SCDigest editorial staff

The News: Wood, paper and pulp producer Weyerhaeuser announced this week it was restructuring the company and combining a number of its wood-based businesses to streamline its supply chain and moving to a new manufacturing and distribution model in other areas.

The Impact: Many companies in industries not often considered as supply chain-focused are now starting to “get religion” and make SCM improvements a cornerstone of their competitive efforts, as global competition changes traditional industry dynamics.

The Story: Weyerhaeuser, A $22 billion dollar producer of paper, wood and related products, said this week it was reorganizing and combining five previously independent divisions related to the manufacturer and distribution of wood products into a single new division called iLevel.

The goal was in large part to simplify the order process to customers by giving them “one face” into the company. Previously, a home builder would likely have had to place separate orders with different individual divisions to get all of the materials required for a job.

This move is similar initiatives undertaken in the past by many companies ranging from Kraft Foods to Sherwin Williams that seek to give customers a single path to place orders and get billed, rather than the multiple transactions that can be required in a decentralized order and shipping model/

The move is designed not only to improve customer service but to reduce inventories through better visibility of both supply and demand, the company says.

Other units of Weyerhaeuser are also being revamped to improve supply chain effectiveness and responsiveness. The company is spending $220 million this year, it said, to renovate 100 of its paperboard factories to respond more quickly to customer orders.

In that business, Weyerhaeuser is deploying a “hub and spoke” manufacturing model, in which a single plant in a geographic region will be responsible for making high volume products, focused on efficiency, while smaller plants will produce lower volume, specialty products.

iLevel is designed not only to reduce costs but to be a driver of revenue growth, the company said, as it intends to become more of a “value-adding” provider to its customers than just a traditional products supplier.

Lee Alford, senior vice president of Residential Wood Products for Weyerhaeuser, said  “Weyerhaeuser is changing from a product-driven manufacturing business to that of an integrated, market-driven culture – a necessary approach to remain successful long into the future.”

The building products and paper industries are two of many that have been slow to adapt to customer and supply chain-focused organizations, but that is changing. A couple of years ago, for example, International Paper embarked on a broad scale supply chain transformation.