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[Green Diamond] Gaining Insight and Validation from Optimized Strategic Planning

BACKGROUND

Green Diamond Resource Company is a fifth-generation, family-owned forest products company, managing working forest land in an environmentally responsible manner in California, Oregon, and Washington.

CHALLENGE

Due to the topographical diversity of Green Diamonds  Washington tree farm, certain areas have been historically difficult to access. In some cases established roads from previous harvest entries were decommissioned. Some of these decommissioned roads had provided access to large management blocks with high production value. The company knew getting back into these areas could cost anywhere between $500k and $5M, much more expensive than their average road cost for an established road network. For Green Diamond, this was one of the biggest financial issues they faced when looking at long range harvest forecasts, and these high-elevation road reconstruction costs meant these harvest units might suffer continuedeferral.
Additionally, some of Green Diamonds Washington tree farm was impacted by severe ice storms that damaged trees, forcing planners to include salvage harvest decisions into their existing schedules.  
Finally, Green Diamonds goal to maximize net present value (NPV) was also being challenged by market price sensitivity and fluctuating pulpwood demand.

SOLUTION

Green Diamond adopted a Strategic model, built on Remsofts Woodstock commercial software, starting in 2015.  This has given them a repeatable decision support platform from which to validate existing choices and compare new high impact decisions for the business.


The optimization planning process improved Green Diamond decision making by helping visualize and clarify decision options and through increased communication - from senior leadership, members of the ownership group, and managers to engineers and foresters. With advanced analytics now at their fingertips, the team could readily analyze various model scenarios to choose the preferred management option with the optimal balance of operational and financial feasibility. Scenario comparison provided insight into modeling assumptions and outcomes with transparency into the tradeoffs of each decision, and long-standing stewardship principles could now also be tested scientifically from financial and operational perspectives. To provide a stronger return on investment (ROI) for Green Diamonds high-elevation road costs, the model schedules harvest only once peak financial maturity is reached for an aggregated area. As such, there must be adequate eligible units in that area to provide a clustered harvest unit pattern for maximized road usage. This was achieved by building a mixed integer programming model that provided constraints to set time limits on how frequently high elevation areas can be accessed, while also preventing abandonment of these high value/high cost units from the management schedule.  

The optimized schedule (i) allowed for more focused and clustered logging operations on expensive roads, (ii) maintained required levels of mature canopy cover to meet regulatory requirements for protecting hydrological functions, and (iii) gave the team confidence they were sequencing the harvest units to achieve maximum NPV in concert with overall tree farm harvest levels.

Green Diamonds Washington model produced new harvest schedules that garnered operational efficiencies and avoided volume surplus or shortage penalties at mill destinations, while providing a balanced, sustainable level of products over the entire management horizon, including salvaged harvest of storm damaged wood.


Easy reporting allowed the team to source statistics, plans, and content for evidence-based decision making from a single source. The improved management planning process has allowed Green Diamond to produce a more realistic and operational schedule, that serves strategic and tactical goals for long-term sustainability and maximized financial value from their land assets, while remaining aligned with their longstanding commitment to environmental excellence.

CONTACT US
For more information on how a Remsoft planning solution can benefit your operation, contact us at remsoft.com or planning@remsoft.com.

Green Diamond Strategic Case Study.pdf

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