, change of coating concept, and other which stand for 1%, 3%, and 1% of the

costs, adding up to represent 5% of the total costs of trial runs. However, looking at the time

consumption of these activities it is possible, in Figure 13, to see that set-up takes up 22% of the total

time of trial runs. Appendix II, more specifically in Figure 18, shows that the start of coating units and

the cleaning after dispersion trial runs represent 14% of the total time while the widening, change of coating

concept, and other represent 8% of the total time.

Studying the variable costs of trial runs, they represent, on average, 49%, of the total costs of trial

runs, seen in Figure 10 by adding the variable costs’ share of disturbed production and production. The

variable cost for production stands for 40% of the total cost while for disturbed production, the variable

cost represents 9% of the total cost. As shown in Figure 12, on average, the value adding activity

production stands for 77% of the variable cost for trial runs while disturbed production stands for 23% of

the variable costs. Observing Figure 13, it is possible to see that, together, the value adding activities,

disturbed production, and production, are taking place during 57% of the total time. So, the value adding

activities take up 57% of the total time while representing 49% of the total costs for trial runs. This

means that the machines are not adding value (during set-up, ramping, and stops) for 43% of the time for

dispersion trial runs in comparison to 14% for ordinary production. In other words, trial runs carry a

larger share of the costs of personnel, maintenance, and depreciation than ordinary production during

66

activities where no value is added. This indicates that trial runs are lowering the efficiency of the

production line and the facility’s profitability in the short term since less time is used for value adding

activities. However, it is possible that the amount of time where the machines are standing still is

longer for dispersion trial runs not solely because they are trial runs. According to several employees

working at the studied production facility, dispersion technology needs more set-up than extrusion

technology, which is mostly because there are higher requirements for cleaning when producing

products with dispersion technology. An investigation regarding how much of the set-up time that

takes place due to it is a new production process for the studied facility versus the nature of dispersion

technology needs to be performed to draw more accurate conclusions.

In Figure 13 it is also possible to see that the activity disturbed production makes up a significantly larger

share of the total time for ordinary production than dispersion trial runs, 27% versus 7%. This is,

according to one of the interviewees within the operational viewpoint, due to the classification in the

ERP system being different between the two different types of products that are studied. For ordinary

production, there are large variations of paperboard, connected to both lengths and procedures. The

standardized process to code the activity disturbed production in the ERP system for ordinary production,

is done according to if the production speed reaches the budgeted targeted speed and if one roll of

the paperboard goes through the production line within a budgeted time. Since there are large

variations of products for ordinary production, more production is classified as disturbed production than

for trial runs. For dispersion trial runs it is, as mentioned earlier, only classified as disturbed production

when the production speed is less than 90% of the target speed. However, it is worth noting that

production is still taking place during this time. Consequentially, the total time of production, including

both disturbed production and production, during trial runs is 57% while for ordinary production, value is

added, on average, 86% of the time.

Looking at Figure 13, it is possible to see that stops represent 20% of the total time for trial runs and

5% for ordinary production. Additionally, Appendix II, looking at Figure 18, shows that the activity

other represents 13% of the total stop time for trial runs. For ordinary production, the activity other

only represents 2% of the total time. As earlier mentioned, activities that are either unspecified in the

ERP system or are a process that is not commonly used in the production line are included in the other

categories, where the former was in a clear majority. Consequentially, better coding in the ERP system

by the employees in the production facility would have given a result where the costs are easier to

allocate to specific activities, which would have given a better understanding of the cost structures. As

the processes around dispersion technology gets more standardized, the production data will naturally

improve as the amount of stops and unplanned happenings will most likely decrease. Since the

technologies are different for dispersion and extrusion, different activities need to be performed for

the respective technologies. Hence, there are also a variety of risks associated with the different ways

of producing paperboards with different technologies. The dispersion technology is built on a water-

based solution which is at risk of leaking or splashing on the machine equipment while extrusion

technology is a plastic film that does not have the same risk of spreading out since it is a firm film.

The consequences of the dispersion technology can be seen by looking in Figure 18 in Appendix II.

For trial runs, leakages take up around 1% of the total time while the cleaning, as a consequence of

the leakage, takes up 4% of the time. For ordinary production, there are no coded leakages in the ERP

system for the studied month. However, there is some cleaning performed during ordinary

production, representing only 0.23% of the total time during the studied time period.

67

9 Discussion In the following section, the results and analyses from the two research questions are discussed,

followed by method criticism and discussions on generalizability and the what sustainability is allowed

to cost.

68

9.1 Discussion of the role of trial runs and their economic effect

Trial runs are, according to what was discovered in the interview study as well as in the thematic

analysis, a necessary aspect to proceed with the business strategy, as the company’s strategy is focused

on offering innovative solutions that fulfill the needs of the market. The new developments need to

be tested in the company’s production facilities. This implies that the four themes identified in section

7.2 could be used to describe the role of trial runs within a packaging company; fulfill the needs of the

future, drive innovation, actualize business strategies and test developments in full scale. As seen in

the analysis of the interview study, there was an agreement amongst the interviewees that trial runs

are a necessary aspect of the company’s strategy and even though trial runs represent an important

step in the company’s product development, there are challenges. From the sustainability viewpoint,

the most prominent challenge, an aspect which was also discussed throughout the interviews with all

viewpoints, is the balancing of customer requirements with the technical feasibility of the products.

The most prominent challenges of the strategic viewpoint are connected to the efficiency of the facility

as well as the need to work in different time horizons simultaneously. From the operational viewpoint,

the most prominent challenges are the communicative misunderstandings and challenges as well as

the high degree of manual work for trial runs. The challenges are, naturally, different depending on

which role and viewpoint the interviewee has.

Balancing customer requirements with technical feasibility will likely be a reoccurring challenge when

it comes to developing products, since product development, as Trott (2012) mentions, is a process

requiring several iterations of technical feedback. Similarly, balancing different time horizons is a

necessary part of the strategy for every company striving to achieve success in both the present and

future time (Sołoducho-Pelc, 2015). The communication around trial runs and how it is organized at

the facility, as well as how the production facilities are measured and valued, are aspects with the

potential to be altered. Communication is regarded as important in any organization but can be

specifically vital in a manufacturing setting if there are multiple shifts with different employees in the

production facility as quality and production might suffer when communication does not occur or is

inadequate (Worley & Doolen, 2006). By being aware of and working to improve these aspects, the

company have the opportunity to improve and simplify the processes around trial runs.

Since trial runs are essential to evaluate and develop new offerings, it can be concluded that trial runs

are crucial for the company’s business strategy, and therefore it can be seen as contradictory to

measure and value a production facility that performs trial runs, similar to production facilities that do

not perform trial runs. Producing a lot of different products and performing trial runs lower the

efficiency, but it does, nevertheless, drive product development. By finding ways to include and

measure other types of values within a production facility, the role of trial runs could likely be

strengthened within the company. Taques et al. (2020) argue that the absence of appropriate ways to

monitor innovation can lead to inadequate allocation of resources. Additionally, Lillis (2002) mentions

that an effective performance measure ought to be able to assess the organization’s strategic

imperatives. For the company, the main strategic focus areas are innovation and sustainability while

the performance measurement for the facilities is measured in the number of produced tons,

independent of how the facility works with innovation and sustainability. Therefore, it can be argued

that the facility’s performance measures are not able to, in an adequate way, measure the strategic

imperatives of the company. The current performance measure is, furthermore, going against how

69

Rumelt (1980) describes how a suitable business strategy should be consistent and not present

conflicting targets.

Through the cost accounting results presented in section 8, it is concluded that dispersion trial runs

are less efficient, utilizing more time for non-value adding activities, than ordinary production. The

activities’ share of total time presented in Figure 13 confirms the statement made in the interview

study about trial runs decreasing the efficiency of the production facilities. For ordinary production,

the value adding activities, production, and disturbed production, stands for 86% of the total time consumed

while for trial runs, these activities only represent 57% of the consumed time. This represents a

difference in uptime of 29% between ordinary production and trial runs. Decreasing downtime is

identified as an important factor in manufacturing due to its link to profitability and productivity of

the business (Nwanya et al., 2017). Poor production schedule reliability can be the result of machine

downtime (Nwanya et al., 2017). The cause of downtime is diverse, for example, it can occur due to

breakdowns of machines, unplanned maintenance, and inaccurate data (Nwanya et al., 2017). At the

studied production line, trial runs cause more unplanned stops, ultimately increasing the downtime,

than ordinary production which results in schedule planning failures that affect the productivity and

profitability of the facility. Regarding disturbed production, it was in general difficult to track the

production rate regarding how many tons were produced during this activity, and thus also challenging

to trace the exact variable costs of the two value adding activities. Hence, there is a risk that the

calculated cost of these two activities is not as accurate as desired. However, the two value adding

activities stand for, on average, 78% of the total costs and 57% of the consumed time, independent

of the percentage distribution between the two activities, shown in Figure 13.

High costs and decreased efficiency of the production facilities imply that there is a need to take

elaborated decisions on trial runs. There were divided opinions among the interviewees about whether

trial runs are properly motivated and evaluated, for example by business cases. When selecting which

products to invest in, Cooper and Edgett (2001) argue that an NPV is one of the most widespread

tools to assess a development’s value. However, it is not sufficient to maximize the value of the

portfolio, it must also be properly balanced, entail the correct number of products as well as be

strategically aligned (Cooper & Edgett, 2001). The divided opinions by the interviewees regarding the

evaluation of trial runs suggest that there are aspects, potentially one of the four mentioned by Cooper

and Edgett (2001) above, that can be improved on to align the viewpoints of the operational and

strategic employees regarding this issue. Regardless of where the truth lies regarding business cases

and evaluation of trial runs, trial runs should, in general, be carefully evaluated beforehand in order to

minimize resources being utilized without adding any greater value for the company. Improving the

communication between the employees performing the evaluations and the employees conducting

trial runs could most likely improve the general understanding of trial runs and their impact within the

company (Saunders et al., 2019). An additional aspect that could be considered by the company is the

scheduling of trial runs moving forward. As seen in the cost analysis, a large share, 7% out of 12%, of

the total costs for set-up for dispersion trial runs is caused by the larger set-ups before and after the

dispersion production cycle. Hence, it could be favorable to schedule fewer but longer dispersion

production cycles. However, this should be investigated further before taking a decision, as other

challenges could occur, such as making the planning process more complicated. As a product or

technology gets more mature, an investigation of the production processes by knowledgeable

employees could be useful to understand and hence decrease the amount of set-up and stops. If such

70

an investigation could be done before testing on a larger scale at the studied facility, in trial runs, large

savings could likely be made.

Ordinary production is outsourced when the demand for ordinary production is high and the capacity

of the facility is filled. The company outsources ordinary production as they want to supply their

customers with requested products, but they also want to perform trial runs and develop innovations.

Therefore, it is also of importance to weigh the potential added value of the trial runs with the expenses

that follow outsourcing. The company is currently only outsourcing ordinary production, and not the

trial runs, as they want to keep the learnings from the new developments internal to use for

competitive advantages. The decision to perform trial runs internally can be connected to McIvor’s

(2010) outsourcing framework. McIvor argues that when the product is critical to competitive

advantage while there are no competitors that have a significant performance advantage, the

production should be kept in-house. The company has created an established market position within

barrier solutions while also identifying barrier developments as one of the focus areas for the future,

which is why it can be argued, with evidence from McIvor’s outsourcing framework, that trial runs

should be kept within the company. Additionally, as mentioned, it is significantly more expensive to

outsource than to produce ordinary products at the studied facility. So, in addition to, in many cases,

no revenue for the products produced during trial runs, there are also extra costs for the facility in the

form of outsourcing expenses. This raises the question if trial runs should hold the costs of the added

costs entailed by outsourcing ordinary production? If this is the case, it means that the NPV calculation

should include an estimation of how many trial runs are needed for the products to become

commercialized, and add the expenses for outsourcing on top of the expenses for the actual trial runs.

It is challenging that the specific demand of the company’s products is not always known long

beforehand, as the company needs to make fast decisions on how to schedule production and hence

complicating a more evaluated planning process. Hence, it could be favorable, within the production

facilities that perform trial runs, to increase the manufacturing flexibility which would enable a faster

transition between technologies. Then, the difficulties with balancing the production capacity between

ordinary production and trial runs would hopefully be less noticeable. By being able to shift more

smoothly between ordinary production and trial runs, the company would be able to easier adapt to

changing demands. Increasing flexibility could either be done by improving the flexibility of the

production lines and the manufacturing system or the procedures around them (Jain et al., 2013).

Some of the activities happening are performed due to specific requirements for dispersion technology

while some activities are more general for barrier production or occur due to unplanned happenings.

The technologies for dispersion and extrusion require different activities. The activities that solely

need to be performed when producing dispersion products are:

− Preparation: start of coating unit

− Afterward: cleaning

− Set-up: change of coating concept

These three activities represent, on average, 18% of the total time for dispersion trial runs, which can

be seen in Figure 18 in Appendix II by adding the percentages of the above-mentioned activities. The

starting of the coating unit is an activity that needs to happen before producing dispersion products, which

on average takes 6% of the total time. As this set-up, according to Shingo’s (1985) definition, is an

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internal set-up that only can be performed when the machines are turned off, it is likely impossible to

eliminate the set-up time completely, even though the process could likely be more efficient. The

corresponding activity for ordinary production, start of extruder, only takes 2% of the total time and can

be performed simultaneously as for example the cleaning after a dispersion production cycle. An

external setup can be executed when the machines are running (Shingo, 1985). Hence could the set-

up before ordinary production be seen as external, as some of the set-up activities can be performed

in parallel to the machines getting started. Parallel activities could be seen as a method to increase

manufacturing flexibility (Jain et al., 2013). If some of the set-up activities included in starting of the

coating unit could be performed in parallel, it could likely contribute to decreasing the total set-up time

for dispersion products. As mentioned, the machines need to be cleaned after the production of

dispersion technology, which represents 8% of the total time for dispersion trial runs. Different

dispersion products sometimes use different coating concepts, and if that is the case, the concept is

required to be changed before starting production of a new dispersion product, which takes time. The

activity change of coating concept took on average 4% of the total time of trial runs, also seen in Figure 18

in Appendix II. Consequentially, the remaining 82% of the total time for dispersion trial runs

represents the activities that are, either, performed independent of what product type is produced or

that occur due to unplanned happenings such as stops. However, the amount of time each of these

activities will take differs between different products and technologies.

For trial runs, the activity stop in Figure 13 represents 20% of the total consumed time. In comparison,

for ordinary production, the activity stop represents 5% of the total consumed time, also seen in Figure

13. This means, in general, that the activity stop constitutes 15% more time for trial runs than for

ordinary production. This was confirmed by several interviewees who mentioned that the processes

around trial runs are more complex and require more manual work due to, for instance, unplanned

happenings. Hence, it can be concluded that the interview study confirms the results from this part of

the cost analysis. As trial runs are supposed to test developments on a larger scale, which often entail

different procedures than small-scale testing, unplanned happenings will likely occur (Bhuiyan, 2011).

To learn from failures arising from full-scale production is also an important stage in product

development (Bhuiyan, 2011). But then again, it is not possible to completely distinguish how much

stop time occurs due to the dispersion technology or occurs due to it being a trial run. Similarly, the

set-up time is almost four times higher for dispersion trial runs than for ordinary production,

representing 22% and 6% respectively, of the total time. Hence, using production capacity to conduct

trial runs is both costly and provides the assigned facilities with efficiency disadvantages in the short

run. It is likely, for other types of trial runs as well, that they consume more set-up and stop time than

ordinary production as trial runs require more manual work and unstandardized processes. But as

Thomke (2003) describes, one aspect of testing new developments is to reduce uncertainties and learn

about the production process, hence stop and set-up time could be decreased as the products become

more mature. However, the activities’ share of the total time might be different depending on what

type of technology is used.

Most of what has been brought up and discussed in this thesis so far, suggest that the role of trial runs

is crucial for the studied company. But what has not been discussed so far is what the alternative to

conducting trial runs would be. Skipping the trial run step, and going straight from small scale lab

testing to full scale commercial production, would most likely entail other, and by the company

considered worse, disadvantages. Even though trial runs entail many challenges and high costs, it can

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be concluded that the alternative of going straight to full scale production is considered worse as they

still give production capacity and time to developments and hence, perform trial runs. If trial runs are

not conducted, it is likely that important lessons from scaling up would be learned when the product

development process is already supposed to deliver fully developed products ready to be sold. But as

Bhuiyan (2011) describes, the failures arising from starting to produce in full scale is an important step

in product development, that not should be skipped. By not initially testing new developments in full

scale it is likely that the standardization of the production process would take longer, and hence

increase the period of time with lower efficiency. Skipping trial runs would, additionally, most likely

lead to even more misunderstandings and communication challenges regarding the production

processes as the operational employees would not feel comfortable with the processes for the

produced product. There is also a risk of losing customer trust if, by not learning by the mistakes in

trial runs instead of in commercial production, not being able to deliver what the customer asks for

or not being able to deliver on time. Supplying products without guaranteeing the quality or

performance indicators of the product can lead to unsatisfied customers and consequentially bad

reputation for the company. Therefore, it can be concluded that there are no other viable alternatives

to trial runs.

9.2 Method criticism

One possible limitation of this study is the amount of data used to present the results. For example,

in the interview study, more interviewees within other functions in the company or from other

organizations could have contributed to a deeper and wider understanding of the role of trial runs in

manufacturing. Further, more accurate conclusions could most likely have been drawn with a more

comprehensive cost data basis. Data from more production cycles could for example have resulted in

more precise distribution of costs. However, the studied production cycles (September 2021 –

February 2022) were the only production cycles registered in the ERP systems for the studied products

when conducting this thesis. There was no earlier data available since the studied products had not

been registered under specific product codes previous to this. It should be noted that the result in

Figure 13 is not represented by the same time period, which implies a risk that the comparison might

not be fully reliable as events in the longer time period could have been missed in the shorter one. For

ordinary production, only one production cycle (January 2022) was studied. As ordinary production

cycles are longer and more standardized than the ones for trial runs, this was however assumed to be

sufficient to give an understanding of ordinary production. Furthermore, different choices of cost

objects could have resulted in different conclusions and recommendations. By allocating the costs of

trial runs differently, for example to other cost objects, some insight from this study would have likely

been missed and some new ones might have been discovered.

As earlier mentioned, some assumptions have been made to conduct the cost analysis, see Appendix

III. All the assumptions were made to be able to move forward with the cost analysis and were all

estimated to have a low impact on the final result. The assumptions were evaluated through discussion

with a controller and employees at the studied production facility. Even though the assumptions’

impact on the result was assumed to be low, the impact is most likely not negligible. Hence, the

assumptions should be taken into consideration when making use of the results of this thesis.

However, some of the assumptions have most likely contributed to making the results more accurate.

One example of this is the assumption of allocating the cost of start of coating unit evenly to all products

produced during that time period. If the cost accounting would have followed how the data is coded

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in the company’s ERP system, the first product produced during each production cycle would have

carried that cost. In other words, the results would have displayed a higher cost for one of the

products, while what is causing the cost, in reality, is utilized by all produced products. Furthermore,

all assumptions have been used consequently throughout the study, meaning that all costs have been

allocated and traced the same way. This entails that the same results should be possible to achieve

when using the same methodology and assumptions.

Furthermore, there were some shortcomings in how the data was presented in the ERP systems. Lack

of information or labeling of activities could have led to some costs being missed or wrongly traced

or allocated. For example, in the manufacturing system data, the cause of unexpected stops is manually

coded, making it a possible source of error. Another flaw of the cost analysis is that it does not take

into consideration how much of the paperboard that has been produced in the trial runs that are

actually being sold and what goes to waste.

The results of this thesis are based on one production facility and one production line. To be able to

draw more general conclusions and validate the result it would have been preferable to investigate

more cases, by doing a multiple case study. However, to fit the available time of the thesis, this

delimitation was necessary. The evaluation of costs and the role of trial runs were to a large extent

done with input from employees working at the company. Hence, some relevant factors could have

been missed or been influenced by the values of the interviewees. The understanding of the role of

trial runs could possibly be extended by also including viewpoints from external parties. However,

since trial runs are company internal processes, it was not considered required to include external

parties.

9.3 Generalizability

Generalization is about making broader and more general conclusions that can be applied to several

cases, from one specific case (Schwandt, 2001). As this study has been focused on one specific

production site and one production line, there is a risk that the results might not be completely

applicable to the company’s other available sites for trial runs or other companies in similar situations.

Some aspects are more generally applicable, and some are more specific to the studied case. The

discovered distribution of time, with a significantly higher distribution of time for non-value adding

activities for trial runs in comparison to ordinary production, could be useful knowledge for other

packaging companies. For example, specific results regarding downtime will naturally vary between

different companies, products, and technologies, but it is most likely a reasonable insight for all

production processes that have not yet been standardized. Some results regarding the cost objects are

specific to the dispersion technology, making those cost objects more applicable to packaging

companies using dispersion technology. To reduce the impact of a specific technology, there has been

a discussion, see section 9.1, about which activities are solely connected to dispersion technology and

which are general production activities, which minimizes the impact of a specific technology and

hence, makes the result more generalizable.

Regarding the interview study, the interviewees belong to different units, all with different expertise

and knowledge about trial runs and manufacturing. A variety of expertise from the interviewees might

have added to a more general view of the role of trial runs. There is, according to Morse (1999),

divided opinion among researchers if qualitative findings can be generalized. Morse (1999) does

however claim that qualitative studies that generate knowledge that in some way can be utilized to

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increase the understanding of similar topics or problems is generalizable. So, the results from the

interview study might have been influenced by interviewees’ personal opinions on trial runs and

product development, but by choosing interviewees with roles that are essential to and involved with

trial runs and product development the risk is considered to be negligible. For example, sustainability

is an increasing focus area for many companies and the single-use plastic directive will most likely

affect all packaging companies equally, making the sustainability aspects of packaging material and its

product development generalizable.

9.4 What is sustainability allowed to cost?

The company has a stated strategy of innovation and sustainability where they want to supply products

that are environmentally friendly and circular. The results from the interview study in this thesis has

shown that a lot of the interviewees feel internal support for innovation and portfolio renewal.

However, it has also been shown that some of the employees feel as if top management decides on

investments which focus on short term performance without taking the facility’s best into

consideration as well as question if resources are spent correctly. An additional aspect that has shown

to be a challenge through the interview study is the efficiency of the facilities. Production facilities are

measured and internally rated based on efficiency, or number of produced tons, which do not align

with the innovation and sustainability strategy. Trial runs are necessary in order to deliver the

environmental and circular solutions that the customers demand. However, trial runs bring down the

efficiency of the facilities. Consequentially, it can be argued that facilities which are helping the

company to stay competitive and future proof with environmentally friendly and circular solutions

also gets penalized for having bad efficiency. So, even though the company has a large focus on

sustainability and innovation, the question arises, how much is sustainability and innovation actually

allowed to cost?

Additionally, the dispersion technology enables up to 100% recycling of the fibers in the paperboard,

which the company promotes as one of the major benefits of the technology. However, the recycling

rate depends on the recycling facility. This means that even if the company can supply products which

are 100% recyclable, the customer has a responsibility to utilize the opportunity. So, even if the

company can supply dispersion products with better recycling rate than extrusion, what is the actual

difference of the environmental impact in the end-of-life management between the two technologies?

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10 Conclusions and recommendations In the following section, the final conclusions of this thesis are presented, including

recommendations for the company as well as suggestions on future research.

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10.1 Conclusions

It can be concluded regarding research question A: “How are trial runs viewed, within a

packaging company, from sustainability, strategic, and operational viewpoints?”, that all three

viewpoints consider trial runs as a crucial but also complex part of the company’s business strategy.

The thematic analysis of the interview study showed that trial runs, from sustainability, strategic and

operational viewpoints, can be seen as necessary to fulfill market needs, drive innovation, an important aspect

to actualize business strategies, and as a method to test developments in full scale in the production facilities. Reacting

to changes in the market is a part of the company’s business strategy, as they aim to offer innovative

solutions to meet the needs of their customers. To be able to offer these innovations to the market it

is necessary to test them in the company’s production facilities. Hence, these four themes could be

described as the role of trial runs in a packing company.

Even though many factors motivating trial runs were found, several challenges with trial runs were

also described to affect the role of trial runs within the company. For example, it was brought up,

from all viewpoints, that it is difficult to align customer expectations with what is technically feasible

at the production facilities. Another prominent challenge, regarding innovations which was mentioned

by the strategic viewpoint, is that there is a need to work simultaneously within different time horizons,

hence complicating the planning of which trial run should be performed and prioritized. Furthermore,

it was questioned, by the operational viewpoint, if all trial runs were thoroughly evaluated and whether

they are aligned with the business strategy. Finally, two of the most mentioned challenges with trial

runs, mentioned by all viewpoints, were that they decrease the efficiency of the facilities performing

trial runs as well as the difficulty to balance production capacity between ordinary production and trial

runs. Recommendations on how to improve on some of these challenges are found in section 10.2

below.

Research question B, “What are the economic effects of trial runs in a packaging company?”,

has been answered with the help of three sub-questions. The first sub-question, B.1,” Which cost

objects are included in the economic effects caused by trial runs and what is the cost

distribution between these?”, resulted in cost objects in form of activities and a cost distribution

per produced ton. The cost objects identified and used in the cost accounting were set-up, ramping,

disturbed production, production, and stop. The identified percentual share of the total cost is, on average,

12%, 1%, 12%, 66%, and 9%, respectively. Sub-question B.2, “How does the time distribution of

cost objects differ between trial runs and ordinary production in a production line?”, has been

answered by a comparison of utilized time for the different cost objects between dispersion trial runs

and ordinary production. The comparison showed that the value adding activities, production, and

disturbed production, stand for 86% of the total time in ordinary production and 57% in dispersion trial

runs. Further, trial runs cause, on average, 15% more stop time and 16% more set-up time than

ordinary production. These cost accounting results have then been used to answer sub-question B.3, “How can insights from the identified costs help a packaging company gain a larger

understanding of trial runs?”, which have been given as recommendations, found in section 10.2

below.

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10.2 Recommendations to the company

The general recommendation for the company is to continue with and utilize resources for trial runs,

as it became clear in the interview study that trial runs act as a crucial part to proceed with the strategy.

However, as trial runs also proved to be costly it is important to take elaborated decisions to keep the

costs as low as possible. From what has been discovered and discussed in this thesis, the following

recommendations are possible to present. The recommendations are presented separately depending

on how accessible they are and how vital they are considered for the company. The recommendations

that are suggested to prioritize are presented in Table 17 while the proceeding recommendations are

presented in Table 18. These recommendations aim to help the company in its future work with trial

runs and product development as well as to answer research question B.3, “How can insights

from the identified costs help gain a larger understanding of trial runs?”.

Table 17: Recommendations for the company to prioritize and initiate first.

Recommendations for the company to initiate first:

Spread awareness of the cost of trial runs to encourage well thought through decisions on which trial runs are necessary.

− Inform, educate and discuss the cost of trial runs with employees at the production facility to increase the understanding and align their opinions regarding how resources are spent, this could potentially be done by workshops.

Improve and standardize how production data is coded in the ERP system to enable more precise cost analyzes and thereby increase the understanding of what drives the cost of trial runs.

− Educate operational employees in the production facilities why correct coding of production data is important.

As shown in the cost analysis, the cost of set-up and stops are high, implying that significant savings could be achieved. This could potentially be achieved by:

− Schedule longer but fewer production cycles with dispersion trial runs to decrease the number of large preparation set-ups and cleanings afterward. This needs to be investigated further.

− Investigate the root cause of the stops, and possibly implement lean principles.

− Investigate the possibility of increasing the efficiency of activities mandatory for dispersion technology.

Enhance the understanding and awareness of business cases and evaluations performed before trial runs to achieve a common image within the company of why each trial run is performed.

− Especially important to align the understanding of employees within operational and strategic roles as the interview study showed that their opinions regarding business cases differ.

− Workshops can help to increase the understanding of business cases as well as identify the aspects which are unclear for the operational employees.

Continue with the stated strategy and ambition to develop new and sustainable products. However, top management should not hold the same efficiency requirements on the facilities performing trial runs as they bring down the efficiency but are critical for the future of the company. Therefore, work with developing new ways to measure other kinds of value.

− For example, with innovation KPIs.

− This could, for example, be investigated through an additional master thesis.

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Table 18: Recommendations for the company to proceed with after the intial recommendations.

Recommendations for the company to proceed with after the initial recommendations:

Continue working on integrating sustainability KPIs with NPV calculations in order to make reliable decisions on what developments to invest in.

Investigate if and how the cost of outsourcing ordinary production could be included in the NPV calculations for new developments.

Investigate possible ways to increase manufacturing flexibility, to more easily meet current and future customer expectations without decreasing efficiency.

− In the long term, it could be favorable to add a production line with dispersion technology in addition to the combined production line for dispersion and extrusion technology studied in this case, however, this needs to be investigated further.

Perform further similar cost analyses to understand what drives the cost of trial runs. By analyzing other types of trial runs, the understanding of which of the findings from this thesis is specific to dispersion technology and what is general for trial runs could be increased.

10.3 Future research

Further research on this topic could be beneficial for both the company and other organizations with

similar businesses and challenges. For example, a deeper investigation of what is causing the additional

stops and longer set-up times during trial runs could help reduce the cost of trial runs and increase the

efficiency of the production facilities. Lean principles and tools, such as SMED, could be utilized to

decrease unnecessary costs. Lean manufacturing is about taking a systematic approach to eliminate

waste, such as non-value adding time, in production processes (Liker & Meier, 2006). SMED, or Single

Minute Exchange of Dies, is a Lean technique that focuses on minimizing set-up time (Benjamin et

al., 2013). For trial runs in general this might be difficult due to the low level of standardization.

However, if the internal knowledge of a specific technology is increased, for example as product A in

this thesis, there are possibilities of decreasing unnecessary processes, even for trial runs.

Additionally, further research on the role of trial runs could be conducted. For example, how do other

companies within different industries view the role of trial runs? By conducting similar studies at

different manufacturing organizations, the understanding of what is company-specific and what is

generalizable in this study could be increased. Conducting similar studies could increase the total

understanding of the role of trial runs and thereby help additional companies with the challenges that

trial runs entail.

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Appendix I – Interview guide The questions asked in the interview study are listed below:

− What is your position at the company and how does your connection to trial runs look like?

− What do you see as the main driving forces to conduct trial runs?

− Which sustainability aspects are these driving forces connected to?

− What do you see as the major challenges/barriers to perform trial runs?

− What demands/expectations have you experienced from customers and how do you balance or prioritize these demands/expectations when “new” products are requested?

− Which demands/expectations are predicted to arise the future?

− How does the trade-off between short-term effects of trial and potential future competitive benefits of a sustainability niche look like?

− How does the strategy look like when a new product is allowed to go through trial runs?

− How much resources/time is a product allowed to consume? How does the time horizons look like?

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Appendix II – Detailed result figures Below follow corresponding figures to the ones presented in section 7.1, but more detailed including

all activities.

Figure 14: Average cost per activity and produced ton for products A, B, and C, and for the period September 2021 -

February 2022. The lighter shade of blue and grey in Production and Disturbed production represents the variable costs.

Figure 15: Average cost per activity and produced ton for product A for the period September 2021 - February 2022.

The lighter shade of blue and grey in Production and Disturbed production represents the variable costs.

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Figure 16: Average cost per activity and produced ton for product B for the period September 2021 - February 2022.

The lighter shade of blue and grey in Production and Disturbed production represents the variable costs.

Figure 17: Average cost per activity and produced ton for product C for the period September 2021 - February 2022.

The lighter shade of blue and grey in Production and Disturbed production represents the variable costs.

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Figure 18: Each activity's average share of total time for dispersion trial runs, based on data for products A, B and C

from September 2021 - February 2022

Figure 19: Each activity's average share of total time for ordinary production, based on data from January 2022

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Appendix III – Assumptions made in the cost accounting

− The major set-up before each dispersion production cycle was allocated evenly to all product codes run during the period, and not only to the first product code that was linked to the set-up in the ERP system

− When more than one major set-up in a dispersion production cycle, due to extrusion runs sometimes made in the middle of a dispersion production cycle, are these also allocated to all product codes

− Similar as above, the large cleaning needed to be done after a period with dispersion technology was evenly allocated to all product codes run

− When there is no large cleaning recorded after the dispersion production cycle in the ERP system, a specific number of hours of cleaning is assumed after an interview with a senior process engineer

− Each product code carries the cost of the unexpected stops, ramping, and disturbed production during the production of that specific product code

− When a set-up in terms of change of coating concept has taken place, this was allocated to the product code after the set-up

− All variable costs are only allocated to the value adding activities (Production and Disturbed production)

− Average costs for the studied time periods have been used to avoid misleading results from cost variations not related to the trial runs or the studied products, such as unusually large depreciations

− Average paperboard widths and coating surface weights for the studied products and production cycles have been used to calculate the produced tons during the value adding activities

− An average number of tons produced per hour for the studied products and production cycles has been used to convert the fixed cost from euro/ton to euro/h

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Appendix IV – Interviewees’ role at the company

Table 19: The role of each interviewee from the interview study as well as the length of each interview.

Interviewee Role Length [min]

Sustainability viewpoint

A Sustainability Manager 39:25

B Product End of Line Compliance Manager 36:39

Strategic viewpoint

C Vice President Business Line Fresh Liquid Packaging Board and Foodservice Board

30:10

D Senior Vice President – Strategy and

Business Intelligence 31:03

E Project Director 32:05

F Head of Performance Packaging Materials 36:04

G Head of Product Development 41:30

Operational viewpoint

H Coating Kitchen Operator 17:49

I Process, Quality & Product Development

Manager 30:29

J Research Advisor, Board Coating 28:42

K Production Manager 31:17

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