E-business could provide a significant edge in an “extremely competitive” forest industry, Forest Industries Development Council chairman Alan Bloomfield told a conference held recently in Dunblane as a follow-up to the launch of the ‘e-Business Forum’ by the Scottish Forest Industries Cluster. “At a minimum,” he told delegates, “there is a 10% reduction in supply chain management costs to be achieved.” The aim of e-business and the forum was to promote greater collaboration between forestry-related com-panies in a bid to improve supply chain management and “make the market work more efficiently”. Strong backing from Scottish Enterprise (SE) was providing Scotland’s forest industries with “a huge window of opportunity” to embrace e-business, but this support “will not always be there”, warned Mr Bloomfield.
A 2002 survey from SE involving 163 forest industry companies in Scotland revealed that only 17% had an e-business strategy and 31% an e-business budget, compared with national averages of 26% and 46% respectively. Forest industry companies were more likely to permit customers to place orders on line but only 5% were prepared to allow customers to pay electronically compared with the Scottish average of 11%, according to SE’s e-business senior executive Sarah Jouannot.
According to the survey, forest companies appear to show significantly more interest in accessing new customers via the internet and reducing purchasing costs than the average Scottish business, but at the same time there were certain barriers to increased adoption of e-business. Ms Jouannot said: “Forest industries companies appear to be much more concerned about the risk of fraud than the average Scottish company. They also appear to be more influenced by the fact that their customers do not use e-business.” A third of companies believed the “benefits of e-business are outweighed by the cost implications”, she added.
E-business efficiencies
SE’s senior director for e-business Charlie Watt said that failure to embrace e-business could result in loss of competitive advantage and a comparatively costly supply chain. E-business provided users with improved market knowledge, a lower cost base, more flexibility, improved channels to market and better customer service, he said.
The conference offered several examples of forest-related companies that were already taking advantage of e-business opportunities. Themia Hastie, group IT manager at Nexfor, explained that her company had been asked to act as a “hub” for the development of an online order tracking system. Launched in January 2002, this was already used by eight customers and would be rolled out to others during 2003, she explained. Recent additions included an e-mail alert for changes to orders and XML invoicing to suppliers, while future possibilities included online stock availability information, online auctions, customer sales analyses and complaint tracking.
The exercise had been valuable in that it had “forced us to look at our business processes” and had identified cost-saving opportunities – for example, Nexfor was saving £35,000 per year on its pre-printed paper bill. Companies should look to embrace e-business at the earliest opportunity since its adoption “takes longer than you think”, Ms Hastie advised.
Vinod Thayil, logistics business analyst with Finnforest UK, emphasised that e-business was not merely a website but an information transfer and sharing tool. Within a year of beginning its IT collaboration with Nexfor, the cost to Finnforest of sending faxes to the panel producer had been slashed by two-thirds. He said that the company’s use of EDI was still in its early stages, but that it had been told that it might save it up to 90% of the cost of conventional document processing.
Automated data extraction
Steve Atkins, Forest Enterprise‘s head of systems management and development, highlighted some of the potentially fruitful forest industry applications for e-business. In the timber grower/processor relationship, for example, the electronic route could be adopted for notification of roadside stock for uplift; for sending of dispatch details to the customer and weighbridge weight details to the supplier; and for invoicing and self-billing.
A pilot project involving BSW and Forest Enterprise has led to the development of a ‘by industry, for industry’ internet-based trading data standard known as e-FIDS. According to Mr Atkins, it has the potential to equalise data requirements throughout the industry, while also allowing the automation of data extraction and processing. While still at an early stage, it was hoped this would help users to achieve reduced transaction processing costs, less checking of manual systems, easier reconciliation, reduced stationery/postage costs and improved cash flow.
Prior to implementing the standard, forestry com-panies would have to carry out a thorough analysis of their requirements, including an assessment of the computer hardware held by their business contacts. A switch to the standard would also entail program/software changes, a revision of business practices, and training of in-house staff and customers/suppliers.
