world news - 01.07.2009
Crisis and recovery in the forest industry
-— Charles Darwin The
Stone Age did not end because we ran out of stones. The Stone Age ended
because civilization, informed with new knowledge and equipped with new
technologies, moved on to something better. B.C. forestry has the same
opportunity. B.C. has lost 20,000 forest workers over the past
two years, with numerous mills closed, some permanently. To transcend
this adversity will require a willingness to learn, understand context
and see opportunities. What we should not do is sit back waiting if and until world demand in wood products recovers. The
innovators creating tomorrow's sustainable economy have, each in their
own way, learned to see the larger ecological, economic and social
systems in which we all live and work. Organizational boundaries do not
constrain their thinking. They look beyond quick fixes and events to
see patterns, processes, deeper forces and structures at play. They
make strategic choices that respect cultural and natural limits. A
strategic innovation with great potential is supply-chain management.
It is being adopted by the Scandinavian forest sector and elsewhere to
gain a sustainable competitive advantage. Supply-chain management
transforms natural resources into a finished product that is delivered
to the end customer. This interdisciplinary team concept was advocated
by Thomas Porter in his 1985 book Competitive Advantage. Porter
illustrated how producers can become more profitable by strategically
assessing the functionality of their supply-chain. SCM "un-silos"
organizations by fostering co-operation across functions and
departments, judiciously allocating resources, and selling different
products to existing customers. Inspired by supply-chain management, New Zealand in 2008 hosted an international forest industry strategic summit. New
Zealand's wood supply chain is a $1-billion NZ cost centre. It's
estimated that, as an industry, it's leaking around $150 million, and
the international competitiveness of the country's forest industry is
seriously at risk. Supply-chain management sets goals, measures
performance across organizational boundaries and identifies problems
and solutions, motivated by improved benefits. Applied to forestry, it
could: — Enable forest managers to understand their entire wood
supply-chain, and focus efforts to improve performance where most
needed. — Connect and identify wood qualities in forest products
that well-informed buyers are willing to pay a premium for, back to
their origin in the forest. Radio frequency identification tags will
revolutionize tracking of inventory and enhance supply-chain visibility. -
Integrate forest operations from silviculture, to logging, to mills,
through to customers persuaded to buy B.C. products based on
reputation, cost, product design, and quality. — Ensure decisions
made in forests don't adversely affect mill operations, and decisions
made in mills don't negatively affect final product quality; -
Enable forestry to enter the knowledge economy, with a new
timber-classification system to more accurately grade, buck, scale,
sort and allocate logs to their highest value end use. — Grow
high-quality wood in extended forest rotations with high initial
stocking, frequent light commercial thinnings on managed timberland to
significantly increase generation of value and reduce negative
environmental impacts. — Identify bottlenecks slowing the flow of information, goods and services. — Identify value leakage from sub-optimal performance, and significantly reduce costs. — Ensure the right manufacturing processes are in place to get the right product delivered to the right place in a timely way. — Implement a quality assurance program. — Enable chain-of-custody tracking in forest certification. Implementation
of supply-chain management will not be easy and will take time. There
will be governance, international and local market, tenure and
silvicultural issues to address. We cannot be complacent. About
two decades ago, Finnish forest industries knew they couldn't maintain
their competitive position by minimizing costs and manufacture of
commodity products -— our primary Canadian strategy. The Finns have
since become more customer-oriented and developed more specialty
products. British Columbians have a common cause -— the sound stewardship of our forests, and long-term prosperity of our citizens. We
need to develop a social consensus about the potential of supply-chain
management -— our best hope for a sustainable economic future -— and
invest in infrastructure now. Ray Travers is a registered professional forester living in Saanich.
"It is not the strongest of a species that survives, not the most intelligent, but the one most responsive to change."
See also:
- — Furniture industry 'alive and well'
- — Wood costs for pulpmills in Sweden and Finland have fallen over 30 % the past year
- — Amazon deforestation at lowest level
- — Russian Timber Backlog at Finnish Border
- — Russia and Finland: let's talk about logs!