Valmet Aftermarket agreements For Reduced Cost and Increased Availability Mikko Viljamaa Director Service Agreements
Valmet AftermarketagreementsFor Reduced Cost and IncreasedAvailabilityMikko ViljamaaDirector Service Agreements
Content
Valmet in North-America
Aftermarket Agreements
Example Case – Mill Maintenance Agreement
Example Case – Performance Agreement
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Montreal, QCThunder Bay, ON
Florence, AL
Winthrop, ME
Aiken, SC
Appleton, WI
Beloit, WI Biddeford, ME
Clarks summit, PA
Columbus, MS
Federal Way,WA Neenah, WI
Charlotte, NC
Niagara Falls, NY
Lancaster, SC
Strong Presence in North America
22 March, 20164
Service Center
Mill Site Unit
Service Point
Service Production Unit
Atlanta, GALithia Springs, GA
Toronto, ONJay, ME
Lansdale, PA
Services OfferingComprehensive Life-Cycle Services Offering
© Valmet | 5
Rolls and Workshop Services• Rolls
• Roll covers and maintenance
• Workshop services
Fabrics
• Paper machine clothing
• Filter fabrics
Mill Improvements• Upgrades
• Components
• Expert services
Performance Parts• Original
equipment manufacturer (OEM) spare parts
• Consumables
Energy and Environmental• Services for
evaporation plants, power and recovery boilers and environmental equipment
PressRhino composite roll cover for press rolls Greenpac board mill Valmet’s eServices online application Filter fabrics Evaporation plant in Metsä Board’s mill in Kaskinen
Rearranged Values
© Valmet | Mikko Viljamaa / Director, Service Agreements7
Shared Objectives
Lowest Total Cost
Promises Openness
Partnership
Long-Term Partner3 Value Drivers for Buying Service Agreements
Source; Hahn Consulting8
Cost Control25%
Minimize Downtime 35%
Peace of Mind, 40%
© Valmet | Mikko Viljamaa / Director, Service Agreements
Valmet Aftermarket Agreements
Typically 3 – 5 years at the time Tailored for each customer need Aligns with customer targets and KPI’s Is based on a mutual win-win concept where a capable partner will
deliver the best program in the most cost effective and efficient manner possible
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Typical for Valmet Agreements
Each agreement has its own nominated Agreement Manager Baseline pricing for all goods and services is provided in the Market
Basket– Pricing firm always for 12 months
Continuous Improvement (CI) program– Upon agreed spend Valmet promises to find savings / improvements from the
customer processes, typically a certain percentage (10 - 25%)
Volume Credit Program– Agreement mills receive an annual credit towards future purchases from supplier– Typically excluded from this credit are capital project expenditures or other products
covered under a separate agreement with supplier
Reporting & meetings are important and take place regularly during the agreement
22 March, 2016 © Valmet | Author / Title10
Typical for Valmet Agreements
Own nominated AgreementManager
Continuous improvement (CI) Program 10-25% savings/improvements from
the customer processes
Baseline pricing provided in the Market Basket Pricing firm always for 12 months
Volume Credit Program Annual credit towards future
purchases from supplier Capital project expenditures or other
products covered under separateagreemen excluded
22 March, 2016 © Valmet | Author / Title11
Regular reporting and meetings
Valmet Agreement Portfolio
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Aftermarket Agreements
Performance Agreements
Multiple Levels
Outsourcing Agreements
Maintenance Agreements
Other “ATM” Agreements
Purchasing Agreements
Unlimited
Limited
Product Agreements
Consignment Agreements
Fee Based Agreements
Flat Rate Agreements
Roll Agreements
AMP
TRR
Pricing
© Valmet | Mikko Viljamaa / Director, Service Agreements
Over 40% of the N-A Paper Mills
Major Aftermarket Agreements in N-AAlready Over 125 Paper Mills and 200 Machines
PPP Service Agreements• International Paper 24 mills• Hood Container 2 mills• Georgia-Pacific 26 mills
• SAPPI 3 mills• Boise - PCA 8 mills• Weyerhaeuser 7 mills• Glatfelter 1 mill• Evergreen Packaging 2 mills• Domtar 1 mill• West-Rock 26 mills • Verso 2 mills• Kimberly-Clark 6 Mills
PPP Performance Agreements• Irving Paper 1 mill• Greenpac 1 mill• Wayagamack 1 mill
PPP Clothing Agreements Domtar 5 mills
Jackson Paper 1 mill
International paper x mills
Verso 6 mills Pratt Industries 4 mills
Greenpac 1 mill
Port Hawkesbury Paper 1 mill
West Linn 1 mill
© Valmet | Mikko Viljamaa / Director, Service Agreements
Maintenance Efficiency Over Time
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Performance Management Compared to Traditional Concept
Years
MaintenanceHours / ton
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Performance management concept
Traditional maintenance concept
• Higher costs• More corrective maintenance• Lower technical availability
• Long-term cost optimization• Fewer failures and repairs• Highest efficiency and quality
Remarkable savings by optimizing
maintenance operations
From Maintenance to Improving Mill’sPerformance and Profitability
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A changefrom traditional maintenance to
performance management
Improved profitability by
releasing hidden mill potential
Integrated Maintenance and Production Efficiently
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Typical Way
Cleaning facilities
Engineering Material mgmt.
PurchasingMaintenance Production
Logistics Purchasing
Valmet Way
Cleaning facilities
Engineering Material mgmt.
PurchasingMaintenance Production Logistics
PurchasingOperate and
maintain team
Valmet Lean Tissue Maintenance Concept
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Own site org
Valmet services
Externals
Materials
Operator Maintenance
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-Val
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Maintenance Management in Valmet payroll
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Roll services
Valmet special services
Results Through a Unique Combination of Know-how
Valmet’s combination of machinery, automation, process and maintenance know-how results in:
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Flexibility andexperience tooffer customized service
The right maintenance decisions to optimize maintenance costs
Highestefficiency of operations based onprocess know-how
Maintenance is a critical success factor
Because it Makes Business Sense
Valmet maintenance compared to the industry average– up to 30% lower maintenance costs– up to 80% less unplanned maintenance-
related shutdowns– The annual value of reducing unplanned
shutdowns by 1% can total €1 million
Optimization of net working capital– consignment stock for wear parts and
consumables– spare parts inventory optimization
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Valmet Experts
New Insights Thru Audits
Worldwide Benchmarking
Remote Diagnostics
Guaranteed Results
What is A Performance Agreement?
A program designed to improve and maintain the customer’s competitiveness and profitability throughout the mill operations.
Valmet’s role is to bring in new ideas and to find the best solutions for development items.
Usually 3 - 5 years long and based on monthly flat fee payments.
A program designed to improve and maintain the customer’s competitiveness and profitability throughout the mill operations.
Valmet’s role is to bring in new ideas and to find the best solutions for development items.
Usually 3 - 5 years long and based on monthly flat fee payments.
Performance Agreements - Principal Idea
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Time
Production /Efficiency /Savings /Etc.
Continuous Improvement Program Improved Efficiency and Profitability
Today
Valmet Commitment
Maintenance Development
Operational Development
Phase 1 – Solving Main Process Issues
• Strong pre-analyses• Justified trials • Bottleneck solutions
Phase 2 – Continuous Long-term process Development
• Fine-tuning and Optimizing
• Optimizing Processes and Practices
© Valmet | Mikko Viljamaa / Director, Service Agreements