Final Report SCM

Acknowledgement
This research report has involved inputs from Vikram Singh, Zhang Nan,
Hong Zheng and
Mr Andrew Potter who provided us useful material and information in the
subject lectures.
We would like to extend our profound credit to him. Without his help, the
report
could not have been written.
INTRODUCTION
The supply chain management is the creation, designing , production,
development and operation of the integrated systems which should
responds to the satisfactions of customers by providing required quantity
of required quality products and services as and when required (time,
place and speed) at the least possible costs.
The report corroborates about the timber supply chain and the
implications of this towards various businesses which are associated with
the timber supply chain in wales. This is demonstrated by elucidating the
structure of the supply chain , nature of the customer value and how this
affects the behaviour within the supply chain and which gives rise to
pressures in the chain and the efforts and responses of management to
tackle those pressures.
The structure of the supply chain

Logi si t cs
Forestry
margi n
Cl i ents
provi der
Acqui si ti ons Operati ons Shi ppi ng Sal e
Fig.1. The value chain of a timber exporting firm
The structure of supply chain in timber industry can be illustrated by a

value chain of a firm that exports timber (Fig.1). The value chain involves
several departments from units upstream in the chain deliver to the next
downstream unit, until the product reaches the final clients. Each unit has
a specific value adding function.
The sales unit is the terminal part of the value chain which directly
interacts with clients. There are at least three tasks that the sale units
should take. The first is that it should be in charge of marketing the
products by using various sales forces and commercial channels, making
people know that what kinds of products are available.
The shipping unit moves the products from factories to retailer by using a
transportation fleet. Before transport, this unit should decide what size
and type of truck fleet to use.
The operation unit refers to a succession of process to change raw

material into products according to the clients’ requirements. This unit
should make decisions like how many productions should be produced
given the information from both upstream and downstream and how to
raise the present technologies in order to improve quality and efficiency.
The acquisition unit mentions purchasing the timber from forestry

provider. The strategic decision in this part focuses on the available
variety of trees and costs of transporting trees from the forest to
distribution center or factory.
The logistics unit, sometimes regarded as the management department of

the supply chain. The primary task of this unit is to coordinate the whole
chain. In case of timber industry, some moral are issues will be raised
concerning ecological damage. Thus this unit should also associate with
other units to deal with these problems which seems out of scope of the
traditional supply chain.
Value from customers view

In competitive terms, value is the amount buyers are willing to pay for
what a firm provides them. First, there is present value – what present
customers are willing to pay for. Then there is future value – what
tomorrow’s customers are willing to pay for. Though it seems simple to
define the value from customers’ view, it is not easy to identify every
value adding steps in timber industry. However, we can find out those
non-value adding steps - which means wastes. The widely used definition
about wastes is Ohno’s 7 wastes which were originally from
manufacturing. But it can still be meaningful in timber industry that is
Transport, Inventory, Motion, Waiting, Overproduction, Over-processing,
and Defects. Customer will not pay for the wastes of waiting and
unnecessary motions. The layout dimension involves poor workplace
arrangement, leading to micro wastes of movement and then wastes of
waiting. Likewise, customers will refuse to pay the products with defects.
In this way the value is determined from customers’ view.
Behaviours within supply chain

As the world is developing swiftly, changes can be discerned in every
business model. The supply chain model of timber in wales is also one of
that. Certain behaviours can be observed in the supply chain of timber.
Cost of haulage
The cost of haulage is very high in Britain then some European countries .
This is due to the lower lorry gross vehicle weight, higher fuel prices and
heavier tax burden. Some initiatives have been taken in wales which can
increase the efficiency in supplying the timber from farmer to consumer.
This is done by reducing the flow of tonnage, running vehicles more
efficiently and by increasing the use of alternative transport system.
Establishment of pan-wales collaborative electronic logistics

market place
The pan wales collaborative electronic platform is established to carry

the freight transport more efficiently and effectively by bringing together
both shippers and careers.
Pre-haulage of timber
Profitability is seeked in the operation of pre-haulage and this is the

solution to road problems as the roads are minor in some areas in wales .
Specifically designed pre-haulage vehlces are used in this case. Reduced
cost of pre-haulage improves the profitability of a supply chain process.
E-Learning
E-Learning approach is adopted by many companies in wales to improve

the skills of the contractors and their operators for managing the control
system of logistics.
Economical Driving
This is the adopted by all companies to reduce the fuel and maintenance
cost of transport system and to make the supply chain more
environmental friendly.
Current pressures on the supply chain

The main pressures in timber industry in Wales are as follows:
High cost
The cost of the supply chain has become a key obstacle in the growth of
timber industry. The overall impact of the costs is greater than simply the
supply end. There were many researches which indicated that timber
transport in the UK accounts for around 30% - 40% of overall costs
(Gousseti 2007).
Sustainable development
Sustainability is an important issue for companies in timber industry.

Statistics (Pearce, 2007) shows that the forest resources in England are
growing, but currently lesser than one-third of the annual increment is
being harvested. In Wales, there are huge numbers of owners of woods
who want to manage their woods sustainably. As part of that, some want
to focus more on the commercial than the environmental or social and
that should be embraced in public policy, but it will not be if forestry is
seen as fundamentally uneconomic.
Public policy constraints

There is no doubt that the timber industry (e.g. timber transportation)
inevitably impacts on the wider public. A number of consultancies have
raised the issue of the cost and complexity of planning and other
regulatory procedures involved in establishing new or enhanced facilities.
As well as England, in Wales part of the reason that public policy does not
recognize wood production as a public benefit in itself is because the
economic aspect of forestry is seen as weak. Forestry is seen to provide
little employment except in a few parts of the country, and it is not
important in an economic development context.
Responses to these pressures

Within those pressures in Wales companies in timber industry which
mentioned before, there is still scope to seek to overcome the pressures.
Amongst the potential solutions to currently perceived difficulties are:
Reduce the costs of the supply chain
Take transport cost for example, there are still many potential ways for
reducing this cost element of the supply chain as follows:
Firstly, increasing the number of access points in order to reduce the

average road haulage distance.
Secondly, take advantage of bespoke timber vehicle operations and tax

dispensations over forest road networks and short stretches of public
road.
Finally, improving the forest road networks can help to gain significant
commercial, economic, social and environmental benefits.
Industrial co-operation
Woodland management first needs to be economically sustainable.

Besides, environmental and social sustainability cannot truly be achieved
without economic sustainability. A interview with the project manager in
Wales timber company indicates that a strong championship is needed to
promote more advanced logistics initiatives throughout industry. A
logistics network composing of government, academic and industrial
bodies might be able to fill the gap, which can provide a community for
the sharing of knowledge, pool of resources and expertise, and help to
improve the regional logistics competitiveness from both shippers and
carriers’ perspectives.
Improved understanding of public policy constraints
Public policy constraints are considered as one of the main issue which
restrict the development of Wales timber company. The following
solutions may be helpful to solve the currently difficulties.
Firstly, improving understanding of planning and environmental protection

legislation
Secondly, additional assistance for small companies to resource the
preparation and submission of grant applications.
Finally, simplification of the Strategic Timber Transport Fund will improve

the understanding of public constraints.
Conclusion
In a nutshell, The timber supply chain of wales can be made streamlined

by the genuine synchronization of all units, amending the constraints on
business firms and reducing the overall costs of the timber supply chain.
References
Arce, E.J., Carnieri, C., Sanquetta,R.C.,Filho,A.F., 2002. Aforest-

levelbuckingoptimization system that considers customer’s demand and
transportation costs.ForestScience48.
Boychuk, D., Martell, D., 1996. Amulti stage stochastic programming

model for sustainable forest-level timber supply under risk of ﬁre. Forest
Science 42.
Humphrey,J.,Schmitz,H.,2001.Governance in global value chains.IDS Bullet

in 32( 3).
Marcos, S., Patricio, D., 2008. Upstream or downstream in the value

chain? Journal of Buisness Research 61, 669-677.
Satyaveer, S.C., Jean-marc, F., Luc, L., 2009. Multi-commodity supply

network planning in the forest supply chain. European Journal of
Operational Research 196, 688-696.
Andrew Potter, Mohammed Naim, Yingl wang, April 30,2005.

Establishment of pan-wales collaborative ELM project report.
Tore Hognas. May 2002, FCA News.
Gousseti, E. E. 2007. Key Performance Indicators (KPIs) for efficient and

sustainable
timber transport operations. Improving competitiveness in the timber
sector. Heriot -
Watt University.
Hognas, T. 2001. A comparison of timber haulage in Great Britain and

Finland.
Forestry publications of Metsahallitus
Pearce, M. 2007. Under pressures to meet demand. Forestry & British

Timber. August, pp 46-47

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Acknowledgement

The structure of the supply chain

Fig.1. The value chain of a timber exporting firm

The structure of supply chain in timber industry can be illustrated by a

The operation unit refers to a succession of process to change raw

The acquisition unit mentions purchasing the timber from forestry

The logistics unit, sometimes regarded as the management department of

Value from customers view

Behaviours within supply chain

Establishment of pan-wales collaborative electronic logistics

The pan wales collaborative electronic platform is established to carry

Profitability is seeked in the operation of pre-haulage and this is the

E-Learning approach is adopted by many companies in wales to improve

Current pressures on the supply chain

Sustainability is an important issue for companies in timber industry.

Public policy constraints

Responses to these pressures

Reduce the costs of the supply chain

Firstly, increasing the number of access points in order to reduce the

Secondly, take advantage of bespoke timber vehicle operations and tax

Woodland management first needs to be economically sustainable.

Improved understanding of public policy constraints

Firstly, improving understanding of planning and environmental protection

Finally, simplification of the Strategic Timber Transport Fund will improve

In a nutshell, The timber supply chain of wales can be made streamlined

Arce, E.J., Carnieri, C., Sanquetta,R.C.,Filho,A.F., 2002. Aforest-

Boychuk, D., Martell, D., 1996. Amulti stage stochastic programming

Humphrey,J.,Schmitz,H.,2001.Governance in global value chains.IDS Bullet

Marcos, S., Patricio, D., 2008. Upstream or downstream in the value

Satyaveer, S.C., Jean-marc, F., Luc, L., 2009. Multi-commodity supply

Andrew Potter, Mohammed Naim, Yingl wang, April 30,2005.

Tore Hognas. May 2002, FCA News.

Gousseti, E. E. 2007. Key Performance Indicators (KPIs) for efficient and

Hognas, T. 2001. A comparison of timber haulage in Great Britain and

Forestry publications of Metsahallitus

Pearce, M. 2007. Under pressures to meet demand. Forestry & British

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