Benchmarking Procurement Cost Saving Strategies for Wood Supply Chains

Abstract

Intense international competition pushes the actors of wood supply chains to implement efficient wood supply chain management incorporating coordinated cost-saving strategies to remain competitive. In order to observe the effects of individual and coordinated decision making, mixed-integer programming models for forestry, round-wood transport, and the wood-based industry were developed and integrated. The models deal with operational planning issues regarding production, harvest, and transport and are solved sequentially for individual cost optimization of each wood supply chain actor as well as simultaneously by a combined model representing joint cost optimization in an integrated wood supply chain. This allows for the first time, benchmarking relative cost-saving potential of the wood procurement strategies coordinated transports, integrated supply chains, satellite stockyards, and higher truck payloads within a single case study setting. Based on case study data from southern Austria, results show the advantages of an integrated supply chain with a cost-saving potential of up to 24%. Higher truck payloads reinforce this potential and enable up to 40% savings compared to the predominant wood procurement situation in Central Europe. Wood supply chain integration for Central European circumstances seems to be feasible only for a limited consortium of a few companies, for example when restricted to a wood-buying syndicate supplying several industry plants or a few large forest enterprises, especially as both groups are commonly steering wood transport on their own. Consequently, further research on the challenging task of implementing integrated supply chains using the opportunities of digitalization to realize existing cost savings potential by deepening cooperation and intensifying information exchange is needed.

Optimizing Bucking Decisions in Korean Red Pine: A Dynamic Programming Approach to Timber Profitability

“…Comparisons with other studies, including Geerts [13] and Pinto et al [36], as well as the insights from Väätäinen et al [6] and Kogler et al [7], provide a broader context and validation for these findings. The integrated supply chain management approach and the focus on coordinated cost-saving strategies, as discussed by Kogler et al, align with our study's implications for optimizing timber production.…”

“…They emphasize the importance of integrated management for enhancing the efficiency and sustainability of wood products. Similarly, procurement strategies, including bucking decisions and transportation planning, crucial for economic sustainability and aligning operations with market demands, are discussed by Kogler et al [7], Kogler and Rauch [8], and Acuna et al [9].…”

Modeling Techno-Economic Wood Procurement from Renewable Forests for the Sustainable Energy Supply of a CHP Plant

“…It seems that the elements of sustainable wood procurement in the energy transition of CHP plants must be integrated into the planning systems of the logistics value chain network when wood procurement is digitized and automated (Figure 2). It can also be assumed that the automation of wood procurement sub-processes will increase the capacity of WSCs and, at the same time, make them more cost-effective and resilient [32,33]. Indeed, the operative work of sub-processes has been rapidly mechanized in recent decades, but the related planning and management work only started to be automated in the 2010s with digitalization [33].…”

Methods for supporting digital timber trade

“…Purchasing, harvesting, transportation, storage and handling, and manufacturing are the five major functions in the wood procurement supply chain (Lang and Mendell 2012). As these supply chains are dynamic networks of complex information and material flows between forestry, transport, and industry stakeholders (Kogler et al 2021), this thesis is intended to contribute to wood procurement by improving our understanding of timber stand valuation, since it provides the information needed to define appropriate value and timber assortment distributions for harvestable timber stands.…”