SUPPLY CHAIN REDESIGN AT FINNFOREST CORPORATION
Business organizations today operate in a turbulent and dynamic business environment. The contemporary business environment is undergoing a metamorphosis as rapid technological innovations, competitive markets, diverse customer preferences, and extensive global operations prevail in it. To ensure continuous operation and survival in today’s rigid business environment, a business firm has to be open to change and improvement. Business processes, services, products and operations should be consistently subject to evaluation and refinement. The norm is to deliver quality products and services while maintaining flexible and effective operations.
One of the most vital aspects of a business operation is the management of the supply chain. The supply chain comprises of the coordinated arrangement of manpower, technology, and production processes that transforms raw materials into tangible products or services. The supply chain is the overall process that determines how business firms secure materials, exploit people, utilize machines, and follow business processes to develop specific products and services for the satisfaction of consumers. This business operation is crucial as any defect in one area can render adverse impacts to the others. Thus, management of the supply chain entails strategies and constant monitoring to ensure its consistency to deliver outputs to the customers at the most convenient time.
ANALYSIS OF THE FINNFOREST SUPPLY CHAIN
The supply chain network at Finnforest Corporation starts at the forests in Finland where the company gathers the logs from trees found in these forests and ends in the retail outlets that sell the finished timber products to individual customers, industrial and construction firms, and timber merchants in the United Kingdom. The entire supply chain process of the company follows twelve steps. The first step is the harvesting of trees which takes one day, seven days to get to the mills, and has fourteen days of inventory. The second step is transporting the logs to the sawmills which takes one day, seven days to become grade togs and one day in inventory. The third step is to grade togs which take 0.1 day, one day before primary manufacturing and ten days in inventory. Primary manufacturing or the processing of logs into timber follows which takes 0.1 day, one day before kiln drying and one day in inventory. Kiln drying takes five days, five days before grading and two days in inventory. Grading takes place in 0.1 day and 0.5 day before packing. Packing occurs in 0.1 day, 0.5 day before transport to the ports, and 45 days in inventory. Transportation to the ports takes one day, one day before the products arrive in the United Kingdom and ten days in inventory. Transportation of timber products to the United Kingdom takes eleven days, fourteen days before they are processed into consumer products and thirty-one days in inventory. Processing of timber into specific consumer products takes 0.1 day, fourteen days before they get to the warehouse and one day in inventory. Warehousing of consumer products takes forty-six days and transportation to retailers takes 0.5 days, and four days lead-time.
Finnforest is confronted with three challenges in its supply chain network. First, the company basically has a slow supply chain process due to the amount of time that each step consumes. The first eight steps of its supply chain network take place in a single location which is Finland, yet consume 8.4 days of activity time, 18 days of lead time and contain 83 days of inventory. According to (2005) one cause of under-supply in timber products can be traced to a poorly structured supply chain network characterized by lack of communication and coordination between producers of sawmill timber products and end-users (p. 1). In...
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