“Measuring Operational Impact of Supply-Chain Issues”
This Update comes at the launch of a very busy year, with WSRI’s April Annual Meeting just around the corner. At this writing, two research projects are in their final stages, and we’ve begun the process for selecting two new projects from among twelve outstanding project proposals.
I’d like to provide a status summary of two important projects WSRI will complete and report on during 2012’s first quarter: Forest2Market’s Price Volatility Study and the Wood Supplier / Wood Consumer Relationship Study, undertaken by Don Taylor, of Sustainable Resource Systems, LLC.
Don’s experience and credibility are proving invaluable as (with guidance from legal counsel) he interviews loggers, contractors, and consumers across six U.S. regions to identify issues—and potential solutions— facing wood supply management during this critical time. Judging from the preliminary reports, I can say that even unique regional situations reveal common, systemic supply-chain issues that are both powerful and far-reaching in how they influence business relationships. The WSRI study actually measures the operational impact of negative and positive issues in terms of how much production is lost or gained on an annual basis.
Here’s a sampling of the issues identified—reserving Don’s thoughts on solutions for the final Report.
• The effect of the rising cost of wood suppliers’ consumables on ultimate delivered wood costs, and the measures supply chain participants are adopting in response. • The perception, in some regions, that local procurement personnel are unable to bridge the gap between cost-control mandates from above and operating realities on the ground—with long-term implications for wood suppliers’ survival.
• Understanding the effect that short-term (or inconsistent) wood orders have on suppliers’ cash-flow and ability to obtain credit.
• The stand-off between current “supply-and-demand” dynamics and the limitations of the elasticity of logging capacity—and those limitations’ potential future cost to wood consumers.
• Once more: truck turn-times, and what characterizes wood procurement organizations that have been able to meet truckers’ needs most sensitively.
• The changing condition of the forest resource is a concern. As stagnant saw log markets delay final harvests, and thinning opportunities diminish, how will the supply chain cope with the resulting demand volatility for saw logs, pulpwood, and biomass? And what are the implications of declining reforestation on future fiber needs?
We can all look forward to Don’s presentation of his findings at WSRI’s Annual Meeting, and at FRA’s Annual Meeting, which will be conducted together, April 18-21, in Jacksonville.
Also during the First Quarter, Forest2Market will complete the WSRI Price Volatility Study and publish a final Report, comparing price volatility for wood purchased under a longterm contractual agreement and that of wood purchased as gatewood. Forest2Market has a large database of samples across the country to calibrate how purchasing systems affect price volatility. The study will examine how that volatility affects costs and margins for both suppliers and consumers.
The mission of WSRI is to identify issues that impact wood supply chain productivity and efficiency and to offer recommendations to improve wood supply chain partnerships. The intent is not to “point a finger” but to provide real data that can aid in developing intelligent approaches to supply chain optimization.
This is not a spectator sport! Join WSRI and become part of the process!
Jim Fendig
WSRI Executive Director
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