The forestry value chain is challenging and complex. Forest product companies have actively collected data from key business drivers along each step of the value chain for many years, with the goal of improving their operational efficiencies.

However, without a holistic, 360-degree view of their captured data, companies struggle to make data-driven decisions that can impact their planning efforts.

By uniting siloed data and activities with an Integrated Business Planning solution, forest products companies can realize the true value of their data and make finance-driven decisions in real-time to optimize business outcomes.

The Benefits of Integrated Business Planning for Forest Products Companies


Integrated business planning is a process that enables a company to align its business goals with its finance, supply chain, and other operational and development activities. For the forest products industry, an Integrated Business Planning solution brings visibility to the data collected from the many siloed, purpose-built systems used, by connecting them in a central platform.

It becomes a single source of truth for organizational-wide planning and forecasting. Having greater visibility to key data means that:


  • Resource teams have an increased understanding of production demand and can make more informed decisions about activities such as: which parcels to bid on, species to harvest, and mills where logs should be delivered.
  • Production teams are better informed about the quantity of incoming logs (supply) and amount of lumber outgoing (sales demand) which can help them make decisions about what species to cut and which products to produce. It also enables production teams to more accurately predict the risk of running out of logs, and the need for workforce overtime, proactive hiring, or scheduled downtime.
  • Sales teams are provided with valuable insights into finished inventory and timing to help improve customer acquisition rates. These insights include finished products in inventory, products being produced and their associated lead times to completion, and type and volume of residuals available for sale.

Understand the Financial Impact of Decisions at Every Step of the Value Chain


How does having greater visibility of your data with an Integrated Business Planning Solution enable more informed, finance-driven decisions? Having access to all your key business drivers on a common platform, enables you to model complex planning scenarios to determine those activities that meet immediate financial objectives, as well as long-term company goals.

In the forest products industry, understanding the financial impact of planning decisions can help FP&A teams forecast with greater precision, optimizing profitability at every step of the value chain from the forest to the customer.

There are several business drivers from different LOBs in the forest products value chain that contribute to integrated business planning:

1. Resources

The resource group, at the start of the value chain, is responsible for assessing timber land, making bids, and creating the logging schedule that identifies the timing to harvest the trees and ship the logs to the mills or production facility.

One of the business drivers that is important to planning at this stage is the timber under contract (TUC) or the parcels of land and trees owned. This would include purchases month-to-date with value by species.

The logging or harvest schedule details are critical, as they outline the timing of when the parcel of land would be cut down and identify which mills the logs would be delivered to by what date.

2. Log Inventory

To minimize mill downtime due to a shortage of raw materials and keep up with customer demand, it is critical for forest products companies to have a current estimate of their raw log inventory.

In addition to data collected by manual or drone counts of log decks each month, log usage information by species, by month is also a key business driver. Log usage metrics are calculated by the projected yield or recovery from a log, including associated residuals. Applying recovery rates to the beginning log inventory and adjusting for incoming and outgoing deliveries, help forest products companies forecast log inventory and changes in inventory calculations.

3. Production

At the production stage of the value chain, it is important to know what each mill is going to produce daily. What species are they cutting? What products are they cutting? Breaking down key business drivers by machine centre can also help with overall planning. What is going through the sawmill, the kiln, the planer? Capturing critical information by mill location gives forest products companies the ability to then aggregate these data points to determine company-wide production levels.

FP&A teams can then use this information to measure production across mills and tie all operational detail back to the P&L. Since every mill is different, the aggregated data also gives operational leaders a standardized scorecard to monitor operational efficiency.

4. Lumber Inventory and Sales

For FP&A teams in the forest products industry to accurately forecast volumes of MBF, they need to have a strong understanding of their company’s lumber inventory. FP&A teams can use green end volumes collected from operational systems, such as LumberTrack, to calculate lumber inventory levels.

Forecasting lumber inventory levels by species, then analyzing key product attributes such as size and grade, help determine available volumes of MBF by specific customer requirements.

With access to these product attributes by centralizing the cut schedule on an Integrated Business Planning platform, the FP&A team can easily associate a dollar value to lumber inventory.

In addition, the sales team can put together accurate customer proposals with specific timelines to aid in successful customer acquisition.

5. Workforce

Critical to the forest products value chain is a workforce to ensure its success. The business drivers from other LOBs such as resources and production, help to plan out the type of workforce required to turn logs into lumber.

For example, how many general mill labourers and supervisors are needed to support production? Will the jobs be hourly positions that need set hourly and overtime rates? Or salary positions that need to have defined salary, bonus, and commission amounts?

By associating position and benefit-cost drivers to workforce requirements, FP&A teams can then forecast out and understand the expenses that will be incurred to support the team.
Connecting business drivers in the value chain with an Integrated Business Planning solution gives forest products companies the competence to understand the financial impact of planning decisions, empowering leaders and improving business outcomes.
Our specialized experience in deploying Integrated Business Planning solutions with Forest Products companies means we understand your business processes and the way your teams interact with data.

Contact us to learn how your company can optimize LOB planning and forecasting across the value chain.

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