Taking Stock: Feric Measures Wood Storage Effects
January 1, 2007 By Pulp & Paper Canada
FERIC and Paprican have worked together since 1997 to estimate the effects of storage duration on the production of mechanical and chemical pulps. The project focused on a decision-support tool, prese…
FERIC and Paprican have worked together since 1997 to estimate the effects of storage duration on the production of mechanical and chemical pulps. The project focused on a decision-support tool, presented in the form of a Microsoft Excel spreadsheet, and was the result of studies conducted by FERIC, Forintek and Paprican on various aspects of wood storage, such as the effects on quality, yield and wood properties.
Named Opti-Stock, this program uses estimates from Forintek studies on the consequences of storage for sawmills. Combining the results of these studies into a single model permits a mill’s supply manager to simultaneously compare a large number of elements and select a storage strategy that will reduce overall production costs. At the same time, woodlands managers can estimate the amount of money that they can rationally invest in their road infrastructure or trucking system in order to extend the haul season and reduce storage duration.
The model groups costs into four categories that together explain the effects of wood storage on supply and production costs: logistics, financial and operational aspects, product yield, and transportation to the mill. Each category of cost responds differently to changing storage duration. As shown in the first figure, the upper curve provides the optimal storage period, which occurs at the point where the total supply cost (the sum of all costs) is the lowest. This optimal value depends on the relative importance of the costs for each category that influence the total cost.
Each category of costs includes several factors that can increase or decrease that category’s share of the total cost. The following description of the cost components in each category helps explain how the model addresses various scenarios.
The logistics category represents the overall cost incurred to ensure a steady flow of fibre to the mill. This cost is difficult to quantify, but represents a particularly important aspect of the analysis, especially for short storage durations or when considering “just in time” scenarios. The costs associated with logistics reach a maximum when there is a high risk of fibre shortages at the mill (i.e., when the wood inventories in the forest and the wood yard are very low). In this situation, additional harvesting capacity and a reliable road network are required to ensure that the mill supply is not interrupted. Managers must also predict and plan for rapid deployment of harvesting contractors to provide the complete range of products required by the mill. Improved planning, monitoring and control systems also become essential to permit a rapid response to changes in operating conditions (e.g., heavy rains, which interrupt transport). As storage duration approaches zero, the logistics costs climb rapidly because the risk of running out of wood increases greatly, even in scenarios defined by managers as presenting relatively low risk.
The second category of costs comprises financial and operational costs. This category is characterized by a linear increase in each of its cost components, as illustrated in Figure 3. The “Bleaching” and “Inventory” cost curves are the most important components in this category.
FERIC and Paprican have worked jointly to evaluate the effects of storage on the production costs of mechanical and chemical pulps. The results demonstrated that the cost of bleaching mechanical pulp increased noticeably with increasing storage duration for unfrozen wood. The Opti-Stock model uses the results of a study for four types of pulp: chemical pulp (Kraft), TMP for newsprint, mechanical pulp at 70 ISO brightness points and a mechanical pulp at 78 ISO brightness points. Based on these results, the model calculates the impacts of wood storage on the cost of bleaching chemicals, on the fibre’s dry density and on the fibre’s brightness.
The wood’s storage duration creates an inventory cost for the company because it ties up the capital invested to accumulate the stocks of wood in the wood yard and in the forest. Mill-yard storage also often adds an insurance cost to protect against losses (e.g., against the risk of fire). An additional handling cost is also associated with larger inventories, since the loaders in the wood yard will probably have to travel longer average distances or perform more repeat handling to supply the mill. All these costs increase as storage duration (and thus, the inventory level) increases.
The problem with building up inventories during certain seasons of the year is that it requires more machines during this shorter period, and these machines are then underutilized during the remainder of the year; in contrast, using machines consistently throughout the year would require fewer machines, each of which would be more fully utilized. Machines that have a lower annual utilization rate have a higher hourly direct cost than machines that can be utilized consistently throughout the year.
When larger quantities of chemicals are used to maintain the brightness of mechanical pulp, the treatment costs for mill effluents also increase. Using an economic model for the treatment of pulp mill effluents, we quantified this increase and added it to the model.
When wood is harvested during summer, it dries during storage. A study found that the energy consumption to produce lumber from dry wood increased by around 30% compared with the energy consumption for producing lumber from fresh wood.
Yield and losses
Product yield tends to decrease with increasing storage duration, primarily due to the increasing dryness of the wood. This cost category estimates the costs associated with volume losses during the processing of roundwood, lumber and pulp. The curves in Figure 4 illustrate the relative importance of each component. The curves generally increase exponentially with increasing storage duration in summer. During the first weeks, the additional costs are relatively small, but they become significant with prolonged storage.
A FERIC study found an increase in breakage during the handling of stems in the wood yard as storage duration increased. This breakage reduced the yield during the slashing phase and reduced the number of logs entering the mill. Another study demonstrated a fibre loss of around 6% during ring debarking of dry wood. The calculation of fibre loss as a function of wood dryness and storage duration (time since felling) is based on the in-woods and millyard drying rates of wood during summer storage. This fibre loss is then converted into financial losses at each production phase.
Lumber yield is affected by storage duration in two ways: downgrading of “premium” lumber caused by discolouration of the wood and decreasing the yield of “standard” lumber as a result of processing dry wood. Discolouration of the wood prevents the sawmill from producing the full available volume of “premium” lumber.
The yield at pulp mills that use peroxide for bleaching (to produce pulps with 70 and 78 ISO brightness points) decreases because the mill must use more chemicals to bleach these pulps as storage duration increases. In general, lignin-preserving bleaching does not produce significant yield losses. However, for peroxide bleaching, the pulping yield decreases as chemical consumption increases, largely because of the required alkali charge. Presumably, additional alkali is necessary to reach the brightness targets by neutralizing the wood acids formed during storage.
Reductions in fibre yield lead to the previously discussed cost increases, but also result in lost profits. These can be estimated by establishing the profit margins for each product. The model automatically calculates these “opportunity costs” as a function of storage duration.
The transportation costs category represents a significant factor in the analysis because w
ood storage in the forest can reduce transportation costs by reducing the amount of water that is hauled. As with logistics costs, this category is one in which costs decrease as storage times increase.
When the transportation of roundwood from the forest to the wood yard occurs immediately after harvesting, the high density of the “wet” wood sometimes causes haul trucks to reach their maximum legal load weight for public roads before using all the available volume in the trailer. Wood storage in the forest during summer reduces the wood’s moisture content (and thus, its weight) sufficiently to increase the volume of wood hauled per trip. The model calculates the reduction in transportation costs as a function of the in-woods storage duration and the haul conditions. Eventually, the maximum volume is attained in the trailers and the savings slow to the point that trucking rates are readjusted by wood supply managers and the cost per m_ stabilizes.
When wood is processed at a sawmill, the chips produced during sawing are usually trucked to a pulp mill. Debarking and chipping dry wood at the sawmill can increase the quantity of chips with unacceptable dimensions (i.e., can produce more pins and fines) as well as increasing the bark content of the chips. The model penalizes the chip haul to account for the losses associated with producing lower-quality chips from dry wood.
Optimal storage duration
Once the individual cost components have been established, they can be combined to produce a total-cost curve whose shape can vary depending on the storage scenarios considered, and especially on the storage season and the duration of storage in the woods and the mill yard.
Opti-Stock helps the mill’s supply manager answer the following questions:
* How do costs change as a function of storage time, and what is the optimal storage duration?
* Where is the most cost-effective location (forest, satellite yard or wood yard) to store harvested wood?
* What is the impact of harvesting large volumes of wood during the winter?
* Are decreases in fibre yield significant based on the company’s current storage strategy?
* Is it realistic to reduce wood inventories to zero and adopt a just-in-time delivery system?
* How much can I invest in my forest road infrastructure or in my transportation system in order to haul during a longer period and thus reduce storage time?
By using the spreadsheet, a number of sensitivity analyses can be performed to help choose the most cost-effective approach for managing inventories of softwood roundwood. The spreadsheet can be used to simulate specific storage conditions for the operational context.
Jean Favreau, F.E., M.Sc.E., is the program leader – Decision support software and logistics at FERIC. For more information, please call 514-694-1140 or e-mail: email@example.com.
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