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Clear cutting costs
The last few years have been tough on the forest industry. Increased energy, wood and labour costs, slumping demand and a rising Canadian dollar have conspired to create a perfect storm that has battered the more than 300 communities across Canada that rely on the industry for their local economy.
According to the Forest Products Association of Canada, nearly 87,000 forestry-related jobs have been lost since 2006. With an average wage of more than $50,000 in 2010, these are good-paying jobs communities cannot afford to lose.
But mathematical models and decision support tools designed by Laval University business engineer Sophie D’Amours and her team are being used to help the industry. Her algorithms aim to streamline the industry’s supply chain, helping managers make smart decisions that reduce costs.
“We do a lot of work in the sawmilling and pulp and paper industry to help them decide on investments, the location of mills, capacity, product and distribution strategies,” says D’Amours. “It’s about how to make decisions in a market where you have a lot of uncertainty.”
What is certain, however, is that plunging U.S. housing starts (nearly 80 percent of Canada’s lumber goes toward U.S. housing construction) and sharply reduced demand for newsprint have taken a toll on the industry.
The work conducted by D’Amours and her team shows that companies following their instruction can, in some cases, drop their costs by as much as 20 percent. Working with industry partners such as Kruger, Maibec and Domtar, the team considers all kinds of business practices in their analysis, such as planning systems for cutting rolls of paper to minimize waste and decreasing storage and transportation costs.
They have also designed a web-based platform that allows companies to work together to reduce the number of empty logging trucks on the road and plot out the most efficient routes to and from logging sites. She estimates the platform alone could save companies up to 12 percent in transportation costs.
“It’s very hard to get them to do this — they are reluctant to work together,” says D’Amours. “So we have been doing a number of case studies for them to look at.”
Funding from the Canada Foundation for Innovation has helped enable her work. In addition to a lab and servers, she has two “visualization rooms,” outfitted with several large screens that enable her team to study different aspects of the same problem at the same time. “The funding was fundamental,” she says. “We needed the servers, we needed the lab. We needed the capacity to visualize problems and solutions.”
While it’s important to streamline current practices, D’Amours and her team are also pondering the industry’s future, including the potential of refocusing the pulp and paper industry on biofuels or other value-added oils — specialty oils produced from wood scraps and other raLaval material that make up industrial chemicals such as cleaners and lubricants.
“This will depend greatly on the leadership of the industry and its ability to attract the best talent to support the transformation,” says D’Amours.