COVID-19: Navigating disruption in forest products

May 8, 2020

The continuing crisis

COVID-19 has rapidly become a global crisis, and in the forest products industry, it is disrupting the entire value chain. In response, forest products companies have quickly taken steps to protect their people by implementing work-at-home programs and restricting access to offices, mills, plants and timber plantations.

The impact of the pandemic varies across industry sectors. In some, mills have been shut down. While in others, production has been increased to meet COVID-19-driven demand for tissue and other paper products. But across the board, forest products companies are experiencing unpredicted events. And the crisis appears to be far from over.

In this environment, companies need to continue to take actions to protect employees and limit disruption. At the same time, they need to keep an eye on the future and develop ways of working that will allow them to manage through future disruptions and thrive in the long run.

Managing the response

Many forest products companies have already risen to the challenges presented by COVID-19. But the impact of the pandemic is both widespread and profound. Companies need to take continued, comprehensive action. Sound governance is essential, with the ongoing involvement of senior leadership and cross-function representatives. Other near-term priorities include:

Keep people safe

Continue to explore innovative strategies to protect people, including the use of remote operating centers and mobile technology to reduce the need for on-site personnel.

Conduct financial due diligence

Assess the company’s current financial position and the impact that different scenarios will have on revenue. Mitigate risk and be ready to identify opportunities that may arise from market volatility.

Reduce operational exposure

Create a rapid-response supply chain task force; assess potential supply chain disruptions; work with suppliers and other stakeholders to validate business continuity plans; and engage the workforce in finding ways to reduce the impact of the crisis on operations.

Monitor and report

Track the health of the workforce and the sentiment of stakeholders across the value chain. Develop a risk-assessment process and update it regularly. Use Applied Intelligence technology to accelerate monitoring and increase responsiveness.

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Reinventing the forest products industry

Acting today, building for tomorrow

As they work to limit business disruption and revenue loss, forest products companies can also consider ways to position themselves for the future. To do so, they should focus on “North Stars” within five foundational areas.

1. Embrace remote ways of working

These uncomfortable times provide an opportunity for leadership to engage differently, increase communication, connect with employees and show their support. The North Star: Embrace virtual work, upskill employees and automate workplaces for an elastic and digital future.

2. Anticipate unpredictable demand

Getting fresher demand signals as inputs to the production planning process is a major challenge for forest products companies. The North Star: Monitor information from new sources that have a current pulse on consumer demand, create end-to-end visibility and connect with the right partners to develop accurate demand sensing.

3. Figure out what to make and how to source it

Demand signals and stability of supply have been impaired across the forest products industry, including large demand fluctuations for products such as toilet paper. The North Star: Implement a supply chain control tower to minimize the impact of volatility and manage the confluence of inputs to outputs.

4. Ensure inbound and outbound delivery

There are a range of complications across different modes of transportation due to travel restrictions, a lack of available containers and slowed import from and export to China. The North Star: Use big data, analytics, supplier relationships and ultimately autonomous logistics to map transportation networks and increase resilience.

5. Rethink your assets

The COVID-19 pandemic is causing operational shutdowns, but some forest products companies are adjusting by shifting to production of essential medical equipment. The North Star: Continue to work toward product innovation beyond the crisis, looking at more sustainable inputs and improving your ability to quickly pivot products.

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Looking even further ahead, forest products companies can use the imperatives created by the COVID-19 crisis to brainstorm how they can be more resilient as the world continues to change. For example, how might they adapt their circular economy strategies with health in mind? How can autonomous operations help build flexibility? And how can companies adjust their product strategy to adapt to change and disruption?

Ultimately, forest products companies will need to act fast today, and at the same time, think carefully about the future—and find ways to build on the lessons learned from the COVID-19 crisis.