Speaker
Description
Forest operations managers handle multiple sources of uncertainty when planning wood supply. Wood sourcing for Nordic forest industries typically include both internal and external suppliers, where the first-line for solving operational deviations from delivery plans involves re-planning of internal supply operations.
This paper presents an adaptation of the typical monthly wood supply plan in order to quantify the risk of varying supplier portfolios.
The approach is used in masters-level instruction in industrial wood supply. The student exercise is done in 3 steps over 2 teaching days. The first step consists of selecting a supply structure aimed to secure year-round supply to a generic pulp mill. The mill supply structure is defined by students’ selection of annual wood orders from 5 supplier categories (2 internal and 3 external). An initial tactical plan is drafted for monthly deliveries per supplier category to maintain monthly stock intervals. At this stage the planning is purely determinstic, and can be assisted by an initial optimization, including consideration to seasonal trends for wood availability. The second step is then to test the draft plan using Monte Carlo simulation with supplier-specific distributions of monthly demand fulfillment. The resulting frequency of stock levels exceeding defined goal intervals is then used to adjust the annual order from the respective supplier categories. After adjustment, the third step is to explore internal responses to reduce the risk for exceeding the goal stock intervals. The response options include i) time horizon for response and ii) strength of response.
The distributions of monthly demand fulfillment (%) for the respective supplier categories are described with a 2-parameter gamma-distribution. The estimation of the gamma parameters is based on 2 years of pulpwood deliveries to Swedish SCA from 25+ external supply organizations and 6 internal supply regions. Multivariate clustering was used to segment the suppliers into six main categories, including spot contracts. The respective distributions were estimated in relation to two base-lines: i) originally contracted monthly volumes and ii) revised monthly contract volumes.
The approach enables adaptation of a typical monthly master plan to simulate various supply system risks. The approach serves well as a practical introduction to understanding uncertainty and risk in wood supply.
| Keywords | uncertainty; risk; tactical planning |
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