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Opportunities to Increase Productivity of the Industrial Wood Supply System Through Improved Planning and Communication
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Planning is the act of determining the steps necessary for an organization to obtain goals in the future. Planning takes on even more importance as competition increases and additional efficiency is needed. In todayâ s competitive business environment, any method that can be utilized to maintain an advantage over an organizationâ s competitors must be investigated. Organizations allocate time and resources dedicated to planning differently. Differences are directly related to the goal that is being planned for and the amount of time before the goal is to be met. This study was undertaken to determine what levels of planning and communication were present in the wood supply industry and to determine how information that was being exchanged was being used in these processes. During 2001, Virginia Tech Forestry Operations researchers completed a study to assess the current state of planning and communication in the industrial wood supply process and to identify opportunities for improvement. Researchers performed interviews with 169 individuals representing all segments of the wood supply system. Interviews were performed during the summer of 2001 in the southeast and northeast regions of the United States. The overall findings of this study showed that current planning in the wood supply system is primarily â reactiveâ rather than proactive, resulting in extremely short planning horizons for all segments of the wood supply chain. This is due in some part to the high degree of uncertainty facing the forest and logging industries in todayâ s business climate, but is also a result of a continuation of traditional business practices that promote inefficiencies in the wood supply chain. Frequent, short term changes in mill requirements, including delivery schedules, inventories, and specifications, drive many of the constraints to planning in the wood supply system. Thirty-five percent of the wood procurement organizations interviewed reported that the consumption mix at their mill often changed on a weekly basis, and 65% reported they typically receive only one or two weekâ s notice in advance of significant changes in mill wood requirements. Advances in communication technology, such as cell phones, are facilitating frequent verbal communications between all segments of the wood supply chain. These communication improvements are also a factor in reducing the planning horizons for suppliers. As consumers adopt and use these communications technologies they are being used to actively manage daily (rather than weekly, monthly) wood flows as â just-in-timeâ inventory management goals. While 60% of the loggers interviewed reported they communicated at least twice a week or more with their wood dealer or procurement forester, 70% reported that these communications were only â somewhatâ or â not helpfulâ in planning their production goals. More than 75% of the contract loggers interviewed know the location and characteristics of the next tract they will harvest less than one week before they move their equipment and begin harvesting operations. This common and wide-spread industry practice of delaying critical information to loggers with regard to tract allocation creates a barrier to effective operational harvest planning, and provides one of the greatest opportunities for substantial cost savings through improved planning and communications. Compensation rates for logging contractors are primarily determined (70%) through the application of consumerâ s logging cost models or dealerâ s â marketâ rates which facilitate little if any true negotiation for harvesting system cost items. These models are generally based on projected â averageâ production rates that do not reflect consumer-imposed constraints such as quota reductions, additional mandated moves, or tract allocation â mismatchesâ . Efficient and predictable wood flow is critical to a stable and profitable forest and logging industry. Mill management and wood procurement personnel should plan their wood requirements, inventory and delivery schedules on an annual basis and effectively communicate these plans to the appropriate suppliers to facilitate their (suppliersâ ) ability to conduct meaningful long-term strategic and tactical planning. Without adequate planning all participants of a system lose control and generate inefficiency. Proper planning reduces the likelihood that obstacles will dramatically affect the efficiency and corresponding productivity of these participants. The results are improved productivity and increased return on capital employed.
- Masters Theses