Scenario-based strategic supply chain design and analysis for the forest biorefinery using an operational supply chain model

- A scenario-based approach for designing the biorefinery supply chain (SC) is introduced.
- Market uncertainty is reflected in the problem through generating market scenarios.
- Company's constraints and policies are addressed by making SC network alternatives.
- SC optimization is used to calculate the profit of alternatives in case of each market scenario.
- Performance metrics are used to analyze the performance of alternatives.

Supply chain (SC) design involves decisions for the long term, e.g. determining products, process technologies, number, location and capacity of different SC nodes, production rates, as well as suppliers, markets and partners. The forest biorefinery (FBR) is emerging as a new possibility for improving forestry companies' business models, however introduces significant technological, economic and financial challenges-which can be systematically addressed in strategic SC design. In order to reduce the burden of such challenges, partnership with companies whose expertise brings value and experience to the forestry companies' new business model is essential for FBR implementation. In this regard, redesigning the forestry SC in order for it to be aligned and consistent with the partner's SC, and in other words, designing a new integrated SC is of crucial importance.This paper presents a scenario-based approach to strategic SC design for the FBR, designing the SC based on the impacts of the design on operational SC activities. Two kinds of scenarios are used; market scenarios representing market volatility and SC network scenarios (referred to as alternatives) representing different biorefinery options/strategies. In order to analyze the impacts of SC alternatives on operational activities, a tactical/operational SC model examines the advantages and disadvantages of each alternative by exploiting the capability of the SC for flexibility in the case of the market scenario realization. This demonstrates the impact of each scenario on SC profitability. It will also show how integration scenarios may result in better economic performances compared to the case when the forestry company implements the biorefinery on its own and hence, it reveals how forestry companies can benefit from the created synergies.