Challenges in Integrating the Forest Value Chain – - VCO

Challenges in Integrating the Forest Value Chain –a Swedish perspective p on VCOLennart Rådström – The Forestry Research Institute of Sweden

The Swedish Forest IndustryForest Products Industry123 billion SEK exports (2009),74 000 employees (2008),10.5 billion in investments (2009)Forestry Sector80 million m 3 fo fellings38 billion SEK turn over17 000 employeesCompetitive value added raw materials supply!ppy

Ownership structure of forest landOther private owners 6%The state 18%(including the state-ownedcompany Sveaskog)Private(individuals)51% Other public 1%Companies 24%(excluding Sveaskog)Source: National Board of Forestry

Wood resource 51%

Net conversion value and logging costsSEK/m³sub400300Rotnetto Net conversion valueDrivningskostnadLogging costs200HurricaneGudrun1000

Turnover: 38 billion SEK

Production cost at mill 2010, SEK/m 3 subLogging 115Transport 70Roads 20Administration 15Storage & handling 25Silviculture 40Total 285

Productivity in forest operations, m³fo/manday(3 year mean values)m 3 fo/manday

The value chain definitionSupport activitiesFirm infrastructureHuman resource managementTechnological developmentProcurementInbo oundlogis sticsOpe erationsOutb boundlogis sticsMar rketing& sa alesServicePrimary activitiesSource: Michael E. Porter

CustomerDelivery of finalproductsOrdering of wood-/fiber productsIndustryProcessingVCOForestSelectionof standsReceivingraw materialsLoggingtransport

Planning- andinformation systemsDecisionsupport systemsCommunicationsystemsThe wood supply systemBusinessconceptOrganizationManagement andbusiness controlProduction systems(Logging and transportation)Wood market

Wood supply targetsStrong focus on customer needsOptimum raw material utilizationHigh productivityHigh flexibilityShort lead timesHigh capital productivityLow logistic costs

Decoupling point and inventory –a strategic decisionDriven by demandDriven by forecast

ChallengesWood resource informationCommunication of market requirementsProduction controlLogistics efficiency.Customer feed backInnovation & implementation

Lean and Agile Production00110010101100111

VSOPOperational planning from customer to forestDelivery plansStandsMachinesBucking instructionsScheduling ofharvest resourcesCommunication andadministrativesupport

Accurate assessment of wood resourcesFORAN SingleTree® Method

Data requirements inpre-harvest planningStandTreeDBH‐distr.Stem taperStem taperStem taperBucking simulation

Ground-sample data

Wood utilizationVl Value recoveryWood consumptionProduct qualityProduct developmentProduction costs

Market requirements – sawlogsTree speciesVolumeDistribution of logs perlength and diameter classQuality

Saw log propertiesStructural ral lumberShape stabilityStrengththDurability (outdoor)JoineryKnot free/knot structureYear rings & surfacepropertiesDensity

Log distribution80007000600050004000No. of logs143000172000201000Diameter (cm)23263343 44 46 4950525556 034 37 38 40 41 43 44 Length (dm)

Predicted and registered production of sawlogsDiameter distributionPredictedHarvesterSawmill

Bucking with respect to knot qualitySound knot cylinderSound knot qualitySaw logsPulp wood

Market requirements – pulp woodTree speciesVolumeFresh (moisture content)SoundFibre properties

Pulpwood propertiesBasic densityFibre wall thicknessFibre length

Pulpwood < 15 cm ØSpruce final cut 97 y brhG24Juvenile wood 20%Fiber length 3,3 mm+TearTensile index 96%Tear index 114%Pulpwood < 15 cm ØSpruce 1:st thinning 22 y brhG32Juvenile wood 88%Fiber length 2,7 mm+ TensileTensile index 104%Tear index 82%

Tract information

Information about diameter,length, species, log quality etc.

Measurement of diameter and lengthin the harvester head3 measurementpointsLength

The new Swedish HCV concept

Customer feedbackCollaboration and dialogue between suppliers and industrythroughout the value chain– Logging contractors– Haulage companies– Forest managers– Forest industriesFollow-up of deliveries at industrySupplier rating.

SCA, saw log deliveries vs orderDiameter, mmGoodShortageExcessNot orderedLength, cmOrdered 435 00040Tot delivered 434 570Out of range 3 %Excess 13 %Not wanted 8 %Deviations from order 24 %2011-06-22 SCA Timber

.VCO variablesTodayForestTomorrowNot a key issueProductivityKey issueKey issue, operational level CostsKey issue, system levelBest practice,harvesting site levelNot a key issuePartly plannedupply Ch hainWood SWood utilizationLead timeFlexibilityizationValue Cha ain OptimOptimization,supply system levelKey issue and indicatorsPlanned and controlledWood measurementorganizationsQualityIndustryCustomer satisfactionmeasures

Important R&D tasksLogging and transportation systemsLogistics systemsForest to industry interaction casesCustomer needs/product d specification i →Industry process →Wood supply operations →Forest specification.

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