A Framework for CTL Method-Based Wood Procurement Logistics
Authors
Jori Uusitalo
Abstract
Wood procurement logistics has developed dramatically during the last few decades. The adaptation of general logistics theory, increasing customer orientation, product-based bucking, the externalization of work processes, the expansion of international wood trade and the rapid development of management tools and methods have changed the characteristics of wood procurement tremendously. Consequently, there is a growing need to redefine the concept of wood procurement. This paper attempts to lay down a general framework for CTL (cut-to-length) method-based wood procurement management and to highlight the most important research and development objectives in this area.
In wood procurement the main customer service goals are price, dimensional requirements, quality requirements and the ability to react to changes. The price is always important, but the smaller the proportion the wood cost is of the total production costs, the less significant the price becomes. The importance of quality and dimensional requirements increases with the rising value of wood. Due to improved inventory booking systems and transportation optimization systems, wood procurement companies have managed to decrease stock levels, thus decreasing rate costs. The company may aim to decrease the level of stock, but not without possible additional costs. According to logistics theories, an increase in stock levels increases storage costs but, on the other hand, a decrease of stock levels increases transportation costs and the risk of lost profit.
Seasonal variation and the ability to react to changes have great significance to logistics costs in wood procurement. Small stumpage reserves inevitably lead to expensive harvesting and transportation activities. But more research should, in the future, also be directed at improving classifications of harvesting and transportation accessibility.
In the Nordic countries significant progress both in tree bucking control and transportation allocation has been achieved in practice, but they are still considered as separate processes. It is in most cases undesirable to cut many products from the same stand, since it implies too many loading and transportation operations. Therefore, it is necessary to choose which products in what quantities may be cut from each stand. This means that tree bucking control and wood transportation problems should not be considered as separate tasks, but instead be optimized as a whole. If they are considered as separate processes the gains achieved through better product characteristics are lost in increasing transportation costs. Current wood pricing systems make it difficult to fully exploit the advantage that could be gained through this kind of optimization.
