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[LVM] Operational Planning Solution Saves LVM Millions

Background

JSC Latvijas valsts meži (LVM) is Latvia’s State Forests organization.

Challenge

LVM harvests approximately 12,000 harvest units per year with an average size of 1.9 ha resulting in 4.9M m3 of wood against a mixed wood basket producing almost 80 species/product sorts, and feeding more than 50 domestic roundwood mills and export pulpwood markets. Operations for harvesting, transportation and roading are large and complex and products are shipped long distances to meet domestic and export markets where an individual harvest unit produces up to 16 products.

Solution

Since 2011, LVM has been implementing an Operational Planning solution with Remsoft to help manage this complex supply chain, resulting in their decision-support solution for optimizing wood assortment production and delivery planning, called “OPT,” used for monthly and annual planning.

OPT is used three to four times each month to create harvest and delivery schedules for the coming months. They are implemented throughout the organization to push information containing the needs of the sales, production and supply organizations within and take into account forestry restrictions and conditions. They have observed significant benefits since implementing Remsoft, especially in reduction in transportation costs, improved contract fulfillment execution, and a reduction in product downgrade.

Remsoft solutions have driven transportation savings for this client in two ways. First, there has been a significant reduction of total distances driven with and without load. Secondly, transportation distance are not rising year to year despite ongoing weather condition complexity and overall plan changes for each year. This is significant because their trucks drive over 25 million kms to 140 destinations every year. LVM has calculated that they've cut a minimum 2 km off each round trip since implementing OPT and overall estimate a 4% reduction in transportation cost which saves €1,200,000 annually.

From 2011 to 2015, the client has experienced a 9% improvement in contract fulfillment, resulting in happier customers, as well as an overall improvement in their ability to meet product and species mix requirements. Better planning helped reduce the loss of potential revenue from product downgrade by 5% from 2013 to 2014, and 17% from 2014 to 2015. They also reduced product storage needs and improved their inventory management. This has all resulted in bottom line savings and a worth while return on investment for LVM.

“Using OPT, we can effectively steer and manage our complex supply chain, on both an annual and monthly basis. We can model scenarios, allowing us to make better decisions about our operations and sales processes, and providing our clients a high level of service in our delivery process. As a result, OPT utilization has resulted in significant cost savings to LVM. ”

- ANDRIS BALODIS, DIRECTOR TIMBER PRODUCTION AND DELIVERIES

Contact Us

For more information on how Remsoft could improve your short term planning processes, contact us at www.remsoft.com or info@remsoft.com 

LVM Case Study FINAL.pdf

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