- In Customer Stories
- Posted 20/12/2016
Find a way to reduce operating costs and while promoting sustainability in timber logistics.
WITNESS was used to develop a logistics model that would reduce costs while improving capacity, quality and standards.
The ResultsThe model contradicted initial asssumptions that larger trucks would be more economical and identified substantial cost saving areas including a 3.3% saving but using an alternative loading method.
A highly complex operating environment
Luke Natural Resources, Finland (Luke), is a specialist body headquartered in Helsinki which promotes bioeconomy and sustainable use of natural resources. The sustainable and efficient management of timber derived from forests, covering the entire value chain in the Finnish Forest Industry is crucial, and therefore represents a strong focus for them.
The operating environment for timber transports by truck is hugely complex, and even more so in Finland. Difficulties in logistics are caused by the high number of timber assortments and end use facilities, as well as high fluctuation in road traffic, weather conditions inhibiting road bearing capacity, in gravel roads and in the timber demand of mills.
The forest industry, in collaboration with logistics companies and timber truck entrepreneurs, are continuously seeking out solutions which stand to improve timber transport efficiency. Testament to this commitment is that a national vision was recently outlined focusing on enhancing wood purchasing efficiency with 30% lower costs in 2025 compared to the present situation, with improvements in timber transport efficiency representing a key role in realising this vision.
In support of this agenda, the law recently changed to allow larger trucks to transport timber. This shift represents a potential new opportunity for efficiency improvements to be made and one which Luke has taken very seriously.
Boosting sustainability and reducing costs with simulation
In line with the forest industry’s vision, and on the back of this change in the law, Luke was commissioned to undertake a project on behalf of Metsäkolmio Ltd to look at reducing costs and promote sustainability in its timber logistics. To maximise the success of this project, Luke decided to deploy Lanner’s predictive simulation solution, WITNESS.
Having used WITNESS across a number of other projects within Luke, the team had confidence that it would enable them to create an accurate and dynamic view of all aspects of timber supply chain, and as a result inform recommendations on how to improve performance and reduce costs.
“The main objectives of the project were to establish a new logistics model for movement of timber via road networks, with a view to reducing costs while improving capacity, quality and standards,” comments Kari Väätäinen, Research Scientist, Luke Natural Resources, Finland. “Timber logistics is hugely complex and involves many dynamic variables such as road conditions, truck size, wood assortment and variability in the operating environment. We needed a simulation-led approach to build out a realistic picture of the interdependent relationships between these complexities, showing both a baseline case together with a number of scenarios which outlined potential improvements in performance.”
A simulation model to balance cost and process
A key lever in achieving these improvements was the trucks used to transport the timber. Specifically, the model looked at the cost and operational potential of its existing multi-assortment load model, and the impact of using larger timber trucks within its existing operational environment.
The model looked at two load methods – single assortment and multi-assortment, factoring in the limitation that only eight of the 12 designated delivery places could accept multi-assortment deliveries. In line with new laws which allow larger trucks to transport timber, within these two methods, it factored in the use of four different sized timber trucks: 64; 68 and 76 tonnes supplying 25 different timber assortments to 12 end-use facilities being eight saw mills, two pulp mills and two train loading terminals.
Other factors incorporated into the model included the type of roadside storage available, such as wood assortments, volumes, distances to delivery facilities and parks (by ArcGIS and Digi Road); area, storage size, assortment specifications from the customer; and characteristics of the operation environment such as work-shifts, wood reception times, routing rules and time-element functions. Cost factors and values derived from the Finnish Transports and Logistics SKAL and the truck dealers were also included.
For each scenario, the team ran multiple simulations projecting a year of operations that showed the likely volume of transported timber and operating hours per truck.
Sustainable results and decreased costs
The model highlighted potential for substantial cost savings, showing that the multi-assortment load method was on average 3.3% cheaper than the single assortment load method. It also showed that the driving performance - presented as solid-m³ of timber per 100 kilometres - was 4% higher with the multi-assortment load method.
Contrary to the team’s initial hypotheses, the use of larger trucks did not bring significant cost benefits. Bigger truck size decreased transporting costs by just 1.5 % and 2.5 % while comparing 64 tonne truck to 68 and 76 tonne trucks in single-assortment scenarios, and 0.4–0.8 % lower costs in multi-assortment scenarios, respectively. This negligible cost benefit was largely because 76 tonne trucks’ capacity was not in full use, and that bigger trucks have higher investment and variable costs.
Another conclusion was that small assortment piles at roadsides caused difficulties in efficient timber transport due to driving between piles and the need of loading many small piles for filling the entire load space. The multi-assortment load method decreased drastically the number of rides between piles and, therefore, improved the performance of the fleet.
“We have been extremely pleased with the success of this project,” concludes Kari Väätäinen. “We have learned many new things and realise that there is a great deal of potential to improve timber logistics using the insights and recommendations from our predictive simulation model.
“Looking ahead, we would like to extend our research to evaluate the impact of different operating environments against each truck size as well as looking in more detail at the size of the roadside storage and wood assortment piles to reduce inventory and increase availability.
“Lanner’s predictive simulation platform is hugely valuable in allowing us to effectively see into the future, highlighting opportunities for improved performance, and providing clarity and certainty in an unpredictable environment.”