Toggle Categories

Log Profitability

HALCO's LogProfitability™ system has been developed as an improved alternative to traditional Return-to-log (RTL) analysis.  RTL is the standard forest-industry term for the value of products developed from a log when it is converted to products, less the conversion cost.  RTL values are obviously useful as a measure of value and as a guide to purchasing and selling prices, however there are some significant shortcomings.  RTL values are often determined through execution of a series of detailed log tests.  This is problematic, for a number of reasons:

  • Executing the tests is very costly
  • Mill tests are notoriously inaccurate. One reason for this is the “mill test effect”, where the mill performs better during testing. Unfortunately, for the purposes of RTL calculation, one cannot be certain that the extent of the “mill test effect” will be equal for different log classes, or on different days.
  • The results will be valid only for the sawing practices in place on the day of the test. Once any variable is changed – even something as common as a target size or saw kerf change – the results are no longer valid.

It can even prove very difficult to hold these variables relatively constant for the amount of time required to run the required series of mill tests!

  • Mill tests can provide useful information about recovery and product mix derived from a given log sample, however the information they provide about mill flow is of very limited worth because:

Mill throughput can be highly variable hour-to-hour or shift-to-shift due to breakdowns

Knowledge of how a particular sample of logs flows through the mill when run in isolation is not necessarily indicative of how that sample runs as a component of the overall log mix

  • Reporting criteria is limited to the granularity of mill test samples

Running a mill test of 5-7" top diameter logs gives you information about the 5-7" top diameter grouping but tells you nothing about how 5, 6 and 7" logs perform relative to one another

The LogProfitability™ system combines HALCO’s WOODSIM™ (bucking simulation), SAWSIM® (sawing/peeling simulation) and WOODMAN™ (linear programming optimization) to model your process from delivered logs to finished products, ready for market.  Since a well calibrated simulation model of the facility is at the heart of the model, it is relatively easy to incorporate the changes that occur over time and investigate potential changes before moving forward.

The primary inputs to LogProfitability™ are:

  • Log scale data
  • Mill bucking practices
  • Processing facility operating parameters

Sawmill

Veneer mill / Plywood plant

  • Lumber/veneer/plywood and byproduct market information

 

From these inputs, LogProfitability™ produces reports that summarize the following both overall and qualified by any field or combination of fields available in the underlying scale data (e.g. vendor/source/forester, species/diameter/length etc.).

  • Profit/loss
  • Key operating metrics of the processing facility 
  • Volume and value of finished products produced and sold

 

In addition, detailed analyses can be conducted, as required, to show the reasons for the variations in profitability between supplies or loads.  The system make it possible to compare the profitability of loads that have been purchased or obtained from different sources, and to learn from experience. Where log profitability analysis has been used, this experience has been used with great effect in negotiations with suppliers.

 

Please click here for an example of LogProfitability™ program output.

TOP