Identifying key factors for the success of a regional logistic center

Abstract

The forest industry, facing an evolving market with a diversified resource and divergent production processes, has to revise its business practices and its sorting and transportation operations in particular. Our project aims to identify the parameters having an influence on the profitability of a regional logistic center comprising both a sorting yard and the sharing of transportation resources. Using a profit maximization model and a forest products supply chain encompassing six mills in the Mauricie region of Quebec, Canada, we tested four scenarios involving the use or not of a sort yard and the use of one delivery vs. combined deliveries at a time. Results show that both the sort yard and the use of routing bring higher profits for the supply chain. A sensitivity analysis conducted for four parameters (transportation costs, distances to forests, number of oversize trucks, and sorting costs at the yard) also highlights that lower sorting costs at the sort yard have the greatest impact on the logistic center profitability.