Oiling the supply chain wheels
Dr Carel Bezuidenhout.
Shaping supply chains into value chains is something Dr Carel Bezuidenhout and his team excel in.
Carel is Scion’s Science Leader for Value Chain Optimisation, a small dedicated team of systems’ analysts who specialise in ironing out the complexities of supply chains, analysing market opportunities and making operations run more efficiently. Or, as Carel terms it, fine-combing the details and connecting the dots.
“A supply chain is about making money by producing, moving and marketing products,” says Carel. “On the other hand, a value chain is more about alignments where companies with similar business models synergise and innovate to create unique win-win opportunities.
“Our team has a strong mathematical modelling background, but the real key to driving value chain optimisation lies in creating teams with the right skills across Scion’s broad range of disciplines, and appreciating the different business realities along the supply chain. A considerable amount of value chain research involves understanding the people who make the decisions along the supply chain.”
Although it’s early days for the team, they have already begun to analyse data that describe product flow and stockpiling to quantify the forestry supply chain’s degree of leanness and agility. As Carel explains, this should fit the business models and the nature of the markets, otherwise the supply chain may not be fit for purpose.
“On one hand we have lean operators who try to reduce all forms of wastage. They operate in a commodity market with a high turnover and small margins, so the focus is often on volume and consistency. At the other end are some manufacturers that need a greater choice in timber because they make a range of products for different markets and need to adapt to suit market demand.
“The best way to measure how well a supply chain is working is by evaluating the size and fluctuations of the stockpiles. There are always going to be fluctuations due to the variability in log prices, market demand and upstream variability, but it’s how well that variability is managed that makes the difference.”
Although the drive is towards increasing domestic processing, log exports form a substantial component of the forestry industry. The various port and shipping logistics activities happen independently of each other, and often no single entity assumes responsibility for streamlining port activities as a whole.
According to Carel, there is significant scope to benchmark and simulate port activities in order to ensure operations are world class. Likewise, there are opportunities for individual log exporters to evaluate the efficiency of their multi-port operations. The VCO team has already initiated work in this area.
Log Price Outlook
Carel also introduced a Log Price Opinion Index earlier this year to gauge a better idea of future log prices. This three-monthly web-based survey provides a speculative log price forecast based on informed opinions. This is a unique initiative in the New Zealand forestry industry that asks log traders and others within the industry to think about what is likely to happen to log prices over the coming months, and to vote confidentially online. The team collate and graph this information and share it with those who participated.
This information adds to the wealth of data the team is gathering about performance, markets, networks and concerns from industry stakeholders throughout the supply chain, ranging from growers to traders and manufacturers, to be modelled and re-shaped into fit for purpose value chains.