Editor: M.Sc. Antti Vehviläinen
Supply chain
Everything you need to know about the key elements of sustainable logistics: supply chain including both material, financial and information flows.
A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. It normally consists of three components: the material flow, the financial flow and the information flow. Supply chain models address upstream and downstream elements. In the forest industry these are self-evident as the raw material flow and as the delivery chains of the finished product.
The supply chain in forest industry business can easily be compared in complexity with the production formula of sulphate pulp. On the other hand, it is logical, simple and can be mastered with common sense. The simplicity comes from the fact that it is a continuum of visible, common operations. But it is also a complicated value chain with horrendous amounts of predefined contracts and clauses encrusted with international IT-programs and links. The chain starts from the deep forest and continues with harvesting, log transportation, mill production, transport of finished products and delivery to the customer in time.
In real life this all is a bit more complex. It is balancing supply and demand, company strategies and operations and maximising the value chain. Some people call this logistics: the right product in the right place at the right time.
Complexity is emphasised by the amount of rather independent stakeholders in the value chain. Normally they have different values even within one forest industry company:
- Sales wants to increase the sales and make the customers happy with high inventories
- Operations want to run machines as long runs and with few changes
- Finance wants high turnover, efficient operations and low working capital
Other stakeholders in the supply chain have their own interests. Upstream value chain in forest operations is strongly linked with seasons and weather. Both upstream and downstream, the carriers like rail, truck and ship want to optimise their company internal costs and seek for high cargo capacity utilisation. Downstream, the customer wants to have the product in time, in excellent physical shape and with very short order time. These aforementioned stakeholder interests conflict easily, if the supply chain management does not cover whole the chain and if there is no major orchestrator running the show.
The physical supply chain consists of several different operations and this Supply chain theme tries to cover the most important issues and tries to introduce the versatile transport offering we have in Finland and in our foreign trade.
This theme will also consist of more abstract items in the transport value chain. We have stories about sales and operational planning, chartering, sustainable transport, safety issues, digitalisation of supply chain information, incoterms and insurance, routing models, product quality and its maintenance not to forget the overall logistics operating environment.
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