Smart Value Chain Wood

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1 Smart Value Chain Wood Maria Anna Huka und Manfred Gronalt Institute for Production and Logistics BOKU - University of Natural Resources and Life Sciences, Vienna 4 July 2012

2 Overview 1 Introduction 2 Project overview 3 Project goal 4 Project Work Packages Log Yard Planning Production Planning at a Sawmill Dry Kiln Assignment Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 2

3 Overview 1 Introduction 2 Project overview 3 Project goal 4 Project Work Packages Log Yard Planning Production Planning at a Sawmill Dry Kiln Assignment Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 3

4 Introduction Information and Communication Technology (ICT) and Automatic Identification and Data Capture (Auto-ID) Systems get more important in business research activities support companies to enhance their business processes improve product tracking and tracing key future technology and more important for a broad variety of companies and the forest based industry numerous reports available but no systematic application in wood processing industries Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 4

5 Overview 1 Introduction 2 Project overview 3 Project goal 4 Project Work Packages Log Yard Planning Production Planning at a Sawmill Dry Kiln Assignment Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 5

6 Project overview Procurement Production Distribution Potential of RFID in the Wood Supply Chain (P0) Business Processes Wood Terminal (P1) Advanced Production Planning Wood Industry (P2) Integration of Production and Distribution Planning (P3) Logistics of Distribution construction area (P4) Wood Product Value Chain (P5) DocumentFlow Material Flow Quality Flow IT Flow Operation Flow Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 6

7 Overview 1 Introduction 2 Project overview 3 Project goal 4 Project Work Packages Log Yard Planning Production Planning at a Sawmill Dry Kiln Assignment Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 7

8 Project goal the whole wood product value chain from procurement over production to distribution of a manufacturing company will be covered model the whole wood product value chain and develop a framework for ICT driven value stream mapping in the forest wood chain persistent production planning system as well as a connected information system fed by RFID for the saw milling and solid wood industry will be developed Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 8

9 Overview 1 Introduction 2 Project overview 3 Project goal 4 Project Work Packages Log Yard Planning Production Planning at a Sawmill Dry Kiln Assignment Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 9

10 P1 Wood terminal and industry railway connection design of new terminals and their operation in order to ensure a continuous material and information flow to the industry I I new operations strategies for wood rail terminals new business models and processes for asynchronous loading and unloading of wood at the terminals Maria Anna Huka und Manfred Gronalt industry railway connections are analyzed in order to ensure smooth loading and unloading operation at sawmills and paper mills Smart Value Chain Wood 10

11 P1 Wood terminal and industry railway connection cont d 1. exiting transport and data flows need to be gathered from the analyzed region assess each node apart as well as estimate the complete network of terminals 2. existing transport processes need to be defined and aggregated to a standard process view focus on the intermodal aspect including railway transport 3. support process starts at the log supply at the source terminal by truck and ends at the incoming material department allocation, takeover, retrieval and billing process of rail wagons is included create an overview of flows and costs in the timber supply network show the standard processes of the timber intermodal supply Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 11

12 P2 Advanced Production Planning - Wood Industry and House building industry Status Quo although well established and known processing technologies are used there is an emerging need for an overall planning approach supporting sawmill operation efficiencies establish a comprehensive production planning system in the saw milling industry linked with the cutting optimization and the above mentioned ICTs integrated production planning approach will select the best mix of cutting patterns for a time period according to customer orders and on hand inventory of logs, but at the same time it will also consider system bottlenecks Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 12

13 P2 Advanced Production Planning cont d Log Yard Planning test and implement new sorting and grading logics using computer tomographic strength sorting recognition of knots, cracks, wanes and dimensions with a non-destructive stress rating system maximizes the value recovery based on the added value of stress-rated lumber and increases performance levels integration with RFID and GPS systems to control storage box s content and movement of handling device dynamic allocation of round wood in sorting boxes according to the diameter and strength information optimal utilization of the round wood sorting area log yard planning and design; integration of material handling devices and truck and train delivery find optimal design in order to minimize the total transportation cost Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 13

14 P2 Advanced Production Planning cont d Log Yard Planning cont d A E S N a TTT es CAP s VOL a x aes y aes set of assortments set of ejection boxes set of storage boxes number of trips per assortment a, due to the diameter of the assortment and the demand per set assortment total transportation time for every assortment from ejection box e to storage box s and to the material charge capacity of storage box s maximal volume of assortment a binary assignment variable, 1 if assortment a is assigned to ejection box e and storage box s, 0 otherwise filling variable for assortment a in ejection box e and storage box s Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 14

15 P2 Advanced Production Planning cont d Log Yard Planning cont d min a A,e E,s S N a VOL a TTT es y aes x aes 1 e E,s S x aes 1 a A,s S x aes 1 a A,e E y aes = VOL a e E,s S y aes CAP s a A,e E y aes x aes VOL a x aes {0, 1} a A e E s S a A s S a A, e E, s S a A, e E, s S Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 15

16 P2 Advanced Production Planning cont d Production Planning at a Sawmill enormous influence to future use of a specific board of a log - future required strength distribution known adjust cutting patterns presents an individualization of products and shows enormous potential because only a classification after cutting was possible until now supply with optimal raw material for particular customer orders is possible established machinery has not to be modified, but impacts on the material flow will be expected optimize production with strength related cutting pattern for different diameter, qualities and wood types under the capacity constraint Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 16

17 P2 Advanced Production Planning cont d Production Planning at a Sawmill cont d p c d t q h rm ctqh id dtqh ip ptqh b ptqh feed ch the number of products the number of cutting patterns the number of log diameters/raw material time periods the number of different qualities type of wood quantity of raw material of quality q and wood type h processed with cutting pattern c used in period t inventory of log type d of quality q and wood type h at the end of period t, where id d0qh is the starting inventory at the beginning of period 1 inventory of product p at the end of period t, where ip p0qh is the starting inventory at the beginning of period 1 backorder of product p at the end of period t, where b p0qh is the starting backlog at the beginning of period 1 quantity of raw material of wood type h processed with cutting pattern c Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 17

18 P2 Advanced Production Planning cont d Production Planning at a Sawmill cont d Y pc PA dc DE ptqh PC dqh RM dtqh VC pqh NSP pqh ICD d ICP p BC p MHT c CAP t FED M yield or percentage of the product p obtained after processing raw material with cutting patter c production allocation (0 or 1) 1 if cutting pattern c used for log diameter d, 0 otherwise demand for product p in period t of quality q and wood type h purchasing price of log diameter d with quality q and wood type h available raw material, logs with diameter d in period t of quality q and wood type h variable costs for product p with quality q and wood type h net sales price for product p with quality q and wood type h inventory costs for one unit of log diameter d for one period inventory costs for one unit of product p for one period backlog costs for one unit of product p for one period machinery holding time for cutting pattern c maximal operating time in period t amount of material fed to the sawmill big M (big M method) Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 18

19 P2 Advanced Production Planning cont d Production Planning at a Sawmill cont d NSP pqh ( ) Y pc rm ctqh + ip pt 1qh ip ptqh t T p P c C q Q h H VC pqh Y pc rm ctqh t T p P c C q Q h H ICD d id dtqh ICP p ip ptqh t T d D q Q h H t T p P q Q h H PC dqh PA dc rm ctqh t T d D c C q Q h H BC p b ptqh t T p P q Q h H Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 19

20 P2 Advanced Production Planning cont d Production Planning at a Sawmill cont d id dtqh = id dt 1qh + RM dt 1qh c C PA dc rm ctqh t T, d D, q Q, h H MHT c rm ctqh CAP t c C q Q h H t T, q Q, h H ip pt 1qh b bt 1qh + c C Y pc rm ctqh ip ptqh + b ptqh = DE ptqh t T, p P, q Q, h H rm ctqh, id dtqh, ip ptqh, b ptqh 0 p P, t T, c C, d D, q Q, h H Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 20

21 P2 Advanced Production Planning cont d Dry Kiln Assignment after the cutting process the sawn timber has to be kiln dried where the information of the computer tomography and from the RFID tag has advantages for the kiln drying chambers new technologies for a faster drying process lead to the problem of how to feed packages to archive the best utilization results of production planning approach and the RFID data can calculate the produced and demanded amount of sawn timber in advance new heuristic approach for solving the loading in problem of kiln drying chambers Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 21

22 P2 Advanced Production Planning cont d Dry Kiln Assignment cont d support the right handling of the finished timber packages and therefore intermediate storage can be avoided generally only technical aspects but no logistical ones of drying are considered for the dry kiln assignment problem Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 22

23 P2 Advanced Production Planning cont d Dry Kiln Assignment cont d k b j p l t j rt kb pt kb ct kb x kbj y kbp number of kilns number of batches number of packages number of length patterns length of package tardiness of package j availability of batch b at kiln k processing time of batch b at kiln k completion time of batch b at kiln k binary variable, 1 if package j is assigned to kiln k and in batch b, 0 otherwise binary variable, 1 if length pattern p is used in batch b and kiln k, 0 otherwise Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 23

24 P2 Advanced Production Planning cont d Dry Kiln Assignment cont d DD j PT j RT j L j TH j ROW k N pl THmin b THmax b THdiff Smax j due date of package j processing time of package j release time of package j length of package j thickness of package j rows of kiln k number of packages of length l in pattern p lower bound of possible thickness of batch b upper bound of possible thickness of batch b maximum permissible thickness deviation of packages in a batch maximal storage time of package j Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 24

25 P2 Advanced Production Planning cont d Dry Kiln Assignment cont d min j J t j x kbj = 1 k K b B j J rt kb max {RT j x kbj } k K, b B j J pt kb max {PT j x kbj } k K, b B j J ct kb rt kb + pt kb k K, b B rt kb+1 ct kb DD j = RT j + PT j + Smax j { } t j max ct kb x kbi DD i ; 0 i J k K b B k K, b B j J j J Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 25

26 P2 Advanced Production Planning cont d Dry Kiln Assignment cont d THmin b = min j J {TH j x kbj x kbj = 1} THmax b = THmin b (1 + THdiff ) THmin b x kbj TH j x kbj THmax b y kbp ROW k p P j J L j =l x kbj = p P N pl y kbp x kbj {0, 1} y kbp {0, 1} k K, b B b B k K, b B, j J k K, b B k K, l L k K, b B, j J k K, b B, p P Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 26

27 Outcast integrated production and distribution planning for successful value chain management an integrated view on production and distribution planning is necessary focus on customer s view and develop dedicated solution to optimize customer service level by working with new business models which support Auto-ID information transfer we will uncover a number of opportunities to improve both production and business process wood product value stream this puts all together in order to develop a comprehensive approach aggregate different findings of green ICT to improve overall supply chain productivity may figure out most beneficial areas where to start developing new planning models in the wood supply chain and green ICT Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 27

28 Comments How is the data going to be captured during the value chain? Focus on one area, log yard, sawmill or kiln drying, instead of the whole value chain wood! Develop an information and data management to follow the log into the product! Design a seal of quality to secure the wood value chain! Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 28

29 Thank you for your attention!

30 University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Institute for Production and Logistics Maria Anna Huka und Manfred Gronalt Feistmantelstrasse 4, A-1180 Vienna Tel.: , Fax: maria.huka@boku.ac.at, Maria Anna Huka und Manfred Gronalt Smart Value Chain Wood 30