Target Cost Exercise in Paper Plant

Topics: Paper, Pulp and paper industry, Costs Pages: 7 (1445 words) Published: July 27, 2011
Target Cost Exercise in Paper Plant

Shank & Fisher (1999) gave an example of application of  target costing in the case of Montclair Paper Mill  abd showed how the target costing principle could be applied even at a later stage of the product life cycle. The situation of Montclair Mill was gloomy. The mill was making $700 loss per every ton of paper sold. The management believed that the standard cost of $2900 per ton was thought to be based on a solid analysis and was taken for granted.

The target costing gave a target of $1162 per ton, which equals a 60% cost reduction. The management accepted the challenge, and after rigorous analysis, four major reductions were accomplished:

   1.       Fiber cost: 60% cost reduction.
   2.       Paper machine cost: Yield from 47% -> 75%.    3.       Dye costs: material savings of $250 per ton incorporated in the yield improvement at the paper machine resulted in an amazing $769 reduction per ton.    4.       Conversion costs: Based on benchmarking, a reduction from $303 to $150 was challenged with the risk of possible outsourcing. During 18 moths, the cost dropped to $240, and the continuous improvement seemed to gain even more.

Together, these produced the desired level of costing and a dramatic turnaround in the mind set. (Shank & Fisher 1999.)


Ergonomics Cost Benefits Case Study in a Paper Manufacturing Company

Dan MacLeod,
Anita Morris, Ergonomics Coordinator, Crane & Co., Dalton, Massachusetts.

Original publication: Proceedings of the Human Factors and Ergonomics Society, September, 1996.

Total investments in ergonomics over a five-year period is estimated at about $2.5 dollars, including cost of new machinery and equipment. Total benefits over the same five-year period are estimated at $3.5 million, based primarily on workers compensation cost savings plus improvements in productivity. Thus, the Return on Investment (ROI) for this ergonomics program is approximately 40%.

Energy Cost Reduction in Paper Manufacturing


Bearings Reconditioning Cost Reduction

Waster Water Utilization - Cost Savings in a Paper Plant

Total savings due to the intensive water reuse modifications completed by the company are estimated at $112,000 per year. Avoidance of transportation/handling costs and landfill fees by diverting wastewater sludge to the production process resulted in cost savings of $72,000 per year.


With its new "fiber loading" process, Voith Sulzer, Inc., is greatly improving the efficiency of paper production and recycling. Fiber loading produces precipitated calcium carbonate (PCC) filler in the pulp recycling process at costs below conventional means.;jsessionid=025ADAEBC2C445B85DD1EA2364FE8ADB?purl=/751069-LA3c7Q/webviewable/ ______________________________

Reports on Paper Manufacturing Plants

Deloitee 4 page Note on Paper Industry - 2009

Productivity and performance improvement in paper mills: Procedural framework of actual implementations John Fogelholm, DSc (Tech.), PhD, Frank Bescherer, MSc
Performance Improvement
Volume 45 Issue 10, Pages 15 - 20, Published Online: 1 Nov 2006

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