| |
The Connected Forest - A case that produced tangible results applying sense and reaction capabilities through digital logistics
In this project our team created the concept, established the requirements and developed the business case for a new inbound logistics approach of a pulp & paper company, increasing connectivity and agile control capabilities by means of digital technologies and significantly reducing costs.
A LARGE SCALE AND COMPLEX PROBLEM
Managing wood logistics means large scale management of a complex system. Wood forests may be located only a few miles from pulp mills or thousands of miles away. Transportation is done using dedicated truck fleets, specifically made for transporting wood. Rail is also used on a smaller scale. Truck fleets of Brazilian companies can include over 500 vehicles.
Pulp mills require a stable supply of the right blend of wood to make the process and outputs more uniform to achieve maximum production efficiency. Certain levels of blend variation can significantly affect the efficiency of cellulose digestors.
If on one hand pulp mills require stability, on the other hand the supply process variability is abundant, thus defying forest logistics managers.
Transportation variability comes from diverse sources such as rain that strongly affects the loading rate of vehicles at forests, traffic jams, drivers’ misbehaviors, accidents, forest equipment availability and various other factors.
As dedicated assets, a natural efficiency measure of the wood transportation fleet is the cycle time (length of time that vehicles take from plant yards to forest, returning to plant yards). The more time vehicles stay inactive waiting in forests queues or plant yard queues, the longer the cycle time and larger fleets are required.
Wood transportation represents one of the main costs of the pulp and paper supply chain. Increasing connectivity and agile control capabilities through digital technologies have proven to be a wise decision in reducing cycle time and variance, and consequently overall logistics costs.
REPLACING ASSETS FOR REAL-TIME VISIBILITY
What if there was no variability in wood logistics? It would be easy to establish a never-stopping transportation system, like a carousel. But….the real question is how to react in an agile way to disturbances that we cannot completely control and still maintain the overall logistics system at maximum possible efficiency.
In this project the members of our team created the concept, established the requirements and developed the business case of a new approach on how to manage inbound logistics of a pulp & paper company.
Their main components are:
- Connect and Sense
Connecting forests, cutting, loading and unloading equipment, vehicles, plant yards and wood stocks to provide the ability to monitor the complete system status any time.
Connecting forests provides information on vehicle queue status and truck loading rates. Connecting equipment enables us to understand downtime and its immediate availability at forests and yards. Connecting vehicles provides position information and instantaneous trip adherence to a pre-defined pattern. Yard connectivity allows for real-time information on truck position inside the yard, its specific cargo, and available blend stock.
Several technologies were considered for connectivity (forest, equipment, vehicles ...). GPS was one of them and was already available and being used for risk management, mainly to mitigate truck theft, but not for productivity purposes. Other technologies included GPRS and RFID for inside yard tracking. Sigfox and Lora networks are becoming more accessible and are expanding possibilities.
- Agile Reaction
The now ubiquitous information on inbound wood logistics enabled the transformation of the previous semi-static process into a much more agile, proactive and anticipatory decision-making process resulting in an expressive reduction of wasted time and of redundant activities.
Agile Reaction means the ability to take fast decisions in response to some event or condition that is taking place or that has recently occurred and to change the logistics system´s parameters accordingly.
Vehicle dispatch was previously based on a static plan reviewed in intervals of days. The plan was used to define a certain rate of truck dispatching a specific forest destiny. The overall plan containing all the routes, if followed strictly, would result in the supply of the right blend and the right wood volume to pulp mills.
However, if something went wrong such as degraded road conditions or below-standard loading rates at the forest, long queues were formed, increasing truck idle time.
In this situation it was also possible for blends at yards to be out of specs due to an under-supply of a certain type of wood.
With the new digital logistics control in place, a disturbance like the above is immediately detected and triggers an immediate reaction. Trucks are not dispatched to disturbed destinations. They are relocated to points with greater capacity. The entire programming can be reconfigured to achieve a new equilibrium and provide the right blend.
The immediate consequence was a much better use of trucks which are now able to carry out a greater number of trips, allowing the company to handle the required volume with a smaller fleet.
DELIVERING THE BUSINESS CASE
With a payback of under 12 months, the project has two main pillars which have unveiled significant value.
- Transportation cost reduction due to increased asset turnover
KPIs were sharp and clear to show the effect on better dispatching decision making on transport productivity. Truck idle time experienced an 80% reduction. In yards, the waiting time was reduced almost 30%. The total logistics cycle time was reduced by 20% resulting in a 10% transportation cost reduction.
- Increased stability of wood supply achieving higher productivity
Although the specific numbers are not public, we can say that a greater part of the added value came from production efficiencies due to the reduced variance of the supplied blend specs.
|
|
