Accuracy of forecasting in a Nordic paper mill's supply chain: A case study

Abstract

The article compares the accuracy of forecasted and actual supply chain cost and price factors in a Nordic paper mill's sales to customers in two large European countries. Empirical longitudinal research data covering the years between 2002 and 2008 were obtained from a large integrated Finnish paper mill, and consisted of sales volumes, paper prices, variable costs, and transport costs. It was expected that the mill would be able to forecast demand, prices and costs accurately, but the empirical findings showed that the forecasts for paper price, demand, and cost varied from one market to another and were not highly accurate. In addition, the forecasting of gross margins seemed to be very inexact. It is concluded that there is a need for more reliable forecasting methods in the paper industry to anticipate economic development as paper demand and costs change.

Keywords:

• economic geography
• forecasting
• paper industry
• supply chain