Benchmarking Procurement Cost Saving Strategies for Wood Supply Chains

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.

Automated summary

The study reveals that integrated wood supply chains can achieve cost savings potential of up to 24% through coordinated cost-saving strategies, with higher truck payloads further increasing the savings potential to 40%. However, for the wood procurement situation in Central Europe, achieving wood supply chain integration may only be feasible for a limited consortium of a few companies, especially when restricted to a wood-buying syndicate supplying multiple industry plants or a few large forest enterprises.