Driving Pulp & Paper Performance through Variation Reduction Part 1

Executive Summary

The North American pulp and paper industry is facing increasing pressure to perform under an ever-expanding number of competitive

challenges -- rising labour, fiber and energy costs, aging mills, global competition. In this environment, mills are expected to improve

performance while being limited of capital by wary investors. Traditional cost-cutting responses have been pushed near to their limits

and many improvement initiatives have realized disappointing or unsustainable gains.

A well-organized and focused effort to eliminate variation in a pulp and paper mill will have a dramatic impact on costs, productivity,

quality, reliability and environmental compliance with legacy equipment, on existing electronics, without extensive capital investment.

Driving Pulp & Paper Performance through Variation Reduction Part 1 2

Table of Contents

Executive Summary ................................................................................................................................................................... 1

Part One of Two: The Business Case ....................................................................................................................................... 3

Industry Challenges ....................................................................................................................................................... 3

Cost-Cutting Isnt Enough .............................................................................................................................................. 3

The Back-to-Basics Solution .......................................................................................................................................... 3

Case Study Brief: Fort Frances Sheet-Break Reduction Initiative ......................................................................................... 3

Part One Challenge ..................................................................................................................................................... 3

Variation Reduction: Start with the Basics .............................................................................................................................. 5

Sources of Variation ....................................................................................................................................................... 6

A Methodical Approach to Reducing Variation ............................................................................................................... 6

Case Study Brief: Fort Frances Sheet-Break Reduction Initiative ......................................................................................... 7

Part Two Application and Benefit ................................................................................................................................ 7

The Tools are Available Now ..................................................................................................................................................... 8

About the Author ........................................................................................................................................................................ 9

Driving Pulp & Paper Performance through Variation Reduction Part 1 3

Table of Figures

Figure 1: PM Monthly Production (tn/Day) ............................................................................................................................... 5

Figure 2: PM 7 Production Rate ................................................................................................................................................ 7

Driving Pulp & Paper Performance through Variation Reduction Part 1 4

Part One of Two: The Business Case

Industry Challenges

The pulp and paper industry is mature, fragmented, and capital-intensive. Significant overcapacity is coupled with flat to decreasing

domestic demand. Products have become commodities with little differentiation between producers in terms of price. Prices are

trending downward year over year, with no player holding a sufficient percentage of any of the markets to impact pricing.

It is no secret the North American pulp and paper industry has not been returning its cost of capital. ROE for the last 15 years (with one

exception) has been below 5%. The industry has been under pressure by the investment community to improve performance -- the

expectation is that capital spending be limited to levels below depreciation. As a result, very little new capacity is being built in North

America. Mill capital is focused on maintenance-related projects: Keeping the roof on.

On a technology level the focus has been on major equipment, not electronic and information technology and capital for that major

equipment has been dramatically reduced. As a result of traditional capital focused improvement efforts, Pulp and Paper finds itself

significantly behind other industries in utilization of advanced control and predictive technologies. A change-resistant culture and an

industry-wide approach to waiting for others to lead have stood in the way of meaningful process improvement.

Cost-Cutting Isnt Enough

Mill response to these challenges has generally taken the form of cost-cutting measures to preserve the bottom line, measures showing

short-term results but doing little for the industrys long-term health.

Headcount reductions have taken out people but not work, draining the industry of critical IP and overloading remaining personnel.

Trimming the fat by eliminating things like travel, society memberships and conference attendance has saved a few dollars while

limiting exposure to real innovation.

As mills are relatively autonomous and corporate-driven performance initiatives are difficult to apply, the industrys approach to

improvement has been generally piecemeal. Solutions are often given insufficient resources to execute properly, and program neglect

and loss of personnel often prevent any gains from being locked in. Bottom line: the industry has been underperforming and knows it

must improve. Cost-cutting has left it resource-limited in both capital and people, and the potential offered by more advanced

technologies remains largely unexplored.

The Back-to-Basics Solution

There is no more fat to trim. The only place left to look for answers is right where we should have been looking all along on the mill

floor, where a back-to-basics approach to optimizing fundamental processes and reducing variation can turn an underperforming

operation into a potential pacesetter in a matter of months. Experience shows near-term gains in these ranges:

10-50% improvement in control asset utilization

50-80% improvement in maintenance time to troubleshoot control performance issues

3-6% reduction in energy costs

10-50% increase in product quality

2-5% increase in throughput

5-15% decrease in total operating costs

But as weve said, pulp and paper is a conservative, sceptical, change-resistant industry; the invariable response to claims like these is

Show me where its been done in paper. As we move through our overview of variation and variation reduction, well be looking at a

case where it has been done in paper, where some very basic measures to get a handle on control, instrumentation and variation led to

significant gains within a very short period of time.

Driving Pulp & Paper Performance through Variation Reduction Part 1 5

Case Study Brief: Fort Frances Sheet-Break Reduction Initiative

Part One - Challenge

Sheet breaks are a significant contributor to lost paper machine efficiency, and thus to lost production and increased operating

expense. Often, problems with a paper machine can also be seen in the break numbers in customers printing operations. As a result,

sheet-break prevention is a major area of focus for most paper operations.

Paper machine 7 at Abitibi-Consolidateds Fort Frances, Ontario, mill is a 1960s vintage Valmet paper machine, rebuilt in 1990, making

value-added grades of uncoated groundwood. PM7s performance had been deteriorating steadily over time, and by 2004 it was

running at an average of 2970 fpm and suffering an average of 2.3 sheet breaks per day for an OEE of 69.4%. Average

2004 downtime was 75 min/day needless to say, PM7 was having trouble meeting production goals. Various performance

improvement initiatives were tried, but sustained performance gains were difficult to obtain.

Figure 1: PM Monthly Production (tn/Day)

In September, 2005 the decision was made to try a data-driven approach to variation reduction. Fort Frances partnered with Honeywell

Inc. in a Joint Sheet-Break Reduction Initiative. Fort Frances provided all necessary plant data, plant operations experience and mill

process control expertise, while Honeywell provided the tools and expertise to perform the advanced data mining and data

analysis. The core solution for this effort was Control Performance Monitor is Powered by Matrikon, which represents vendor neutrality.

This product works with third-party control systems and applications.

The objectives for the project were to identify the disturbance variables related to the root cause of the press and dryer section sheet

breaks. The financial benefit of the effort was conservatively estimated at $1M if break-related downtime could be reduced by 30

minutes per day.

Variation Reduction: Start with the Basics

Major performance and quality initiatives such as Six Sigma, TQM, etc. have great potential to drive effectiveness to new levels, but

theyre long-term projects, require major enterprise-wide commitment and resources-- and they very often fail to show expected gains,

or show gains that quickly fade. Why? Because they are often built on unstable foundations.

Driving Pulp & Paper Performance through Variation Reduction Part 1 6

A program of variation reduction, a structured approach focusing on base-level processes, can drive performance in a much shorter

period of time with much lower initial expense. Pacesetting gains cannot be made until basic processes are stabilized.

Making this step change in performance begins with asking a few key questions:

What is the primary driver behind the program?

Is it understood by everyone?

What is the measure of success?

What is the expectation in terms of timing for completion?

Who is accountable?

Once these questions are answered, a well-defined program can be developed. To improve the speed of implementation and the

effectiveness of the effort, the objectives for the program cannot be vague. Clear goals with simple metrics such as We are going to

reduce operating costs by 10% in two years or We are going to improve productivity by 50% in five years are needed. To

accomplish the desired goals, the accountability element is best handled by a leader at a senior level driving the changes.

Sources of Variation

As the objectives of the program are finalized, an understanding of the sources of variation is

required to determine the scope of the effort.

Measurement Variation resulting from product and process testing methods and normal testing error

Process Variation induced in the process or caused by the process

People Variation induced by operators or other people with a direct interaction with the

process

Equipment Variation introduced by equipment incapable of meeting process requirements, or by degradation or failure

of equipment

Methods Variation resulting from operating methods like start-ups, shutdowns, grade changes recipe management and

machine scheduling

Materials Variation resulting from differences in raw materials to the process

Once the sources of variation are understood, steps can be taken to minimize or eliminate that variation. There are many proven

technologies available to help reduce variation induced by each of these key sources.

A Methodical Approach to Reducing Variation

Operationally, the first step is gaining access to all data in your plant. In fact, you already have this data in hand. Its flowing into your

control room constantly plant data is an invaluable raw material, one youve already paid for. The challenge is to turn that data into

information, to transform it into a window into your process using readily available monitoring, processing and visualization software.

Stabilizing your basic process must be your top priority. With the window into process opened by your software, sources of variation

can be prioritized and systematically addressed in a structured manner:

Start with a small process area, focusing first on instrumentation and basic control

Identify key process performance indicators, measure benchmark performance

Implement technology (such as Control Performance Monitor) to evaluate control-loop performance and identify variation

inducing problems

Fix the problems identified by the tools

Measure again and document the gains

Address changes needed in loop maintenance workflows to sustain the gains

Move on to the next process area

These small steps, anchored in a foundation of solid plant intelligence, reliable instrumentation and state-of-the-art software, form the

starting block for higher-level performance improvement. Simply getting your process visualized and your control stabilized will have a

direct and immediate improvement on mill performance. Keep this always in mind: The very purpose of control is to reduce variation.

Driving Pulp & Paper Performance through Variation Reduction Part 1 7

Case Study Brief: Fort Frances Sheet-Break Reduction Initiative

Part Two Application and Benefit

The Sheet Break Reduction Initiative at Fort Frances was broken down into four distinct phases:

Phase 1: Interview and knowledge discovery

Phase 2: Data collection

Phase 3: Multivariate data analysis

Phase 4: Detailing and executing improvement projects

The analysis process essentially involved using historical data from PM7s DCS, QCS, PLC and other data sources including

information from the machines sheet-break indicators stored within the data historian. After a rigorous process of cleaning, validating,

visualizing and analyzing the data, some key findings were made:

1. Based on statistical analysis, root causes of sheet breaks could be traced to three major process areas: stock prep and

proportioning, the steam system, and the draw system

2. 30% of investigated breaks related to changes in the broke system

3. 15% of breaks related to differential pressure variation in the dryer section along with dryer motor current variation

4. A second sheet break followed the first within 30 minutes, 15% of the time

5. 15% of breaks were preceded by large changes in draws

From these findings, 50 individual improvement opportunities were identified. A team was then formed to systematically implement the

improvements and track the results. The five key initiatives were:

1. A change in the stock proportioning logic so that broke displaces only virgin groundwood,

not virgin kraft

2. Changes to broke addition logic and piping, from three parallel streams to a single stream

3. Repairs to dryer controls and instrumentation

4. Re-commissioning of the white water silo temperature-control system

5. Mechanical repairs to eliminate loose debris build-up and release after a break

The results from this effort have been very impressive. Four months from the launch of the sheetbreak

reduction initiative, PM7 showed the following improvements:

Average downtime went from 75 min/day to 47 min/day

Break rate went from 2.3 breaks/day to 1.36 BPD

Average machine speed went from 2968.7 fpm to 3020.4 fpm, breaking a machine speed record

Average production rate went from 303.3 t/d to 338.4 t/d, breaking a 10-year machine production record

OEE went from 69.4% to 77.7%

Over $1 million in savings were realized in the first nine months alone. All this on a 40-year-old machine, with existing electronics, and

without a capital investment.

Driving Pulp & Paper Performance through Variation Reduction Part 1 8

Figure 2: PM 7 Production Rate

The Tools are Available Now

With effort and commitment, any plant can realize gains like this and every plant must, if the North American pulp and paper industry

is to survive and thrive. By using available technology to link process information to control information, unlocking it from your DCS and

putting it on your desktop, you empower your operation to stabilize your process and drive it to its constraints. The tools and the data

are there all you have to do is pick them up and use them.

Driving Pulp & Paper Performance through Variation Reduction Part 1 9

For more information:

For more information about Control

Performance Monitor, visit our website

www.honeywell.com/ps or contact your

Honeywell account manager.

www.matrikon.com

cpm@matrikon.com

Honeywell Process Solutions

1250 West Sam Houston Parkway South

Houston, TX 77042

Lovelace Road, Southern Industrial Estate

Bracknell, Berkshire, England RG12 8WD

Shanghai City Centre, 100 Junyi Road

Shanghai, China 20051

www.honeywell.com/ps

About the Author Chris Rogers, is the Director of Pulp and Paper Industry Solutions and is responsible for ensuring that products and services meet the

needs of our Pulp and Paper customers. His experience is extensive with over 30 years in the industry in various senior roles from mill

maintenance and engineering to major capital project management and corporate technology management. During that period he led

many strategic corporate initiatives designed to leverage technology to drive dramatic performance improvements across the company.

WP 653

August 2011

2011 Honeywell International Inc.