Integrating product portfolio design and supply chain design for the forest biorefinery

Supply chain (SC) design involves making strategic long-term decisions for a company, e.g. number, location and capacity of facilities, production rates, flow of material between SC nodes, as well as choosing suppliers and markets. The forest biorefinery is emerging as a promising opportunity for improving the business model of forest product companies; however it introduces significant challenges in terms of mitigating technology, economic and financial risks each of which must be systematically addressed in the SC design. In this regard, product portfolio definition and technology selection are two important decisions that have rarely been considered in a systematic SC evaluation. This paper presents a methodology, in which product/process portfolio design and SC design are linked in order to build a design decision making framework. According to this methodology, design of "manufacturing flexibility" links product/process portfolio design to SC design, through a margins-based SC operating policy. Techno-economic studies along with scenario generation for price and demand changes representing market volatility are employed in the methodology. (C) 2010 Elsevier Ltd. All rights reserved.