Module A9 – Supply chains, asset management and investment planning

Introduction

For the forest industry, as with any other industry, several key components are essential for operational success. These include capital for machinery investments and prioritising long-term maintenance. Therefore, effective asset management, supply chain and investment planning are crucial aspects of ensuring productive operations.

In this module, you will gain a deeper understanding of the significance of supply chain and asset management, as well as the importance of investment planning.

Supply chain management

A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. Supply chain management is the overall management of:

Products
Information
Time
Money

In the forest industry, the delivery chains form main parts of the supply chains (Figure 1). Deliveries are made from the forest to the production plants and to the final customer. The final stage in a delivery chain is from the use of a product to its recycling.

Additionally, supply chain management includes the costs arising from:

goods negotiation
on-time delivery management
quality audits and management
product development.

Sales and operations and performance measurement in the supply chain are described in Learning Path B in module 5.

Asset management

In asset care, the asset brings return on the purchasing costs. The better the asset functions, the better is the return. Asset management forms asset care into a systematic, planned, and manageable form.

Maintenance is one of the most significant key success factors for a company. A company with effective maintenance management gets higher profits. Also, good maintenance results in improved plant asset management.

Investment planning

All companies conduct business planning with different time horizons and make strategic decisions on investments either to maintain their current assets or develop new businesses and competences. A wide range of different decisions are taken before the final go-ahead decision. Any project includes multiple risks and uncertainties related to the success of an investment.

Decisions are made during the project development phases with three key cornerstones:

Time
Scope
Cost

Companies invest a lot of capital to be able to operate in the forest industry. Thus, it is especially important that the investment planning and general strategic business planning are well aligned. Essentially, the planning process results in a plan for how the company gets from point A to point B. The typical planning process includes: