Paper and packaging firms turn to AI to manage capacity

Paper and packaging firms are increasingly turning to disciplined approach powered by AI, to manage overcapacity and transform maintenance, a report by global consultancy Bain & Company has suggested.

Bain’s second Paper & Packaging Report, published on 8 January, outlined how AI can help transform sales and operations planning, as overcapacity remains ‘endemic’ to the industry.

The 2026 report delivered insight into how leading companies in the paper and packaging industry are adapting to complex challenges today, including low profitability, overcapacity and decreased demand.

Bains identified three crucial factors shaping performance in the industry: laser focus around capacity decisions, accelerated adoption of AI-enabled efficiency and effectiveness improvements, and stronger commercial execution to protect margins.  

Overcapacity continues to present a persistent issue in the industry, due to executives being overly optimistic when making strategic plans, the report highlighted.

According to the report, most companies aim to grow their profits at four times the rate of the market, but only 7% of industrial companies achieve this goal.

To improve sales and operations planning, AI can be a powerful tool to help transform planning into continuous process, the report suggested, such as using an AI-enabled forecast model to enhance predictive accuracy and reduce the error rate, moving teams from a reactive to a proactive approach.

The research also noted that overcapacity is structural, not temporary, and that companies must understand risk and exposure including profitability of different products, not just the contribution margin, to make effective decisions.

“The industry is operating in a structurally oversupplied environment, and companies that rely on past demand assumptions will continue to face pressure,” said Ilkka Leppävuori, leader of Bain & Company’s global packaging subsector.

Leppävuori continued: “Leaders are taking a more rigorous view of cost position, portfolio choices, as well as capacity decisions to stay competitive in a market that is unlikely to rebalance quickly.”

AI-enabled maintenance is emerging as a powerful operational lever, the research also identified, stating that AI makes maintenance predictive and prescriptive, reducing failures, downtime and labour costs.

This could increase tool-in-hand time by 15% and reduce maintenance cost per ton by 17-23%, the consultancy said.

Rather than chasing volume, companies are increasingly using AI to cut maintenance, making tough capacity decisions and keeping plants running longer, with the report suggesting that optimising maintenance could unlock value, by increasing throughput or reducing opex, capex and working capital.

The report also called for less talk and more action over sustainability in the industry, as it argued that the business case is stronger than ever, fuelled by customer preference.

It stated: “Packaging companies that combine long-term vision with pragmatic execution are already outperforming. Growth leaders in the sector are also leaders in sustainability.”

Source: PrintWeek.com