Raw material inventory management is an area of concern
for many pulp and paper companies in the northeastern United States and
procurement managers for pulpmills are frequently faced with difficult decisions
related to their wood fiber inventory levels. The objectives of this study were
to discern the factors affecting raw material procurement decisions and to
develop an understanding of how these factors influence the inventory levels at
15 northeastern U.S. kraft and groundwood pulpmills. In order to compare the
mills under study, which have widely differing pulp
outputs,
the inventory levels reported here refer to the number of days of fiber supply
kept in inventory during the year. The factors affecting the demand for pulp and
the supply of pulpwood were gathered using onsite interviews and a mailed survey
instrument and data were collected showing typical inventory levels. According
to respondents, the top five factors that influenced procurement decisions were
the demand for paper, the availability of wood, the cost of wood, the weather,
and the form and length of supplier contracts. As expected, the factors were
correlated. Four inventory level patterns were discerned from the data provided
by respondents. Three out of the four inventory patterns peaked in March due to
timber availability issues caused by wet weather in the spring and were typical
in Maine. The fourth inventory pattern peaked in November and was typical of
mills south of Maine. Weather was the only factor that clearly influenced the
shape of the inventory level patterns.
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Material requirements planning and fiber inventory level
management practices are two areas within the northeastern United States pulp
and paper industry where little research has been done. Because pulpmills have
recently been faced with raw material supply issues caused by increased raw
material prices and logging strikes, these areas are now receiving more
attention than ever (Elliott 2004).
Procurement managers refine their pulpwood and chip
("fiber") inventory levels to account for both paper demand and raw material
supply. The link between wood buyers and sellers is critical to the success of a
company, therefore, constant communication between the two entities is
paramount. Moreover, the procurement manager must adjust buying patterns to
account not only for demand, but also for other factors related to the
availability and the cost of fiber. For example, a change in the price of
roundwood will affect operating profits, but inventory levels must be maintained
to support the needs of the pulpmill and, usually, an associated papermill.
The purpose of this study was to develop an understanding
of how the demand for pulp and other factors affect raw material procurement
decisions and how these factors influence fiber inventory level decisions.
Specifically, the objectives were to:
