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value chain optimization in the canadian forest product industry

 

The Canadian forest industry has always relied on its massive fibre supply, capturing economies of scales through its processes and a "push to market" business model. The implemented low-cost commodity-focused business model is no more sustainable for the industry, either economically, environmentally or socially. A full understanding of the Value Chain is needed in order to synchronize and optimize forest with business decisions so that market opportunities are optimally exploited while sustaining and improving Canada's forest assets. This presentation will first review a value chain optimization framework. Then, value chain decisions in which network economies can be captured through integrative and collaborative planning approaches will be discussed. Finally, two business cases will be reviewed to showcase the contribution of OR to this field. The first case will describe sales and operations planning in the panel industry and how stochastic modeling and programming methods were used to support the decision making. The second case will describe order promising in the lumber industry and how revenue management approaches supported by linear programming have helped gained a new competitive advantage.