Assessment of sustainable integration of new products into value chain through a generic decision support model: An application to the forest value chain

Abstract

Integrating new products into an existing value chain network is a crucial step in a company's strategy to remain competitive. Businesses are evolving in an economy deeply affected by the global development through unstable markets, changes in trade agreements, increased preoccupations with land use and pollution, and technological advancements. Intrinsically, a company creates a product portfolio to target specific market needs, balance resources and capacities, lower market risks, and ensure stable revenue input. Nevertheless, changing markets increasingly complicate the set of parameters that a company must consider when securing an efficient product portfolio. This research aims to help organizations assess prospective products and optimize product integration by detecting synergies of an existing production/distribution network. To this end, we developed an analytics tool in the form of a mixed-integer linear programming model to evaluate a regional production/distribution network's strategical-level decisions. The model allows mathematical representation of a given network composed of divergent manufacturing processes, bill of materials, distribution nodes, and business-to-business circular economy. The model is applied to a realistic case study in Quebec's Mauricie region, where the introduction of eight bioproducts is evaluated for the forest value chain. The processes considered are: pressurized hot water extraction, fast pyrolysis, organosolv fractionation, and kraft lignin recovery. Our results show that biorefineries have potential economic, social and environmental impacts on the existing forest industry but are tightly linked to the governmental subsidies underlying the forest industry's incapacity to self-sufficiently sustain economic long-term viability in its development towards market maturity.