Modeling Lean and Agile Approaches: A Western Canadian Forest Company Case Study

Abstract

In the forest supply chain of the coast of British Columbia, the material flows are directed toward the push production of commodity products. This industry has not adopted lean and agile principles due to unclear economic impacts on the supply chain in changing market conditions. We tested the ability of lean and agile principles to improve performance in the coastal integrated forest industry. Mixed integer programming formulations were subject to over–under production capacity, and over–under demand fulfillment penalties to emulate agile, lean, and hybrid manufacturing environments, when solving the planning problem. Assuming that the coastal integrated forest industry performs as a hybrid environment, the profit results of each manufacturing environment were judged. The results show that, opportunities for profit improvement were 11% for adopting an agile environment when demand was stable with low variation and large batches of production. However, profit improvement was non-existent when the same demand attributes apply but with high variation. The opportunities for profit improvement were 12% when an agile environment or lean environment was adopted when demand was stable with low variation and small batches of production. However, opportunities for profit improvements of 15% existed for adopting an agile environment when demand was unstable with high variation and small batches of production.