Solving the High(er) Wood Fiber Cost Problem

Posted by Daniel Stuber

The merger of MeadWestvaco and RockTenn caught many by surprise when it was announced earlier this year. According to the press release, the combination will create a global packaging company with $15.7 billion in sales and a projected cost savings of $300 million in three years. More than likely, after the merger is complete in June, a significant top-down analysis will occur (if it is not already underway) to consolidate sales, realign mill production with demand and reduce costs throughout the newly formed company. One of the costs under the microscope during the due diligence process will be wood fiber costs. Because they represent a significant portion of mill operating expense, a thorough examination of wood fiber costs across the new company’s system of mills will take place.

Read More

Topics: wood fiber costs

Adapt to Survive: Optimizing the Wood Supply Chain

Posted by Jay Engle

Like all forests, all wood supply chains are different. Some are longer and more complex than others, but one thing they all have in common is that they nearly always have at least one weak link. Some of these weaknesses are inherent and systematic in ways that seem beyond control. Others might not have been weaknesses originally, but develop into issues over time as inevitable changes occur. Some, in fact, might have been strengths initially.

Read More

Topics: supply chain

Want to Know If Your Wood Costs Are Too High? Find a Peer Group

Posted by Pete Stewart

Are my wood costs too high? This is an age old question, often posed rhetorically. I am sure that all of us— from legends like Frederick Weyerhaeuser, the Calders and the Camps (Union Camp) to every procurement manager with boots on the ground—have asked this question.

On the surface, this question seems simple. The answers turn complicated, though, when considering the nuances of the wood supply chain—product and sourcing mix, consumption volume and haul distance to name a few. Throw a little inclement weather into the mix and this mishmash of factors get wrapped around an axle spinning so fast that not even Einstein could theorize his way to an answer. Two of the biggest monkey wrenches gumming up this work are poor data and inappropriate comparisons. They not only lead to the incorrect answers, they lead—more importantly—to answers in which you can have little confidence.

Read More

Topics: wood costs

Extract Value from your Wood Supply Chain with Data

Posted by Pete Coutu

Here are a few truths about wood supply chain management that have been proven over and over again:

  • An optimized supply chain produces competitively priced end products.
  • When a mill sources wood raw materials from an optimized supply chain, it gets better quality wood and lowers its total acquisition costs.
  • Companies considered leaders in supply chain management in industrial products markets have Earnings before Interest and Taxes (EBIT) that is 174% greater than other companies in their peer groups (PwC Global Supply Chain Survey 2013).
Read More

Topics: supply chain

Use Cost Curves to Lower Wood Costs

Posted by Daniel Stuber

By comparing average mill costs to average market costs along a volume curve, a mill can achieve lower wood costs. How does this supply chain optimization powerhouse work?

Read More

Topics: wood cost reductions

F2M Market Watch

Subscribe to our blog

Search our blog