Timber in the UK is still a relatively low cost material that can often change hands several times throughout the supply chain, often with little or no value being added. Transport, therefore, can represent a disproportionately high percentage of the cost to both buyer and seller. In addition, the timber industry contains many small- to medium-sized enterprises that feel that, regardless of their position in the supply chain, they lack influence. This means that compared with industries like food distribution and automotive production where streamlined supply chains have been developed, many timber industry supply chains can both lack structure and be over extended.

The diversity of the industry makes it difficult to identify universal benchmarks for best practice supply chain management, as these may vary significantly, reflecting the variety of organisations operating within the industry.

There is also little benefit in a single organisation improving its supply chain management in isolation, as a chain is only as strong as its weakest link. To create real benefits, a greater degree of co-operation is required.

Closer working relationships

Many industries have improved their supply chain management by establishing closer working relationships with a reduced number of suppliers. This has enabled suppliers and customers to build mutual trust and to co-operate on problem-solving and solution seeking, leading to more integrated supply chains. Of the companies interviewed by TRADA as part of its research across softwood, hardwood and panel products supply chains, most were familiar with the term ‘partnering’ and most had entered into some form of partnering relationship with other companies, even if only on an informal basis.

Timber producers today are operating in a more rigorous environment than in the past. They must meet higher environmental standards as well as achieving high product quality. In addition, customers typically want small, frequent deliveries to maintain low stocks and a lean operating culture. The closer the links between seller and buyer, the more efficient the supply chain.

Good communication

Good communication internally and externally will be a key factor. Poor communication of stock levels internally was identified as one reason for unnecessary ordering. Better understanding of inventory levels and greater willingness to assist suppliers with planning and forecasting would allow for longer lead times and more co-ordinated transport planning. In some cases material fit for grade but not fit for purpose is delivered. Again, better communication between supplier and customer could obviate unnecessary deliveries. Staff training would also help improve efficiency.

Maintaining efficient distribution will be an increasing challenge. In most cases, transport of timber within the UK means road haulage, and this is unlikely to change even in the long term, despite rising fuel costs, increasing traffic congestion and the government’s desire to reduce national CO2 emissions.

Transport by rail and sea will increase only slowly. The infrastructure is lacking and they do not offer the flexibility of road transport for just in time (JIT) delivery. The report warns, however, that supply chains that rely heavily on JIT delivery combined with low inventories are vulnerable if supply is disrupted. Increasing congestion will reduce surety of supply and this is likely to be compounded further when the Working Time Directive is implemented in around 2005. It is estimated that this new legislation will add a further 30,000 to the already significant 50,000 driver shortfall in the UK.

&#8220Better understanding of inventory levels and greater willingness to assist suppliers with planning would allow for more co-ordinated transport planning”

‘Milk round’ deliveries

Solutions for larger players or partnerships lie perhaps in regional distribution centres and ‘milk round’ deliveries. Customers would have to resign themselves to higher stockholding, but this would be offset by a reduction in total mileage, fuel consumption and CO2 emissions and therefore may bring some cost savings.

There are, however, a variety of practical and technical solutions that can promote efficient transport logistics. Vehicle selection, driver training and vehicle routing systems can all help to increase efficiency.

Vehicle selection includes looking at all aspects of the vehicle, such as optimising payload and engine capacity, improving aerodynamics and making better use of trailers. Improvements here can help reduce the number of journeys and increase fuel economy. Longer-term developments such as alternative fuels and multiple trailers on designated routes could add to these benefits.

Driver training can also reduce fuel consumption and maintenance requirements and therefore costs.

Vehicle routing systems enable users to make more efficient use of their vehicles by optimising payloads and delivery routes. They can reduce the total mileage covered, minimise delays, help to provide a quicker customer response and even reduce the fleet size.

E-commerce

Those questioned during the project perceived e-commerce to be a useful tool that was mainly in the domain of the larger organisations. In some areas there was resistance to its wider introduction.

It was acknowledged that e-commerce would increase the speed of transactions but this would involve all parties having access to inventory levels. Some felt that there was not enough trust in many areas of the industry for this degree of integration to be workable. So while e-commerce will almost certainly elevate its profile in the next few years, the industry is not wholeheartedly behind it.

There are many external factors over which timber companies have no significant control. However, there are equally many ‘housekeeping’ measures to be taken which will make a difference. Most importantly, however, to achieve best practice supply chain management as outlined in the report, companies whatever their size, will have to develop greater integration at all levels.

Many organisations are already reducing their supplier numbers and developing closer working relationships with those that remain. Against this backdrop, greater levels of trust can be built.