Demand amplification in supply chains of mills close to and far from main markets

Six paper machines, three in Scandinavia and three in the middle of Europe, are studied for their end-market and mill demand patterns. The well-known demand amplification effect is proven valid for mills with long supply chai ns, while the situation is different for mills located close to their end-m arkets. The paper shores that the existing reaction time for market demand information is not being exploited and that production allocation is not be ing well matched with real demand Mills close to demand do have an advantag e over those in Scandinavia, but it is also shown that this advantage could be overtaken by shorter production cycles and better integrated supply cha in operations that add up to reliable operational performance with no safel y margins and buffers. It is concluded that the physical distance between m ill and market should only show up in transportation costs, but not in poor ly managed material flow with high buffers and poor customer service result ing from biased demand information at the mill.