Reengineering business processes to improve an integrated industrial roundwood and energywood procurement chain

Abstract

Procurement systems and supply chains for industrial-scale forest fuel recovery are still immature. Business process improvement techniques can significantly improve system performance. The present study applies business process modeling and reengineering approaches to an integrated industrial roundwood and energywood supply chain in Germany. The existing business process was reengineered. A new business process for integrated industrial roundwood and energywood procurement and two new business processes for future biomass procurement operations were designed using proven best practices. The improvement potential of the new business processes was investigated by determining the organizational and managerial workload of all actors using discrete-event simulation. The results of the discrete-event simulation were then used as a basis for a comprehensive cost calculation. Finally, the cost-saving potential relative to the current practice was determined. The redesign of the current business process provides a cost-saving potential of 20–39% (–2.64 to –5.25 USD/m³). The first biomass procurement process involves a saving potential of 12–53% (–1.60 to –7.20 USD/m³), while the second might even increase the costs by 13% if the probability of failures is high. With decreasing probability of failures, the costs can decrease by up to 32% (+1.76 to –4.27 USD/m³). The study demonstrates that simple and low-cost measures can improve business processes in forest supply chains and achieve considerable cost savings.

Keywords:

• business process reengineering
• business process modeling
• discrete-event simulation
• supply chain management
• forest biomass
• Germany

Acknowledgements

The authors would like to thank all the enterprises and entrepreneurs who provided their valuable time and data, especially Metsäpalvelu Turunen in Eno, Waldbesitzervereinigung Holzkirchen, and MW Biomasse in Feldkirchen-Westerham. Furthermore, the authors would like to thank Lars Eliasson of Skogforsk in Uppsala, Sweden, for providing his expertise for the opportunity cost calculations.