Kappa Packaging, based in Holland, is a company that turns waste paper into cardboard. The company has 17 paper and board mills across Europe. Each mill has a giant multimillion-pound paper machine that converts pulp into reels of paper for board-making.

When it first goes into this paper machine, the pulp is 99 percent water that is progressively squeezed out by passing the pulp over a series of about 20 mesh screening belts. These belts are varyingly made from stainless steel, polypropylene, and polyethylene and cost over $20,000 each. So you would think that with 17 branches all doing the same job, Kappa would be able to get a good price on volume purchases of the belts. That’s what Kappa thought too. The big obstacle was that each plant had its own preferences as to types of belts and suppliers.

Kappa developed a Decision Support System (DSS) to analyze information on all the combinations of belts used by plants and the suppliers they liked, along with the prices and options available. Each plant was asked to identify which belts it was buying from which suppliers and to specify an acceptable alternative for each belt.

Kappa then fed all this information into its DSS with the intention of reducing the overall number of belt types as much as possible. Thus, Kappa had business intelligence, which it used to negotiate a deal with suppliers to minimize costs by maximizing-volume discounts for the belts. The end result was an annual saving of over $500,000 per year. In terms of the highly competitive commodity cardboard market, this was a huge advantage for Kappa.