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What’s Keeping Lumber Industry Giants Up at Night?

by | IntelliTrans | Oct 29, 2020 | Blog News

Interfor’s VP of Logistics reveals the key fulfillment and transportation issues that his organization is dealing with right now and tells what the organization is doing to ride out these waves and prepare for the future.

As companies across all industries cope with the impacts of the global pandemic, economic recession, and other external factors, the push to infuse more technology into supply chain and logistics functions has accelerated.

Knowing that manual systems take up too much time, inhibit productivity, reduce efficiency, and introduce a high number of errors, more organizations are implementing supply chain management platforms that help ease those pain points.

 

Tracking the Shifts

With 16 sawmills located throughout the U.S. and Canada, softwood lumber producer Interfor Corporation relies on a team to run its supply chain and transportation networks. Shipping mostly via flatbed trucks, rail and  intermodal (for North America), and ocean container (for its international export business), Interfor’s logistics network is complex and growing.

When COVID-19 hit in early-2020, trucking capacity was in “great shape” and readily available, according to Craig Dohm, Interfor’s VP of Logistics. “Carriers were out there looking for business,” he adds. “That’s since changed, and now we’re managing in a much tougher environment.”

Interfor has also seen shifts in buying behaviors within its customer base, which includes large home improvement retailers like Home Depot and Lowe’s. With more people working from home and/or adhering to stay-and-home orders, the DIY renovation and rehab trend picked up tremendous momentum.

 A major supplier to the lumber treating sector,  Interfor has tweaked its supply chain to accommodate a spike in demand for this and other products. “We've focused our business on ensuring that the home improvement retail segments don’t run out of wood,” says Dohm.

As Interfor works to keep up with that demand, it’s also dealing with a challenging logistics environment, and predominantly within the trucking sector. “We’re working through capacity constraints in some markets right now,” Dohm explains, “and some other challenges that we didn’t expect, given some of our initial projections about how the pandemic would impact our business.” (Early on, the company planned for a significant decrease in demand for its products.)

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“We Need it Right Now”

For years, the “Amazon Effect” has been reducing the amount of time both B2C and B2B customers are willing to wait for their stuff. The pandemic accelerated this trend even further, pushing companies like Interfor to speed up their delivery times. “It’s not even about just-in-time at this point; it’s ‘we need it right now, and we need you to make it happen,’” Dohm explains.

To accommodate these requests, the company moved over to using more over-the-road trucking versus rail for more of its Southern Yellow Pine business. “Customers were prepared to pay truck rates to get product sooner because they were afraid that the market was going to shift,” says Dohm. “They were also taking product more quickly in order to mitigate potential risks.”

Using IntelliTrans’ transportation management system (TMS), Interfor was able to successfully make the shift over to using more truck transportation while also maintaining good visibility over its end-to-end supply chain. The platform also helps Dohm manage an ongoing anxiety point that he has in any market conditions: trucking and rail capacity.

“We’re a 12-month-a-year business, so the seasonality of demand keeps us on our toes all of the time,” says Dohm. “We work constantly to ensure that Interfor is always on the forefront for our key carriers.”

Riding a High Wave

Right now, the lumber industry is riding a high wave that Interfor plans to ride “for as long as we can,” according to Dohm, whose team works to form strong bonds with its customers, knowing that it sells commodity products that are 1) available from different sources and 2) prone to frequent price fluctuations.

“We know that our customer relationships are important and that there's a lot of give and take in our business,” he says. “We sell a commodity and the price of our products changes every day. If demand starts to wane, we’ll have to adjust our operational and pricing strategies. Then, we’ll just follow the market.”