Benchmarking Procurement Cost Saving Strategies for Wood Supply Chains

Christoph Kogler,Peter Rauch,Clemens Eichberger,Sophie Schimpfhuber

doi:10.3390/f12081086

Christoph Kogler, Peter Rauch + Show 2 more

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https://doi.org/10.3390/f12081086

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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.

Highlights

Introduction iationsWood supply chains are dynamic networks of complex information and material flows between forestry, transport, and industry stakeholders
Strategies, and scenarios were parameterized based on case study data of the Austrian provinces Carinthia and Styria
The results of this study focus on strategy and scenario analysis based on the presented mixed-integer programming models for forestry, round-wood transport, and wood-based industry to emphasize relative procurement cost-saving potential

Summary

Introduction

Wood supply chains are dynamic networks of complex information and material flows between forestry, transport, and industry stakeholders. Contrary to supply chains of other industries (e.g., car, electronics), uncoordinated decision making focusing on individual interests of single actors in planning, designing, operating, controlling, and monitoring the wood supply chain dominates wood supply chains in Central Europe. Wood supply chain actors pushing their own agendas and optimizing solely their own performance impose constraints on other actors and lead to inefficiencies harming the performance and competitiveness of the entire supply chain. Examples of integrated wood supply chains, in Northern Europe, Canada, and Chile, indicate a competitive advantage through cooperation and coordinated decisions making. Benchmarking promising procurement cost-saving strategies enables wood supply chain.

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