S&OP NETWORK MODEL FOR COMMODITY LUMBER PRODUCTS
Résumé
In the lumber industry, we can observe that commodity products prices fluctuate according to seasonal patterns. Nevertheless, it is believed by the industry that it is impossible to take advantage of this information for many reasons. Firstly, the fact that many different products are produced at the same time from the same material input (coproduction) makes it difficult to produce exactly and only what is needed. Secondly, equipment is already being used at 100% capacity all year long, so there is no room to increase production when product selling price increases. Finally, the belief is that keeping finished products in stock till the moment for the right price arrives would increase inventory holding cost too much. For these reasons, the typical sawmill produces using a "push" strategy and sells its production, without much consideration of yearly price fluctuation. We have developed a mathematical model that allows planning the sales and operations of a network of sawmills at the tactical level. Using that model, we were able to show it is in fact possible to modulate production and inventory levels to increase sales revenue. We generated a single plan which, if it had been used for each of the last twelve years, would have increased the gross margin generated by an average of 1,47% of sales revenue.
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