Changing the Way We Do Business
Caraustar's decentralized operating philosophy was instrumental in the company's rapid growth and profitability in the 1990s. But the world has changed and so have we. Where we used to operate like thirty $30-million-companies, today we are operating like a one billion dollar company. Procurement is an area where we are capitalizing on our increased leverage.

The 3 F's: Fuel, Fiber and Freight
Fuel, fiber and freight each represent approximately $60 million in annual purchases for the company and are the primary targets for leveraging our scale.

Fuel: Coordinating Purchases

All Caraustar mills have the capability to shift to alternate fuels to optimize total cost as prices fluctuate. Procurement for the entire mill system enables quantity discounts and provides a natural hedge to reduce volatility.

Fiber: Leveraging Internal Proficiency
Caraustar mills used to source their fiber needs independently. Now we are targeting to source 90 percent of our fiber requirements internally from our Recovered Fiber Group, which will reduce costs and improve the fiber quality.

Freight: Consolidating Providers
In 2004 the company is targeting to place the majority of our freight requirements with two or three providers, which will be a significant reduction from more than 50 providers in 2003, to maximize and benefit from the competitive bidding process.

On Deck:
Caraustar purchases over $570 million in goods and services each year, and the 3 F's represent only one-third of the total. We are in the process of leveraging our scale on other key purchases including chemicals, corrugated containers and communications services. Concentrating our purchases is expected to result in meaningful savings.