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The paper industry is exposed to challenges like increased demands for customized products, customer delivery times and changes in customer schedules. All this has lead to an increased pressure on the prices as well as the margins. Over the years the paper industry is faced with the problem of high energy costs with a lot of energy getting consumed in drying the paper. Six Sigma tools like DOE have been used to reduce the energy costs by identifying, optimizing and controlling the input variables like temperature of the heaters, speed of the fan and the distance of the fan from the paper. Once the best combination of Input variables is attained energy costs can be reduced. Some other examples of Lean Six Sigma application in Paper Industry are: Ensuring timely availability of raw material by improving underlying processes Reducing cost of production Minimizing waste and scrap Improving the overall quality of production Improving the paper machine efficiency and Ensuring effective use of new technology to modernize manufacturing infrastructure.