(479917700) 2005. carlsson, d., ronnqvist, m. supply chain management in forestry- case studies at...

7/21/2019 (479917700) 2005. Carlsson, D., Ronnqvist, M. Supply Chain Management in Forestry- Case Studies at Sodra Cell AB (1)

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+ arlsson- . Ronn/!ist # European Journal of Operational Research 163 (2005) 58961659 + arlsson- . Ronn/!ist # European Journal of Operational Research 163 (2005) 589616 59

(%) or woo$ owfl chain an$ the use of sophisticate$ techni/ues to increase the utiliation of raw "aterials an$pro$uction capacities %e!eral actors are in!ol!e$ in the woo$ owfl 8he situation can !ar& fro" countr&to countr& an$ since the case $escrie$ in this paper is ta,en fro" %we$en- we focus on the %we$ish situation hesituation an$ the use of $ecision support s&ste"s in for e4a"ple hile is $escrie$ in Epstein et al (1999)8he "ain actors usin' % plannin' in %we$en are in$ustrial forestenterprises- with lar'e forest assets as wellas their own pulp an$ paper in$ustries an$ saw"ills- an$ forest ownersH associations- which represent thepri!ate entities an$ ha!e their own pulp an$ saw"ills 8o carr& out the operations there are also lo''ers an$transporters- har!estin' an$ carr&in' the woo$ fro" the forests to the "ills 8he& "a& e cate'orie$ asin$epen$ent entrepreneurs wor,in' for a sin'le forest enterprise- often "e"ers of an association that han$lespricene'otiations etc- or as lar'e transportor'aniations owne$ 0& a lar'e nu"er of entrepreneurs carr&in'woo$ for se!eralforest enterprisesusto"er orientation is in focus of the forest in$ustr& he i$ea of custo"er orientation is that the ri'ht,in$ of pro$ucts (or raw "aterial) shoul$ e $eli!ere$ to the custo"er in the ri'ht /uantit& an$ at the ri'htti"e 7n this wa&- the custo"er has the opportunit& to i"pro!e on his utiliation of the raw "aterial as well asotainin' increase$ e cieffi nc& in pro$uction plannin' usto"er orientation will $ra"aticall& increase the$e"an$ put on the lo'istics an$ pro$uction s&ste" he re/uire"ents on all parts of the o!erall suppl& chainin ter"s of /ualit& an$ e4ifl ilit& will increase as well as the nee$ an$ re/uest for ti"e$ $eli!erieshis 'i!esrise to a $e"an$ for increase$ 'eneral ,nowle$'e aout the % an$ for "etho$s an$ tools for etterplannin' an$ control he further $e!elop"ent of practical an$ roust $ecision support tools 0ase$ onopti"isation "o$els an$ "etho$s are an i"portant prere/uisite for pro$ucin' a 'eneral !iew an$ e cieffi ntresolution in the co"ple4 situation that the forest in$ustr& is "o!in' towar$s *& roust $ecision supporttool- we "ean a "o$el that alwa&s pro!i$es a solution (where infeasiilities are easil& $etecte$)- an opti"al ornearopti"al solution which is pro!i$e$ within a li"ite$ solution ti"e- an$ that the "etho$ is insensiti!e topara"eter settin's Operations Research (OR) "o$els an$ "etho$s arisin' in % are $e scrie$ in %hapiro(2001) or a&ur et al (1999) o"pare$ to other in$ustrial sectors- forestr& has relati!el& few a$!ance$ $ecisionsupport s&ste"s an$ has put less fun$in' into research an$ $e!elop"ent .oreo!er- the proportion ofpersonnel with professional en'ineerin' $e'rees is "uch s"aller in the forest in$ustr& in co"parison with otherin$ustrial sectors Other challen'es in forestr& are $escrie$ in .artell et al (1998) 'eneral o!er!iew of OR"o$els an$ "etho$s in forestr& is 'i!en in Ronn/!ist (2003)

%o$ra ell * is one of the worl$Hs lea$in' "anufacturers of "ar,et pulp inten$e$ for paper pro2$uction consi$erale proportion of all pulp use$ in European noninte'rate$ paper in$ustries (writin'paper- oar$- tissue- etc) ori'inates fro" pulp "ills owne$ & %o$ra ell *


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"ore on re$ucin' their wor,in' capital hese e ortsff 'i!e co"panies the incenti!e to n$fi other wa&s ofprocurin' raw "aterials an$ $istriutin' pro$ucts ase$ on the new oecti!es which accounts for'rowin' interest in i$eas an$ theories relate$ to suppl& chain "ana'e"ent (%.) hus- there is also a clearinterest a"on' pulp custo"ers to e4plore the potentials of suppl& chain "ana'e"ent in colla0o2 rationwith suppliers

13 Aaper outlinen e cffi ient %. is i"portant for "an& co"panies his is in particular true for co"panies where thesuppl& chain consists of "an& inte'rate$ sta'es %o$ra is such a co"pan& as it is $i!i$e$ into se!eralsuco"panies responsile for their particular part of the woo$ chain 7n this paper we will use %o$ra ell* an$ its relation with other co"panies within %o$ra an$ e4ternal custo"ers as an e4a"ple to illustratehow %. an$#or suppl& chain opti"isation (%O) are use$ in fi!e case stu$ies to i"pro!e the o!erallperfor"ance of the co"pan& 8he outline of the paper is as follows 7n this section we ha!e $escrie$forestr& an$ the pulp "ar,et an$ how these a ectff %o$ra ell 7n %ection 2 we $escrie %o$ra an$ itsor'anisation- its suppl& chain an$ its current suppl& chain "o$ules 7n %ection 3 we $escrie !efi casestu$ies where speci cfi proects ha!e een un$erta,en in or$er to i"pro!e the perfor"ance of the suppl&chain 8wo of the proects are concerne$ with suppl& chain "ana'e"ent an$ three with suppl& chainopti"isation he "ain purpose of this applicationoriente$ paper is to show how %. an$ OR "o$elsan$ "etho$s are applie$ in practice for a forest co"pan&


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?i' 2 %o$ra ell sales per countr&- 2001

22 Or'ani6ation

7n total- there are aout 100 people in!ol!e$ in the $irect plannin' an$ "ana'e"ent of the suppl& chain at%o$ra Jalf of those wor, within the %o$ra ell or'anisation an$ half within %o$ra %,o' ?i' 3 'i!es ano!er!iew of the or'anisation in!ol!e$ in suppl& chain plannin' at %o$rahe pro$uction plannin' at the pulp "ills is the central plannin' acti!it& in the suppl& chain ?or all"ills- e4cept ?olla- this is $one centrall& at the Aro$uction an$ +eli!er&plannin' $epart"ent within the.ar,etin' $epart"ent of %o$ra ell he pro$uction at ?olla is planne$ separatel& at the "ill $ue to theplannin' con$itions there ein' !er& $i erentff to other "ills he pro$uction in ?olla is "ore or less strictl&or$er ase$ with !er& little pro$uce$ to stoc, t the other "ills this is the opposite he cost for chan'in'etween pro$ucts is co"paral& hi'h an$ therefore the pro$uction is run in fairl& lon' runs (ca"pai'ns)he $eli!er& plannin' is $i!i$e$ into three 'eo'raphical re'ions>

Ker"an&- *enelu4- %witerlan$- ustria an$ 7tal& (.ainlan$ Europe)@ Borwa&- ?rance an$ the :=@ %we$en an$ O!erseas

8he shippin' $epart"ents at the "ills are responsile for plannin' the loa$in' of !essels- wa'ons2 an$lorries accor$in' to the central $eli!er& plannin' he& also in!oice the pulp to the custo"ers fro" theirrespecti!e "ill 8he sales o cesffi ha!e the $irect contact with the custo"ers One or two people recei!ethe or$ers fro" the custo"ers an$ enter this infor"ation into the usiness s&ste" 8he sales o ceffipersonnel often also operati!el& plan the actual $eli!eries to the custo"er- or$erin' wa'ons or lorries- etc7n or$er to coor$inate the woo$ suppl& a"on' the $i erentff "ills- %o$ra ell has a woo$ procure"entcontroller who wor,s in close collaoration with the woo$ suppl& coor$inator at the


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Sdra

Sdra Skog

Wood supply dept

Wood supply coordination

Sdra Cell

Economics dept

Wood procurement controller

Domestic pulpwoodMarketing dept

Imports

Sawmill chips

Production planning

Deliery planning

!egions "#$

%ransport management areas "&$ Mainland Europe

'orway( )K( *rance

Wood supply coordinatorDomestic( +erseas

Districts "&,$

Wood supply coordinator

Sdra Shipping

-essel

%rain

.orry

Mills "/$

Shipping dept

Ware0house

Sales o11ices "2$

+rder0 deliery handling

?i' 3 Or'anisation in!ol!e$ in plannin' an$ "ana'in' the suppl& chain at %o$ra

.ana'e"ent of pulpwoo$ haula'e in %we$en is the responsiilit& of the leache$ an$ se"ileache$ softwoo$ an$ har$woo$ 7n thee'innin' of the nineties- the ?leachin' (otal hlorine ?ree) process was intro$uce$ which i""e$iatel& $oule$ the nu"er of pro$ucts in the %o$ra ell ran'e t the sa"e ti"e- the ran'e of ri'htnessle!els starte$ to increase since the ?"etho$ coul$ not acco"plish a full& leache$ pulp fro" the

e'innin' s the "etho$ i"pro!e$- an$ 8?2pulp of hi'her ri'htness was intro$uce$- the ol$ pro$uctre"aine$- since so"e custo"ers still wante$ it herefore the nu"er of pro$ucts increase$ $ra"aticall&hetailorin' of pulp for custo"ers also contriute$ to the 'rowin' nu"er of pro$ucts


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n increase$ ,nowle$'e aout woo$ refi properties an$ the i"pact the& ha!e on the properties of thepulp an$ the nishe$fi pro$uct was ac/uire$ $urin' the ei'hties an$ nineties *ase$ on that ,nowle$'e-%o$ra ell an$ other suppliers starte$ to $esi'n special pulp pro$ucts (with special woo$ re/uire"ents#recipes) tar'ete$ for the pro$uction of certain nishe$fi pro$ucts ?ro" the !er& e'innin' this $e!elop"ent wastrul& custo"eroriente$ in the sense that the pro$ucts were $e!elope$ for speci cfi custo"ers- "an& ti"es in$irect collaoration with the custo"er 7n so"e cases this resulte$ in pro$ucts with a li"ite$ !olu"e an$!er& speci cfi woo$ re/uire"ents- which eca"e $i cuffi lt to ,eep consistent o!er ti"e- e' $ue to seasonal!ariation here coul$ e!en e prole"s ha!in' the pro$uct a!ailale at all ti"es he increase in the nu"erof pro$ucts co"plicate$ the lo'istics consi$eral& ar'e in!entories were necessar& to "aintain ser!ice an$se!eral chan'eo!ers (chan'e of which pro$uct to pro$uce) in the pro$uction cause$ increase$ costs an$$i cultffi ies in runnin' the pro$uction7n recent &ears there has een a consoli$ation a"on' the pro$ucts in %o$ra ell- to alle!iate on theprole"s that occurre$ Bow- pro$ucts 'enerall& ha!e a lar'er !olu"e ase- ut still ha!e speci cfi prop2 ertiesfor their inten$e$ use in paper pro$uction 7ncrease$ !olu"es ha!e "a$e it possile to $ecrease the fre/uenc&of chan'eo!ers an$ prolon' the pro$uction runs- resultin' in hi'her consistenc& in pro$uct /ualit& an$lower pro$uction costs 7t has also "a$e it possile to ,eep lower in!entories an$ still "aintain the sa"eser!ice le!el as efore 8his has lai$ the foun$ation for further $e!elop"ent to'ether with cus2 to"ers of thesuppl& chain

nother factor a ectff in' the suppl& chain is $ue to the characteristics of the "ar,et with lar'e !ariation inthe price (see ?i' 1)- which results in lar'e !ariations in sales !olu"e (see ?i' ;) Ji'h capital costs to'etherwith lar'e costs for stoppin' an$ startin' pro$uction "a,e pulp pro$ucers !er& reluctant to close $own thepro$uction *ecause of that stoc,s are te"poraril& rather hi'h- until the "ar,et has foun$ a new e/uiliriu"an$ stoc,s are re$uce$%toc,s !ar& a lot also in the woo$ suppl& chain- not $ue to the "ar,et- ut $ue to the seasonalit& offorest "ana'e"ent he natural or tra$itional perio$s for har!estin' in %we$en in the forests are $urin'autu"n- winter an$ earl& sprin' his is ase$ on the seasons for the tra$itional co"ine$ forest an$a'riculture far"- which constitutes the core of the %o$ra "e"ers 7n the sprin'- su""er an$ earl& autu"n alla!ailale ti"e is $e$icate$ to a'riculture Once the nalfi crop has een har!este$- an$ the 'roun$

?i' ; +e!elop"ent of sales !olu"e (relati!e !alues) fro" Januar& 1999 until +ece"er 2001 ($ar, colour is softwoo$ an$ 0ri'htcolour har$woo$)

Sales

olume

344453

344452

,55553

,55552

,55353

,55352


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3555 cu6ic meter

55

#55

&55

,55

355

7an 1e6 mar apr ma7 7un 7ul aug sep okt no dec

?i' 5 ar!ests- "ill $eli!eries an$ stoc, of softwoo$ pulpwoo$ $urin' &ear 2000 ("3)

preparations ha!e een carrie$ out for the followin' 'rowth season- ti"e can e $e$icate$ to forestr&ar!estin' is then carrie$ out $urin' the perio$ until earl& sprin'- when the !olu"e is sol$ to %o$ra %,o'E!en thou'h nowa$a&s onl& a "inor part of the woo$ ori'inates fro" these co"ine$ far"s- thisseasonalit& is still !er& e!i$ent in the o!erall woo$ owfl his results in a hi'h suppl& of woo$ $urin' thesprin' an$ far less $urin' the su""er as is shown in ?i' 5 %ince $eli!eries to "ills ha!e fairl& sta0lepro lesfi fro" "onth to "onth- this causes the stoc, of pulpwoo$ to !ar& a lot o!er the &ear he crucialperio$ is often ust after su""er when the suppl& to "ills is planne$ he prole" is often to ha!e enou'hwoo$ for $eli!eries in u'ust an$ earl& %epte"er- until the woo$ fro" har!estin' operations startin' after the!acation perio$ eco"es a!ailale for $eli!er&

2; %uppl& chain at %o$ra ell

he co"plete suppl& chain at %o$ra ell * inclu$es har!estin'- transportation of lo's- pro$uction at the"ills- stora'e (at "ills- in forests an$ at harours)- $istriution to ter"inals & ship- stora'e at ter"inals an$$istriution & lorr& an$ train to custo"ers s it is $i cuffi lt to satisf& all pro$uction restrictions- an$ at thesa"e ti"e ,eep the total suppl& chain cost low the plannin' of the suppl& chain is a co"ple4 tas, Rapi$'rowth in %o$ra ellHs usiness "a,es it increasin'l& i"portant to accuratel& e!aluate how $ecisions a ectfftotal costs an$ to esti"ate the !alue of speci cfi pro$uction sche$ules8he "anual sche$ulin' strate'iesare ase$ on soli$ e4perience incorporatin' ,nowle$'e of possile unplanne$ occurrences such as stoppa'es inpro$uction an$ new une4pecte$ or$ers owe!er- the co"ponents of the suppl& chain are continuall&chan'in' as a result of new pro$ucts- new $e"an$s an$ the $e!elop"ent of new technolo'ies %o$ra ell hasi$enti e$fi the nee$ for a new $ecision support s&ste" to i"pro!e the /ualit& of their $ecision"a,in'with respect to plannin' ti"e an$ costs an$ to pro!i$e an increase$ e4ifl ilit& in the plannin'

8he o!erall picture of the suppl& chain is shown in ?i' 6 8he suppl& chain e'ins in the forests-t&picall& in har!estin' areas owne$ 0& the "e"ers of %o$ra %o$ra a''re'ates these areas into$o"estic suppl& forest $istricts 8he suppl& of raw "aterial inclu$es har!ests of soft an$ har$ woo$fro" these forests- to'ether with li"ite$ i"ports of raw "aterials fro" other countries- "ainl& Russia an$the *altic %tates 7t is possile to store har!este$ woo$ at a forest $istrict efore it is transporte$ to thepro$uction "ills an$ there are costs associate$ with this stora'e8he &pro$uct fro" saw"ills in


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Procurement :Harvesting , Transport

Production :Pulp production

Distribution:Haulage of pulp

Sales:Supplying the customer

Harvest calculation : (5yr) !orest policy implications

Domestic"#mport

Transport capacity

$ood supply balancing : (%yr)

&olume Domestic "#mport

Harvest volume per 'egion

$ood echange

$ood supply planning : (m)

'e*uirement per assortment

distributed per 'egion

+atchment areas: (%m) 'egion -ill per

assortment

.ac/haulage

+hipsechange

0perative transportation

&ehicle routing (Daily)

+ombination of other

transports

0perative transportation

&ehicle routing (Daily)

+ombination of other

transports

0perative: (Daily)

0rder"delivery process

?i' Alannin' hierarch& in the suppl& chain (%.7%upplier .ana'e$ 7n!entor&)

251 %trate'ic plannin'On the strate'ic le!el- "aor in!est"ents in the "ills to increase pro$uction or to i"pro!e the pro$uct/ualit& are planne$ hese in!est"ents are "a$e with respect to the "ar,et situation an$ a!ailailit& ofwoo$- in %we$en an$ elsewhere +ecisions as to which ter"inal structure to use for the $istriution as wellas the nu"er of !essels to charter on the lon' ter" are also ta,en on a strate'ic le!el %trate'ic plannin'for the sales inclu$es on a lon' ter" le!el which 'eo'raphic re'ions to wor, on- an$ the !olu"e relationetween $i erentff custo"er se'"ents (tissue- nefi paper etc) usto"ers that are strate'ic for the future"i'ht also e i$entifie$ $urin' this plannin'

8he %we$ish 'o!ern"ent re'ularl& re!ises the forest polic& 8o support the $ecision"a,in'- the%we$ish Bational *oar$ of ?orestr& (%,o'sst&relsen) pulishes esti"ations of the future har!estin' po2tential in $i erentff areas 'i!en $i erentff polic& alternati!es hese har!est calculations are an i"portantinput to the strate'ic woo$ suppl& plannin' of %o$ra %,o' he nee$ for future woo$ i"port is stron'l&

$epen$ent on the a"ount of woo$ it is possile to procure fro" "e"er forest owners (an$ others) in%we$en 7n the case when woo$ consu"ption is assu"e$ to increase- esti"atin' the e4tra transport capacit&nee$e$- woul$ also e inclu$e$ in the strate'ic plannin'

252 actical plannin'8he tactical plannin' is "ainl& ase$ on the annual u$'etin' an$ /uarterl& re!ision (forecastin'

perio$s use$ within %o$ra ell) he plannin' has a 12"onth rollin' horion he plan is re!ise$ whene!ernecessar&- 0ut at least on a "onthl& asis8he "onthl& re!isions focus on the followin' three "onths

Strategic planning : (5yr) #nvestments at mills Time chartering of vessels 1eographic regions

Terminal structure Segments

Strategic customers

.udgeting "Prognosis: (%yr) Production capacity per product +ustomer demands per

product

&olumes per product per mill

Transport volumes (purchase)

.udgeting "Prognosis: (%yr) +ontracts regular customers

2stimation other customers

0rders regular customers

2stimation other customers

S-#3forecasts

medium term

+alloffs regular customers 0rders other customers

S-#forecasts short term

Production planning : (m) +ampaigns per mill

#nventory planning (policies): &esselroutes"time tables

+hangeovers: (%m) !ine tuning of changeovers

(day"time)

s4t4 +ustomer orders, stoc/s

etc

0perative transport plan4:(%m)

&essel routing

oadplanning at mill

s4t4 Sea"Train"Truc/ volumes


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+urin' the sprin'perio$ there is- howe!er- alwa&s a nee$ to proect all plannin' until Jul&u'ust ecause this isthe crucial perio$ to cope with- fro" the perspecti!e of woo$ suppl& re!ision of the tactical plan starts withnew forecasts for sales of $i erentff pro$ucts to custo"ers 7nitiall& this plan is "ainl& ase$ on the input fro",e&account "ana'ers an$ sales o cesffi his plan is chec,e$ a'ainst pro$uction possiilities- an$ woo$restrictions Bor"all&- there are a few iterations efore the sales plan can e con r"e$fi*ase$ on the con r"e$fi sales plan- a pro$uction sche$ule which shoul$ account for pro$uction an$woo$ restrictions is $eri!e$ E4a"ples of pro$uction restrictions are the "a4i"u" or "ini"u" nu"er of $a&sa certain pro$uct can e run an$ the i$eal or necessar& se/uence of pro$ucts


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ter"inal location an$ "a,e $istriution & !essels "ore inte'rate$ an$ e cffi ient he last $escries the wor, toi"pro!e custo"er relations he rstfi an$ last $eal with suppl& chain "ana'e"ent#custo"er relationswhereas the other three are instea$ suppl& chain opti"isation proects- ai"in' to $e!elop "ore speci cfi$ecision support tools ?or each of the cases- we 'i!e a short ac,'roun$- a $escription of the prole"- theproect an$ its $e!elop"ent an$ so"e 'eneral results an$#or conclusions s "entione$ earlier- we $o not$escrie the "o$els an$ "etho$s in $etail as the purpose of the paper is to pro!i$e an o!er!iew of suppl&chain $e!elop"ent at %o$ra ell Aulp proect refi flow311 *ac,'roun$

7n the past forestr& in %we$en (an$ elsewhere) has continuousl& hel$ !er& lar'e stoc,s of pulpwoo$+urin' the 1960s an$ 190s when a lar'e a"ount of the annual woo$ suppl& was transporte$ on the ri!ers$urin' the sprin' oo$ifl n'- this was ine!itale he lar'e stoc,s- an$ with the" lon' lea$ti"es ha!e re"aine$ !er& lon' until latel& owe!er- the prole" with storin' pulpwoo$ for a lon' ti"e is that it eco"es $r&- an$ the ar, stic,s har$er to the woo$ his results in s"all parts of the ar, re"ainin' after$ear,in' (an$ so"e of the woo$ lost to the 0ar, pile) 7f the woo$ is $r&- the oilin' (or coo,in')che"icals use$ in the pro$uction process $o not penetrate the woo$ as well as with fresh woo$ *ecause ofthis- the consu"ption of che"icals is increase$ in the oilin'- an$#or resfi are lost ecause the& ha!e noteen separate$ $urin' the oilin' +rie$ woo$ also ten$s to result in a less white pulp- which therefore hasto e treate$ "ore hea!& in the leachin' process Are!iousl&- when leachin' was ase$ on the use of

chlorine 'as- which is !er& powerful- this was not a !er& i' prole" 7t was co"paral& cheap to ust a$$so"e "ore chlorine to leach the re"ain$ers of the 0ar, an$ $ar, rawpulp owe!er- when otherche"icals replace$ the chlorine leachin' at the e'innin' of the nineties ($ue to en!iron"ental reasons)-this eca"e a i' prole" he che"icals that were use$ instea$ ("ainl& o4&'en) were not as powerful aschlorine 7t has since eco"e crucial to ha!e access to fresh woo$ for pulp pro$uction

312 Arole"E!en thou'h stoc,s ha$ een 'reatl& re$uce$ since %o$ra intro$uce$ ?leachin'- stoc,s an$ lea$2

ti"es were still rather hi'h at the e'innin' of 199- when the proect was initiate$ ?or %o$ra ell it wasalso a $esire to re$uce the" further here was also a feelin' that the collaoration etween the twoco"panies (%o$ra ell an$ %o$ra %,o') coul$ e i"pro!e$

313 Aroect

he proect starte$ with a prestu$& where the whole suppl& chain was "appe$ an$ the perfor"ance inter"s of stoc, le!els an$ lea$ti"es was "easure$ he prestu$& showe$ that the total a!era'e lea$ti"efro" forest to pulp "ill was 9 $a&s ?urther"ore- onl& $urin' a fraction of that ti"e- were operationscarrie$ out to cut $own- haul or han$le the woo$ ?or "ost of the ti"e- the woo$ was ust l&in' in stoc,*ase$ on the prestu$& it was $eci$e$ that the lon'ter" 'oal for the woo$ suppl& woul$ e to re$uce thetotal lea$ti"e & half- fro" 9 to ;0 $a&s 7t was also $eci$e$ to e4pan$ the scope of the proect to inclu$ethe $istriution of pulp to custo"ers an$ a stu$& of tools for $ecision support in the whole chain 7t wasreco'nise$ that ha!in' a etter un$erstan$in' an$ control o!er the $istriution of pulp coul$ contriute tothe re$uction of the lea$ti"es in the woo$ suppl&

he tas, of achie!in' the 'oals of the proect was 'i!en to si4 $ifferent wor,in' 'roups>

+o"estic roun$woo$@

%aw"ill chips@


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7"ports@ Aro$uct /ualit&@ +istri0ution@ +ecision support

he rstfi three 'roups ha$ the i""e$iate responsiilit& of n$fi in' wa&s to re$uce lea$ti"es whereas thepro$uct /ualit& 'roup ha$ the tas, of esti"atin' the costs incurre$ in the pro$uction $ue to the use of un2fresh woo$ 8he other 'roups use$ these results to e!aluate the pro tfi of an& actions the& consi$ere$Representati!es fro" oth %o$ra %,o' an$ %o$ra ell wor,e$ to'ether in the 'roups in or$er to co!er 0oththe custo"er an$ supplier perspecti!e when stu$&in' the prole"s an$ n$fi in' the solutions31; Results

he proect en$e$ at the en$ of 1999- after al"ost two &ears of wor, t that ti"e the lea$ti"e ha$alrea$& een re$uce$ & appro4i"atel& 25 to 50 $a&s he wor, has continue$ after the proect was close$he lea$ti"e $urin' &ear 2000 was still 50 $a&s althou'h there was a "aor win$throw at the en$ of 1999that resulte$ in a !er& lar'e suppl& of woo$ $urin' the %prin' of 2000- an$ therefore lar'e stoc,s (see ?i'5) +urin' 2001 there were also lar'e win$throws- ut the lea$ti"e coul$ e "aintaine$ at appro4i"atel&50 $a&s

he $ecision support 'roup clearl& i$entifie$ the nee$ for etter $ecision support in the suppl& chainhe "ain ar'u"ent was that sustantial sa!in's coul$ e achie!e$ 7n a$$ition $ecision support tools werefoun$ to ha!e the ailit& to o erff 'reater transparenc& in the chain co""on s&ste" or "o$el- where thetotal suppl& chain is opti"ise$- woul$ 'i!e a etter co""on un$erstan$in' (etween or'anisations) ofwhich factors are i"portant in or$er to achie!e i"pro!e$ e cienc&ffi alon' the entire chain %e!eral co""ercial pac,a'es such as i2- .anu'istics- %A AO an$ Oracle A% were stu$ie$- ut unfortunatel& noneof the" were foun$ to han$le the %o$ra ell pro$uctionplannin' prole" acceptal& (learn "ore a0outthat prole" in %ection 33) he "ain reason was the prole" of accuratel& "o$elin' the possile pro2$uction plans at the tactical plannin' le!el (312 "onths)

he wor, within the $istriution 'roup resulte$ in a concept for the LLi$ealHH $istriution structurein

or$er to re$uce pulp stoc,s an$ lea$ti"es to custo"ers8his "eant that fewer ter"inals woul$ e use$an$ that %o$ra ell woul$ stri!e for $eli!erin' the pulp $irectl& to custo"ers- rather than at the ter"inals(learn "ore aout that prole" in %ection 3;)- as is the tra$ition in the pulp usiness (refer to %ection 12)

315 ?urther wor,he lon'ter" tar'et for the proect in ter"s of re$ucin' the lea$ti"e was a tou'h one- an$ wor, is still

'oin' on to reach it he or'anisation of re'ions an$ $istricts has recentl& een "o$i e$fi to "a,e it "orewoo$ owfl oriente$- which is e4pecte$ to contriute to the atte"pt of enhancin' the chain etween forestan$ pulp "ills nother outco"e was the start of a collaoration with in,opin' :ni!ersit& to $e!elop an$test $ecision support tools ase$ on OR


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in the pulplo's $eli!ere$ 9o's an$ saw"ill chips "a,e up the raw "aterials for the pulp in$ustr& in%we$en o$a&- the criteria for the sortin' of lo's are !er& 'eneral an$ it is usuall& the species of tree- as wellas the occurrence of rot an$ freshness that are consi$ere$ E4perience an$ stu$ies show that thisclassi cafi tion is not su cffi ient for a contents $eclaration of the woo$ pulp with respect to refi /ualit&ransportation cost is a lar'e proportion of the total cost- which "eans that the $istance etween har!est areasan$ in$ustr& is i"portant Other costs are those associate$ with u&in'- har!estin' an$ forwar$in'here e4isttools ase$ on opti"isation that support transportation planners to n$fi e cffi ient ac,haula'e tours for thelorries- see e' arlsson an$ Ronn/!ist (1998) 7f sortin' is increase$- the a!era'e trans2 portation $istancewill increase proect was set up to $e!elop a $ecision tool that supports the planners in inte'ratin' sortin'$ecisions with transportation

322 Arole"Keo'raphical location is a "ain consi$eration for the $istriution of pulplo's 7f an in$ustr& $e

"an$s pulplo's with a special /ualit&- the tra$itional catch"ent area will e altere$- partl& for theco"pan& that i"pose$ the $e"an$- 0ut other in$ustries will e a ecte$ff too catch"ent area is the'eo'raphical area which supplies a 'i!en in$ustr& with a 'i!en assort"ent his chan'e in /ualit&re/uire"ents results in increase$ transportation costs if the pulpwoo$ is not a!ailale in the presentcatch"ent area ?urther classif&in' of the lo's "eans that "ore sortin' "ust ta,e place at the ti"e ofhar!estin'

he sortin' of the pulplo's can e $one in "an& $i erentff wa&s +i eff rent sites- classes of tree an$ partsof the tree are e4a"ples of the asis for sortin' which are $iscusse$ One reason wh& pulplo's ha!e not eensorte$ into se!eralassort"ents is the sortin' costs- which are hi'h in relation to the !alue of the woo$8hecosts are $ue to se!eralfactors he "ain one is that "ore assort"ents lea$ to "ore co"plicate$ uc,in'an$ therefore hi'her fellin' costs .an& $ifferent t&pes can lea$ to a lac, of stora'e places an$ increase$costs for preparin' these .ore assort"ents also result in increase$ a$"inistrati!e costs 7n 'eneral- it cane sai$ that the "ore t&pes within one har!est area- the 'reater the sortin' costs will e

%upport for transportation plannin' an$ in!esti'atin' what potential there is for return owfl (orac,haula'e tours) e4ists- see e' arlsson an$ Ronn/!ist (1998) ?i' 8 illustrates a t&pical ac,haula'etour 7n Je0& there is a saw"ill re/uirin' saw lo's an$ in allsta!i, there is a pulp "ill One si"pleapproach to n$fi feasile solutions is to use $irect ows-fl which is to ta,e pulp lo's in the area3asterasan$ $eli!er to allsta!i,- an$ then 'o ac, an$ forwar$ si"ilar solution is for the saw lo's in the areaBorra to e transporte$ to e&


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?i' 8 n e4a"ple of a ac,haula'e tour "a$e up & two $irect owsfl

an$ coe cffi ients are use$ 7n the "o$el we restrict oursel!es to return owsfl consistin' of at "ost two$irect owsfl

1 if sortin' alternati!e s is use$ in area i!is " 0# otherwise$

yi%& " owfl of assort"ent & fro" area i to area%

i%& " owfl of assort"ent & fro" area i to area% followe$ & a owfl of assort"ent r fro" areap to area '

+ata

ais&> a"ount of assort"ent & a!ailale in area i for sortin' alternati!e sd%&> $e"an$ of assort"ent & at in$ustr&%cis> cost to use sortin' alternati!e s in area i

ei%& > unit transportation cost for assort"ent & fro" area i to in$ustr&%

i%& > unit transportation cost for assort"ent & fro" area i to in$ustr&% followe$ 0& transportation ofassort"ent r fro" areap to in$ustr& '

7n or$er to si"plif& the notation in the "o$el we intro$uce the followin' in$e4 sets 9et I e the set ofareas- S(i) the set of all sortin' alternati!es in area i- * the set of in$ustries- an$ + the set of all assort"ents 7nor$er to satisf& the $e"an$s of a "ill- se!eralassort"ents can e use$ for the sa"e $e"an$ 8o "o$el this-we ha!e intro$uce$ sortin' 'roups constitute$ of se!eralassort"ents

,p'r

-p'r


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"in. . .

ei%& yi%&/. . . . . .

-p'r p'r

.

.

cis!is

i2I

suect to

%2* &2+ i2i %2* &2+ p2I '2* r2+ i2I s2S(i)

.

!is " 1 i 2 I# (1)s2S(i).

yi%&/. . . .

,p'r

.

ais&!is i 2 I# & 2 +#

(2)%2* %2* p2I '2* r2+ s2S(i)

i%& " d%& 0% 2 * # & 2 +# (3)i2I i2I p2I '2* r2+

!is 2 -0#1g i 2 I# s 2 S(i)#(;) yi%& 1 0 i 2 I# % 2 * # & 2 +#

(5) i%& 1 0 i# p 2 I# %# ' 2 * # r 2 +$

(6)

he rstfi two ter"s in the function 'i!e the transport costs for all the $irect an$ ac,haula'e owsfl 8he lastter" 'i!es the sortin' costs onstraints (1) "eans that e!er& area shall ha!e e4actl& one sortin'alternati!e onstraints (2) "eans that the owfl out of $istrict i of assort"ent & cannot e "ore than thesuppl& of the assort"ent 'i!en the $i erentff sortin' alternati!es onstraints (3) sa&s that the owfl intoin$ustr&% of assort"ent & shall e the sa"e as the $e"an$ onstraints (;) states that the !ariales are li"ite$to ein' 0#1 !ariales onstraints (5) an$ (6) are nonne'ati!it& constraints 7n or$er to otain a feasileinte'er solution- we use a ranchan$oun$ techni/ue which is ase$ on sol!in' 9inear Aro2 'ra""in'(A)rela4ations where the rela4e$ inar& !ariales are 4e$fi usin' special ranchin' strate'ies- see e' *arnhartet al (1998) here are a !er& lar'e nu"er of possile return owsfl an$ these cannot e represente$ $irectl& inthe "o$el 7nstea$- a techni/ue ase$ on colu"n 'eneration is use$- which $&na"icall& 'enerates thereturn owsfl $urin' the solution process .ore infor"ation can e foun$ in arl'ren et al (2000)32; Results

he "o$el was teste$ in three el$fi stu$ies 7n the rstfi stu$&- we ha!e a case that is ase$ on four pulp

pro$ucers> &lte- .orru"-B&"olla an$ aro his stu$& also inclu$es co"panies outsi$e %o$ra 7n thiscase- the spruce pulpwoo$ shoul$ e sent to &lte while aro shoul$ ha!e at least 50I of the total !olu"efro" the thinnin' process or fro" the tops after the nalfi fellin' 7n ?i' 9 we illustrate the sortin' $ecisionswithout an$ with ac,haula'e possiilities 8he na"es represent $ifferent assort"ents illustratin' thesortin' $ecisions use$ 7n this case- there were si4 $i ereff nt alternati!es an$ three were use$ One is to sortthe pulp lo's in species %pruce an$ Aine- an$ thinnin' lo's 7n ?i' 10 we illustrate how the catch"ent areafor one of the "ills- &lte- is a ecte$ff 7n oth cases we can clearl& see that & usin' ac,haula'e tours wecan inclu$e "ore sortin' an$ that the catch"ent area is lar'er

7n a secon$ stu$&- the "o$el is teste$ a'ainst $ata fro" %o$ra onl& he $ata concerns %o$ra %,o'Hsco""it"ent towar$s oth its own an$ e4ternal plants $urin' the perio$ of one "onth he "aorit& of thepulpwoo$ is $eli!ere$ to its own pro$uction plants 7t is fro" these plants that $e"an$s arise for sortin'the raw "aterials with respect to thinne$ woo$ an$ nalfi felle$ woo$ 8he "o$el is use$ to stu$& the

conse/uences of this $e"an$ 7n a thir$ el$fi stu$& we a$$e$ owfl of ti"er to saw"ills into the "o$el tosee how this a ectsff the sies of catch"ent areas an$ the sortin' strate'& his ha$ a positi!e e eff ct as thetotal transportation cost coul$ e re$uce$ he s&ste" pro!i$es an i"portant tool in or$er to in!esti'atethe cost ene tsfi of re/uirin' a etter /ualit& of the raw "aterial his increase$ cost is then to e 0alance$a'ainst the cost sa!in's in the pulp an$ paper pro$uction

i%& ,i%& /

i%&6

yi%&/

,p'r


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?i' 9 %ortin' $ecisions in case 1 where ac,haula'e is not accounte$ for (left) an$ where it is (ri'ht)

?i' 10 Opti"al catch"ent areas for the paper "ill &lte (locate$ in the sha$e$ area) if ac,haula'e tours are not inclu$e$ (left) an$ if the&are (ri'ht)

he sie of the "o$el $i ersff for the stu$ies he nu"er of constraints is in the ran'e 5003000- thenu"er of 0#1 !ariales 2001000- the startin' nu"er of continuous !ariales 200020-000 he potentialnu"er of ac,haula'e tours is in the "illions he "o$el is "ainl& a tool for strate'ic $ecisions on whichassort"ents to purchase fro" "e"ers in $i erentff re'ions)ssuch- it will "ainl& e use$ in the strate'ic 5 &earplannin' an$ the annual u$'etin' process


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33 Aroect 3> Aro$uction an$ $istriution plannin'

331 *ac,'roun$Aro$uction plannin' for a 'roup of pulp "ills is nor"all& $one on a rollin' horion of three"onths

his "eans that a plan is "a$e for the ne4t three "onths ut that a new plan (for three "onths) is "a$e- inour case- after one "onth his is ecause of un,nown e!ents that ha!e occurre$ an$ it is etter to $e!ise anew plan efore the en$ of the plannin' perio$ ?or a 'i!en perio$- pro$ucts are pro$uce$ in $i erentff si6e$atches o!er a perio$ of one $a& to three wee,s +epen$in' on which pro$uct is pro$uce$- $i erentff/uantities of assort"ents are use$ *etween two atches there is alwa&s a 4e$fi setup cost $ue to e' alower pro$uction rate or a less /ualitati!e "i4 of pulp $urin' a chan'eo!er perio$ o'ether with the 0atchplannin'- there is also a nee$ to $eci$e transportation- catch"ent areas- stora'e le!els an$ $eli!eries tointernational ter"inals an$#or custo"ers here are lar'e ufl ctuations in the stora'e of pulpwoo$ in forestsan$ pro$uction usa'e of pulpwoo$ at the "ills ?i' 11 illustrates the !ariations o!er si4 "onths in 2000he $ail& !ariations for one assort"ent are shown his inclu$es $eli!eries- stora'e an$ consu"ption ofpulp lo's in the pro$uction proect was set up to stu$& the possiilities of $e!elopin' a $ecision supports&ste" for the o!erall plannin' n i"portant aspect was transparenc& when wei'hin' pro$uction pro2$ucti!it& (ie lon' ca"pai'ns) a'ainst lo'istical pro$ucti!it& (ie shorter ca"pai'ns- short transport $is2tances- low stoc,s) an$ ser!ice aspects (ie shorter ca"pai'ns- "an& calls 0& !essels)

332 Arole"8he pro$uction plans are create$ on $i erentff plannin' le!els ?irst a plannin' perio$ of one &ear is

consi$ere$- where& rou'h sche$ules are pro$uce$ hese are "a$e "ainl& usin' forecasts of $e"an$ forthe upco"in' &ear %econ$- a "ore $etaile$ sche$ule co!erin' three "onths for each pulp "ill which showswhat is pro$uce$ on a $ail& asis is $e!elope$ hese sche$ules are suppose$ to "eet $eter"ine$ $eli!eriesan$ to pro!i$e a alance$ pro$uction accor$in' to the suppl& of raw "aterials Onl& one pro$uct (pulpt&pe) can e pro$uce$ at each pulp "ill at a ti"e Aro$uction is $one in ca"pai'ns- which are se/uences of$a&s pro$ucin' the sa"e pulp t&pe here are "an& factors affectin' the pro$uction- oth o!ious ones

?i' 11 +ail& !ariation of $eli!eries- stora'e an$ consu"ption in the pro$uction of one assort"ent


19/28

such as li"ite$ capacities for stora'e an$ transportation- ut also less o!ious factors ase$ on e4perience


20/28

"o$els for the pro$uctionplannin' prole" (.o$el an$ *) he first "o$el- .o$el - uses !arialesrepresentin' pro$uction plans for in$i!i$ual "ills co!erin' all three "onths natural solution approach-which we ha!e a$opte$ for this "o$el- is colu"n 'eneration he suprole"- to 'enerate new colu"ns- use$to 'enerate pro$uction plans inclu$es restrictions on the "ini"u" an$ "a4i"u" len'ths of eachca"pai'n- an$ ta,es into consi$eration the chan'eo!er costs of switchin' etween pro$ucts 8his suprole" can e for"ulate$ as a shortest path prole" he colu"n 'eneration is inte'rate$ with a li"ite$ranchan$oun$ search usin' constraint ranchin' to n$fi inte'er solutions 8his techni/ue is use$ inR&an (199) an$ *arnhart et al (1998) 7n the secon$ "o$el- .o$el *- we use inar& !ariales representin' thee4plicit $ecisions of which pro$uct to pro$uce on each $a& he li"itations of this si"pli e$fi approach arethat it $oes not inclu$e "a4i"u" len'ths of ca"pai'ns an$ pro!i$es a lower le!el of $etail in thepro$uction plan co"pare$ to the colu"n 'eneration approach*esi$e these inar& !ariales we use a set of continuous ones liste$ elow>

?low !ariales to $eci$e the a"ount of lo's transporte$ fro" each $istrict in each ti"e perio$ to eachpulp "ill ?low !ariales to $eci$e the a"ount of pro$ucts transporte$ fro" ter"inals to $o"estic custo"ers ariales to $eci$e the a"ount of each lo' t&pe store$ at each pulp "ill in each ti"e perio$ ariales to $eci$e the a"ount of each pulp pro$uct store$ at each pulp "ill in each ti"e perio$

8he constraints use$ in 0oth "o$els are as follows ?irst there are owfl conser!ation constraints atstora'e locations in forest $istricts an$ at $o"estic harours *ecause of factors in the transport plannin'- it isnot realistic to allow the inflow to !ar& "ore than appro4i"atel& 10I fro" a 4e$fi le!el


21/28

can see a potential sa!in' of etween 5I an$ 10I he total cost for a three"onth perio$ is appro4i"atel&12 "illion Euros ll our "etho$s 'enerate$ solutions with "ore chan'eo!er of pro$ucts (shifts etweenrecipies)- an$ so"e solutions e!en inclu$e "uch "ore e4pensi!e chan'es- that $o not appear to e the "ostpro tafi le plannin' owe!er- when consi$erin' the co"plete suppl& chain it shows that the costs for thepro$uction plans onl& represent a "inor part of the o!erall suppl& chain cost

he "o$el will e use$ in the annual u$'etin' process as well as in the /uarterl& re!isions 7t will alsoe use$ "onthl& in the operati!e plannin' when the pro$uction plans are nefi tune$ with respect to thecurrent or$er situation etc

3; Aroect ;> er"inal structure an$ $istri0ution

3;1 *ac,'roun$7n 2000 %o$ra ell * ou'ht two pulp "ills locate$ in Borwa& fro" the co"pan& Bors,e %,o'8hese

"ills ha$ their own custo"ers an$ a $istriution s&ste" si"ilar to %o$ra ?ro" this ac/uisition- %o$ra thenha$ aout 1 ter"inals where so"e are situate$ close to each other he "er'er of the two $istri0utions&ste"s resulte$ in a surplus of ter"inals continuous stri!in' has therefore een to re$uce the nu"er of

ter"inals t rstfi

the prole" can e !iewe$ as a facilit& location prole" owe!er- thefi

4e$ costassociate$ with each ter"inal is rather s"all as co"pare$ to the shippin' cost *ecause of this- there is anee$ to inclu$e $ecisions on an$ selection of shippin' routes .oreo!er- as the own shippin' capacit& isli"ite$ it is also a nee$ to estalish which routes shoul$ e allocate$ to spot !essels proect was set up to$e!elop an opti"isation "o$el that can e use$ as a tool to in!esti'ate $i erentff scenarios

3;2 Aro0le"*oth short an$ lon'ran'e plannin' of pulp pro$uction occurs throu'hout the &ear On one si$e of the

suppl& chain is the custo"er $e"an$- oth $o"estic an$ fro" outsi$e %we$en here are a total of a0out15 $eli!er& points sprea$ across Europe- see ?i' 1; out 80I is $eli!ere$ outsi$e %we$en an$ Borwa&+eli!eries in %we$en an$ Borwa& are nor"all& $one 0& train or lorr&8o suppl& the international cus2to"ers there are three possile "o$es of transportation 7n or$er of i"portance these are !essel- train an$lorr&

8he !essels within %o

$ra %hippin' $eli!er aout 0 "illion tons of pulp pro$ucts to internationalharours ouple$ with each harour there is a ter"inal use$ & %o$ra 7n a$$ition to these ter"inals thereare also a few other ter"inals reachale & ar'e he ship routes !ar& in len'th of ti"e fro" aout si4 $a&sfor northern Ker"an& to aout 25 $a&s for 7tal& 7n a$$ition to their own eet-fl !essels are use$ which arechartere$ short ter" (spot !essels) ?ro" each ter"inal- the pulp pro$ucts are transporte$ to a nu"er ofcusto"er $eli!er& points his is han$le$ & lorries or train or a co"ination of oth 7n a$$ition there isinternal transportation etween ter"inals er"inals an$ associate$ stora'e capacities are rente$ in annuala'ree"ents an$ the cost associate$ with a ter"inal is a co"ination of a 4e$fi cost an$ a continuous costase$ on the actual throu'hput ransportation plannin' is $one to'ether with the pro$uction plannin'an$ is nor"all& $one on a rollin' horion of three "onths

he "ost e cieffi nt ship route woul$ e to loa$ at one of the %we$ish ports associate$ with one pulp "illan$ then unloa$ at one international harour#ter"inal ?i' 15 illustrates possile ship routes in BorthernEurope owe!er- $ue to pro$uction plans- stora'e le!els an$ the sie of custo"er or$ers- stan$ar$ shiproutes are to loa$ at two %we$ish ports an$ unloa$ at two harours#ter"inals here is a elief within%o$ra that the nu"er of ter"inals shoul$ e re$uce$ consi$eral& ar'e ter"inals ha!e so"e positi!ee ectff s ?irst-there will e a s"aller total 4e$fi cost associate$ with the han$lin'- an$ secon$l&- the a"ount$eli!ere$ to the ter"inal woul$ e of such sie that ships coul$ unloa$ its full car'o at one ter"inal "orefre/uentl& ence- "ore ti"e e cieffi nt routes coul$ e use$ he $rawac, is a lar'er $istriution cost fro"the ter"inal to custo"er $eli!er& points


22/28

?i' 1; +eli!er& points in Europe an$ $istriution ter"inals

?i' 15 n e4a"ple of route choices in northern Europe


23/28

3;3 Aro5ecthe proect co!ers the strate'ic an$ tactical "o$ules of LL+istriutionHH in ?i' - an$ theLL.ar,etin'

$epart"entHH an$ LL%o$ra %hippin'HH in ?i' 3 7n the proect we ha!e $e!elope$ a "athe"atical "o$elthatco"ines the aspects $escrie$ ao!e no!el aspect of the "o$el is that it co"ines a facilit& locationaspect with ship routin' he "o$el can also e !iewe$ as a suppl& chain "o$el where the ter"inals arepotential $istriution centres he oecti!e is to "ini"ie the annual cost co"prisin' of ter"inal costs an$transportation costs he sets of !ariales use$ are>

*inar& !ariales representin' which ter"inals to enter into contract with *inar& !ariales to $eci$e the sie (ie throu'h ow)fl of each ter"inal ?low !ariales to $eci$e the a"ount of pro$ucts transporte$ accor$in' to a set of possile ship routes

his is intro$uce$ for %o$raHs ships as well as for the spot ships ?low !ariales to $eci$e the a"ount of pro$ucts transporte$ etween ter"inals an$ etween ter"inals

an$ custo"er $eli!er& points ?low !ariales to $eci$e the a"ount of pro$ucts transporte$ $irectl& etween pulp "ills an$ custo"er

$eli!er& points 0& train an$ lorr&- respecti!el&

he constraints use$ are>

9i"ite$ pro$uction capacit& at pulp "ills i"ite$ shippin' ti"e for the own eetfl usto"er $e"an$ ?low conser!ation at ter"inals 9i"ite$ ter"inal capacities Route proportion restrictions

he last set of constraints is use$ to li"it the nu"er of $irect routes (ie routes with one unloa$ point) forter"inals with s"all total throu'h owfl his is ecause ships "ust $eli!er on a re'ular asis an$ it is not feasileto use a few ships for this Aroportions !ar& $epen$in' on the ter"inal sie 8he restrictions $eter"ineli"its on the proportion of $irect routes co"pare$ to the other routes with two or se!eral unloa$in'points3;; Results

he nu"er of inte'er !ariales in the "o$el is in the ran'e 100500- the nu"er of constraints 10005000- an$ the nu"er of continuous !ariales 10-000100-000 %olution ti"e with a co""ercial 7A2sol!erto 'et within 01I of the opti"al solution is aout 20 "inutes on a 1 KJ6 A One $i cuffi lt an$ ti"e2consu"in' part is to collect the necessar& $ata


24/28

$i erentff ter"inal structures an$ will in the future e use$ as a $ecision support in the annual u$'etin'process of %o$ra ell

35 Aroect 5> usto"er relationspulp ser!ices> Aulp lo'istics- pulp 78

351 *ac,'roun$O erin'ff a$$e$ !alue to custo"ers is an i"portant part of the %o$ra ell strate'& for the future 8he

strate'& is na"e$ KA% in accor$ance with its three "ain ele"ents>

Krowthto achie!e a "ar,et share for softwoo$ pulp (B*%=) of "ore than 20I in


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?i' 16 Result fro" the en/uir& on willin'ness to inte'rate in the suppl& chain l"ost 50I of the custo"ers were willin' to wor, "oreclosel& in plannin' the $eli!eriesan$ as shown 0& the replies to the ao!e /uestion- the& were !er& open to inte'rate their usiness intothe %uppl& hain Alannin'

?i' 1 he $i erentff parts of the Aulp%er!iceseconcept

he last two ser!ices are relate$ to the $e!elop"ent of the suppl& chain his allows custo"ers to>

Or$er pulp online either throu'h a $irect lin, etween %o$ra ell an$ their custo"ersH usiness s&ste"-or on the we 9et %o$ra ell ta,e care of the lo'istics all the wa& to the site where the pulp will e consu"e$

9et %o$ra ell also ta,e care of the stora'e of pulp at the consu"ption site (%.7%upplier .ana'e$7n!entor&) Ket speci cfi /ualit& $ata on the pulp units ein' $eli!ere$ either s&ste"s&ste" or on the we

8he Aulp%er!iceseconcept was launche$ on %epte"er 12- 2002 %o"e pilot proects within Aulp9o'istics an$ Aulp 78 were alrea$& runnin' at that ti"e %o far- %o$ra ell is en'a'e$ in %.7s&ste"s withthree "aor custo"ers- an$ there is an interest to start a"on' others One custo"er is or$erin' $irectl&throu'h 7lin,s


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?i' 18 Esti"ation of pulp stoc,s in the %uppl& hain- an$ the potential to re$uce wor,in' capital 7t is assu"e$ that 50I of the stoc, coul$e re$uce$ if an %.7s&ste" is intro$uce$ ase$ on etter plannin' of pro$uction an$ lo'istics

35; ResultsE4perience fro" the sales !alue initiati!e is so far !er& positi!e *& offerin' to ta,e o!er the responsi0ilit&

for lo'istics an$ stoc, "ana'e"ent in the whole chain- there is an incenti!e for the custo"er %o$ra ellcan help the custo"er re$uce the wor,in' capital tie$ in the pulp stoc, rou'h esti"ation shows that ona!era'e this a"ounts to appro4i"atel& 10I of the "one& the custo"er spent on u&in' pulp each &ear (see?i' 18)

he incenti!e for %o$ra ell with the %.7s&ste" is to 'et infor"ation ac, fro" the custo"er specif&in' planne$ consu"ption in the short an$ "e$iu" ter" *ase$ on this infor"ation- %o$ra ell canetter plan what to pro$uce in the "ills an$ what to $istriute to ter"inals owe!er- a$!ance$ plannin'support is nee$e$ in or$er to ta,e full a$!anta'e of this infor"ation his is one ar'u"ent for the %o$raell collaoration with 9in,opin' :ni!ersit& in $e!elopin' an opti"isation "o$el for the pro$uction an$

$istriution plannin' nother reason for %o$ra ell to initiate this wor, is the elief that it o ersff aco"petiti!e a$$e$ !alue to custo"ers

. 3onclusions and recommendations


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ha!e trust in the "o$el@ that it captures the essential factors to e accounte$ for when ta,in' the $ecision 7t willthen increase the un$erstan$in' in what wa& $i ereff nt aspects of the prole" a ectff the opti"al $eci2 sionnother i"portant contriution is to use the "o$els to test $ifferent scenarios an$ to "a,e sensiti!it& anal&sesof current plans 8his is not possile with "anual plannin' as it is too ti"econsu"in' 8he "o$ules $onot ha!e to pro!i$e the nalfi plan ut instea$ the& shoul$ pro!i$e the planners with initial plans of hi'h /ualit&that are $eri!e$ /uic,l& "aor prole" in the practical use of "o$els such as the ones presente$ in this paper is the suppl& of$ata .ost of the necessar& $ata e4ist in the usiness s&ste"- ut how $o &ou 'et it fro" the s&ste" to the"o$elM .an& ti"es a''re'ations- or $isa''re'ations- ha!e to e perfor"e$ an$ or$ers place$ ha!e to e

oine$ with plans of !arious accurac& to for" the $ata the "o$el nee$s %o"eti"es $ata is lac,in' in thes&ste" s an e4a"ple- there are t&picall& onl& $ata (cost an$ ti"in' etc) aout the transport routeshistoricall& use$ in the usiness s&ste"- whereas when opti"isin' it is interestin' to ha!e also other options forthe "o$el to e4plore +ata fro" $i erentff sources ha!e to e oine$ an$ "aintaine$ so it is up$ate$ an$accurate ccurac& is of course crucial if the results fro" the "o$el can e consi$ere$ trustworth& 7$eall& the$ata suppl& is full& auto"ate$ an$ inte'rate$ to the usiness s&ste" 7t is- howe!er- i"portant that the "o$elsare use$ e!en thou'h that is not the case .an& co"panies see" to ha!e the strate'& to first 'et the perfectusiness s&ste" with all ,in$s of infor"ation in it- an$ then start to $e!elop the plannin' support ) lot can e$one to e4tract $ata fro" "ost usiness s&ste"s- for use in "o$els for plannin' support i""e$iatel&with fairl& si"ple se"i"anual "eans (while the 7$e!elop"ent 'oes on in parallel)8his "eans "ore wor,-0ut at the sa"e ti"e pro!i$es the opportunit& of ene tin'fi fro" the opti"isations $irectl&lthou'h there are se!eral co""ercial ERA an$ a$!ance$ plannin' s&ste"s a!ailale- there are se!eralreasons wh& %o$ra ell has chosen to $e!elop its own OR "o$els an$ "etho$s 7n proect 3- the co""ercial pac,a'es $i$ not ha!e enou'h possiilities to "o$el the $etaile$ pro$uction situation 7n proect 2- thesa"e situation was true for the $etaile$ an$ co"ine$ har!est#sortin' an$ transportation plannin' 7n proect;- it is possile to use such a s&ste" ut here it was also possile to "a,e use of earlier $e!elop2 "entsnother reason to use tailore$ OR "o$els an$ "etho$s is the strate'& $escrie$ ao!e to slowl& "o!e fro"a "anual to an auto"ate$ s&ste" One future approach is to a$$ the tailore$ "o$ules as a$$2in co"ponents toco""ercial s&ste"s

4e-erences

*arnhart- -Johnson- E9- Be"hauser- K9- %a!elser'h- . olu"n 'eneration for sol!in'hu'e inte'er pro'ra"s Operations Research ;6 (3)- 316332*re$stro"- +- 9un$'ren- J- Ronn/!ist- .- arlsson- +- .ason- - 200; %uppl& chain opti"iation in the pulp "ill in$ustr&7A

"o$els- colu"n 'eneration an$ no!el constraint ranches European Journal of Operational Research 156- 222arl'ren- K- arlsson- +- Ronn/!ist- .- 2000 %election of sortin' strate'ies in har!estin' inte'rate$ with ac,haulin' 9i8J2

.R200018- 9in,opin' :ni!ersit&- %we$enarlsson- +- Ronn/!ist- .- 1998 actical plannin' of forestr& transportation with respect to ac,haulin'- 9i8J2.)82R199813-

9in,opin' :ni!ersit&- %we$enEpstein- R- .orales- R- %eron- J-


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Ronn/!ist- .- 2003 Opti"iation in forestr& .athe"atical Aro'ra""in'- %eries * 9- 2628;%hapiro- J?- 2001 .o$elin' the %uppl& hain- +u40ur&a&ur- %- Kaneshan- R- .a'aine- .- 1999 Nuantitati!e .o$elsfor %uppl& hain .ana'e"ent =luwer ca$e"ic Aulishers-+or$recht

(479917700) 2005. carlsson, d., ronnqvist, m. supply chain management in forestry- case studies at...

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