Stermons Story Background
Stermon Mills Incorporated was a small paper producer, which was founded by Tom
Brasker in 1910. Stermon focused primarily on producing uncoated wood-free papers. This
kind of paper is used by different types of end users including use in publishing,
commercial printing, office/business, and writing. Paper could vary in area density from 15
lbs per unit area to 100 lbs per unit area in Stermons plant. Paper can also vary in the
proportion of chemicals and colors.
Stermons paper mill was consisted of 20 buildings, housing one pulping plant and four
paper machines of varying vintages with a total output of 570 tons per day. In 1992, the
CEO of Stermon Mills, Stan Kiefner, was faced with a difficult problem to solve: the lower
cost from competitive. The four machines cost too much when compared to the small
output that they produced, therefore, the company could not compete with their
competitors on the cost. Stermon could not afford this new state-of-the-art machine and
needed to find an alternative. Stermon needed to offer something that their competitors
could not *€“ flexibility. This posed an interesting problem, flexibility was hard to define,
it was difficult to measure their competitors performance, and it would be tough to
determine if they were making improvements.
Industry Background
The North America market consumed 45% of the world uncoated fine paper capacity, and
95% of the demand was met by domestic. International Paper Inc and Georgia-Pacific
were the two companies hold the larger market share with 14.6% and 14.5% market share
