Cost Analysis of Introducing a Log Identification System Using RFID in the Wood Supply Chain: A Case Study at a Swedish Forest Company

doi:10.4236/ajibm.2012.24017

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American Journal of Industrial and Business Management, 2012, 2, 128-135

http://dx.doi.org/10.4236/ajibm.2012.24017 Published Online October 2012 (http://www.SciRP.org/journal/ajibm)

Cost Analysis of Introducing a Log Identification System

Using RFID in the Wood Supply Chain: A Case Study at a

Swedish Forest Company

Daniel Timpe, Leif Olsson, Johan Sidén

Department of Information Technology and Media, Mid Sweden University, Sundsvall, Sweden.

Email: [email protected]

Received June 2nd, 2012; revised June 29th, 2012; accepted July 30th, 2012

ABSTRACT

A cost analysis for the possibility of a log identification system using Radio Frequency Identification (RFID) is pre-

sented in this paper. The introduction provides a brief description of the RFID technology and its usefulness within the

area of forest logistics. Information network mapping is used to facilitate an understanding of the current information

flow and identification requirements along the supply chain. The cost analysis is performed using the method of

break-even analysis using nine different scenarios by means of a case study at the Ortviken paper mill, which is located

in central Sweden. The analyses of the processes in the supply chain revealed that the poten tial exists to streamline op-

erations and to make more efficient use of the available resources by implementing an open loop RFID-based log

tracking system in the supply chain using read only tags. Furthermore, this study indicates that even in those cases in

which RFID does not provide any major improvements to the firm’s inventory management; it is still possible to

achieve economic benefits. However, implementation of such a system will require further development of, in particular,

the RFID tags to satisfy the feasibility requirements in the wood supply chain.

Keywords: Log Stamping; Forest Logistics; Track and Trace; Break-Even Analysis; RFID

1. Introduction

There has been a steady increase in the use of informa-

tion technology in the transport and logistics sector.

These information systems consist of advanced business

systems, decision support systems using operation re-

search methods [1] and different devices for track and

trace of the products along the supply chain. One possi-

ble technology for track and trace is Radio Frequency

Identification (RFID).

The term RFID describes technologies that use radio

waves to extract data from a microchip to a reader. The

data stored on the microchip can be used to identify peo-

ple and various kinds of objects on which the microchip

can be mounted. The microchip and the small antenna

attached to it are called an RFID tag and general techni-

cal information of its advantages and disadvantages can

be found in [2].

At present more and more attention is being paid to

RFID in a variety of industries. As the prices continue to

drop, more and more companies are exploring the bene-

fits possible through the implementation of this technol-

ogy. Typical applications of RFID range from the identi-

fication of pets and livestock, access control and toll col-

lection, to baggage and parcel identification and object

tracking in various industrial supply chains. Some dif-

ferent RFID tags are depicted in Figure 1.

Tags can be active, meaning the requirement of a bat-

tery which results in longer maximum read ranges but

also a higher cost and a limited lifetime of five to ten

years. Alternatively they can be passive, thus no battery

is necessary, but, in this case, the requirement is then for

the power to be supplied by the reader’s interrogating

radio wave. Tags may be distinguished from one another

based on whether they are Read-Only (RO) tags, Read-

Write (RW) tags or belong to the Write Once-Read Many

(WORM) class of tags.

According to [3] passive RO tags are the simplest and

cheapest RFID tags and are pre-programmed by the chip

manufacturer. They carry a serial number, which can be

retrieved by reading the tag, but no additional d ata can be

stored on the chip. If these tags are used in an application

where additional data is required on the tagged item, a

central database is necessary where the serial number of

the tagged items is linked to any required addition al data

for the object. Passive RO RFID tags are evaluated in

this study since they are well suited for use within the

forestry supply chain.

Cost Analysis of Introducing a Log Identification System Using RFID in the Wood Supply Chain:

A Case Study at a Swedish Forest Company 129

Figure 1. Examples of RFID tags for different applications.

Furthermore, there are two types of systems: An open

loop RFID system and a closed loop system as described

in Figure 2. In an open loop, tags will van ish in the pro-

duction process and every log tagged receives a new

transponder. In contrast to that, in a closed loop tags are

recycled, i.e. removed from the logs before they enter

into productio n and re-used on fresh lo gs.

In the open loop system, proposed in this paper, the

number of required tags, becomes the main cost driver.

Thus, the number of marked logs must be kept at a mini-

mum in order for the costs to be as low as possible. The

key to this problem is the question of what (e.g. individ-

ual log, log batch, log pile) actually must be identified at

what stage along the chain.

The greatest obstacle to large-scale, global imple-

mentations of RFID systems has been the lack of interna-

tional standards and certification. Hence, a standard is

proposed by the Electronic Product Code (EPC) organi-

zation [4] tags are usually designed with a sufficiently

wide band to be read in all regions.

Forestry is an industry that deals with perishable re-

sources. To ensure the quality of the wood in paper pro-

duction, it is crucial to log the correct forest area at the

correct time and to ensure that the logs do not remain

unprocessed for any great length of time. Efficient plan-

ning of and control o ver the activities in the supp ly chain

therefore plays a major role in maintaining a cost effec-

tive operation.

However, track and trace in forestry is a challenging

task due to the harsh environment for the devices being

used. Nevertheless, logs arriving at a paper mill or fac-

tory must be identifiable. The ability to trace them back

to their area of origin is important in order to deal cor-

rectly with ownership and payment issues and in addition

ensures that all logs are processed within the projected

timescale and that a sensible plan for future logging ac-

tivities exists. It should be noted that at present this

tracking is performed manually.

Therefore, the purpose of this study is to investigate

the possibilities of using the RFID technology to take

advantage of its unique benefits in terms of the quantity

Figure 2. An open loop system compared to a closed loop

system for logs with RFID tags.

of information that can be stored and retrieved and fur-

ther automation of identification procedures throughout

the supply chain. The main focus refers to whether or not

this technology has the capability to improve the effi-

ciency along the supply chain, e.g. by enabling a reduc-

tion of lead time and inventory levels.

Note that no log iden tification technolog y has yet been

put in place that provides handlers with easy access to

data regarding the age of the logs. Thus, time control is

still limited and a major problem, which still exists for

the forestry industry involves losses from deteriorated

wood fiber, as described in [5].

It should also be noted that the functionality of com-

puter based decision support systems using operations

research (OR) methods in forestry is heavily dependent

on accurate and efficient data management. Hence, the

use of RFID is expected to promote the use of OR-sys-

tems within forest logistics, such as those systems de-

scribed in [6-8].

The entire project presented in this article has been

undertaken in the form of a case study, investigating the

prospects for an RFID-based log tracking system for the

SCA Skog AB Ortviken paper mill in Sundsvall (Swe-

den).

SCA is a large, Sweden-based, international paper

company with annual revenue of rough ly SEK 90 billion.

It manufactures a variety of products, ranging from pub-

liccation papers to packaging solutions and hygiene

products. SCA Skog is part of SCA Forest Products, one

of the many business groups of SCA. Its task is to man-

age the forests SCA owns in Sweden, which amounts to

2.6 million hectares.

To coordinate logging and shipping activities, forestry

firms, such as SCA, assign numbers to the different log-

ging areas. These numbers identify associated forest

owners and the nature of their business relationship with

regard to contracts, payment agreements, etc.

Furthermore, these numbers enable the logging and

processing teams in the forests to identify the correct

assigned location. If logs lie idle and unprocessed for too

long the wood deteriorates to such an extent that the

Cost Analysis of Introducing a Log Identification System Using RFID in the Wood Supply Chain:

A Case Study at a Swedish Forest Company

130

quality of the finished product is adversely affected. In

the case of paper products, such deteriorated wood fiber

always requires the extensive and costly use of chemicals

on the pulp during its process. Therefore, good planning

and control is crucial.

It is vital to identify th e correct unit of logs to b e iden-

tified at the various stages along the chain. In the Ort-

viken supply chain, logs lie in piles in the forest, which

are subsequently loaded onto the trucks in stacks for

haulage to the mill. Thus, log piles and log stacks are the

two kinds of units that must be identified and traced

along the Ortviken chain. Our focus in the case study is

on the day-to-day operations. The costs incurred during

this phase are thus solely operational and are driven

mainly by the costs involved in the daily tagging acti-

vities. In addition, some cost saving b enefits may also be

found from the use of RFID during this phase. However,

at present, the Ortviken paper mill is not yet capable of

providing flexible treatment for log batches, which has

been fine-tuned according to the specific characteristics

of the batch in process even if the necessary information

was to be made known.

Figure 3 illustrates how information is communicated

along the chain. The division charged with the planning

of logging activities and ensuring an adequate supply to

the mills must communicate to the harvesting and ship-

ment teams those areas requiring attention. These teams

must then report their progress to the planning division.

Once a shipment of new logs has arrived at the measuring

station of the mill, it is accounted for and its arrival infor-

mation is communicated back to the planning division to

ensure that the most recent information is always on hand

for the managers to plan future activities and give out new

assignments.

One of the most commonly used techniques for marking

logs involves providing an identification number by

stamping the log. Stamping is carried out manually onto

the cross sections of the logs once they have been har-

vested and piled in the forest. The necessary equipment

involves an ink pad and a metal core to which different

Hands

rders

Hands

out

orders Report

back

Report

back

Planning Division

Shipment

teams

harvesting

teams

Meas uring

Station

Figure 3. The information flow along the wood supply

chain.

number plates can be attached. However, sometimes the

marking is even more simplified as depicted in Figure

4. Unfortunately, the ink usually used is very sticky and

difficult to get rid of once it has touched either skin or

fibre which makes this manual stamping a very dirty,

tedious and time-consuming process even if only 20% of

the logs are usually marked.

Although no fully operational RFID-based log track-

ing system has yet been developed, the potential of this

technology with regard to log identification is obvious.

The issue raised further attention when Cambium Forst-

betriebe, a German forestry firm received the 2005 Com-

puterworld Honor Award for Innovation in Manufactur-

ing for their promising pilot project that tested RFID

nails for log identification [9]. However, for the case

study presented in this article, the relevance of Cam-

bium’s RFID efforts is limited due to several important

differences between SCA and Cambium. Since Cambium

is a medium-sized business whereas SCA is a large co-

operation, there are significant differen ces with regard to

the inefficiencies from which the two companies suffer

and their ability to ach ieve economies of scale.

In general, the major challenge with regard to the im-

plementation of a fully operational RFID system re-

mains that of find ing a tag design that fits both the work-

ing requirements and cost effectiveness targets of the

firm simultaneously. In this paper we only focus on the

cost effectiveness and some feasibility issues can be

found in [10,11 ].

However, some feasibility requirements concern the ac-

tual handling and thus relate to ergonomics, while others

concern the restrictions on wood contamination often set

by the mills and requirements regarding weather resis-

tance and durability.

Furthermore, processing wood fiber for paper produc-

tion is a very sensitive procedure that can easily be

harmed if the fiber is contaminated with too much un-

wanted material. Therefore, in the SCA case, the labels

and the tags used on the wood logs should carry the

minimum possible objectionable material (plastics or

metals) into the processing. In contrast, paper is tolerable

Figure 4. Piled logs with traditional paint marking.

Cost Analysis of Introducing a Log Identification System Using RFID in the Wood Supply Chain:

A Case Study at a Swedish Forest Company 131

as a tagging or labeling material as it unable to withstand

the high temperatures involved in processing the fiber

and thus simply vanishes.

The handling and shipping of logs involves a great

deal of heavy machinery, which requires the label or tag

in question to be very robust and rugged. Moreover, the

tags or labels must be sufficiently weather resistant to

remain unharmed if left unprocessed outdoors for several

weeks.

With respect to the above-described requirements, for

instance, barcodes are not feasible alternative to RFID as

described in more detail by [10]. Hence, this cheap al-

ternative is no option in the forestry supply chain.

The organisation of the rest of this paper includes a

brief discussion about research methods in section two,

and then the results from case study follow in section

three. Conclusions and the discussion are in section four.

This paper concludes with acknowledgements and refer-

ences.

2. Model and Method

At the very beginning of the investigation an exploratory

and empirical approach to the subject was required in

order to obtain a deeper understanding of the problem.

To understand the processes involved in forest logistics,

the A-R-A model, developed in Ford [12] proved to be

very useful.

At a later stage, information network mapping was

required in order to facilitate the comprehension of the

current information flow and identification requirements

along the chain. The concept of value-adding time vs. non-

value-adding time, introduced in [13] has then been ap-

plied in order to categorize the activities along the supply

chain and identify those processes that are the least effi-

cient.

An analysis of the cost structure along the Ortviken

paper mill supply chain was conducted to identify those

costs that were expected to change if RFID technology

was deployed. It should be noticed that the effect of

RFID technology on lead times and inventory levels

were not known. Hence, breakeven analysis using sce-

narios was the cho s en method.

Different assumptions have been made with regard to

the changes involved in these costs and different sce-

narios have been developed based on these assumptions.

In a break -even anal ysis the break -even point in terms of

the price per RFID tag was identified for all the nine

scenarios, assuming different marking frequencies.

As will be shown below, two cost categories were ex-

pected to be influenced by the deployment of RFID and

thus formed the foundation for the break-even analysis.

That results in the following:

Total expected cost change = change in cost category

A + change in cost category B

For both categories we developed 3 assumptions re-

garding their possible behavior in an RFID system. Thus

the scenarios developed as follows:

 Scenario 1: 1st assumed change in category A + 1st

assumed change in category B

 Scenario 2: 1st assumed change in category A + 2nd

assumed change in category B

 Scenario 3: 2nd assumed ch ange in category A + 2nd

assumed change in category B

The key question of the analysis then was: How much

may an RFID tag cost under a given marking frequency

to make the total costs of scenario x match present day

total costs along the supply chain? The answer to that

question yields the upper price limit that is tolerable un-

der the assumption that the costs of categories A and B

behave in a certain way if RFID in utilized. A break-even

point was thus reached as the following formula des-

cribes:

Break-even point scenario x:

present day costs = costs for RFID tagging(x) +

change in category A(x) + change in category B(x)

When presenting the relevant costs, only those expect-

ed to be influenced by an implementation of RFID are

taken into account. All other costs can be disregarded

since they are irrelevant to the question regarding the

circumstances under which an RFID application becomes

cost effective. Note, furthermore, that the actual details

of costs and volumes are confidential information for

SCA. Hence, the results are presented using relative

volumes and no specific details about the involved costs.

The relevant costs are described below.

 One of the costs that are taken into account is the

marking of logs, which consists of the stamping ma-

terial and labour;

 Another cost category that must be considered in-

volves inventory costs. They represent the capital lock-

up caused by materials lying idle at various points

along the chain;

 Due to the deterioration of wood fibers a certain

amount of wood must be downgraded to a lower qua-

lity class. One of the expected benefits of RFID is

better control over lead times, which should result in

a better utilization of resources and more precise ti me

planning of shipping activities.

The most interesting variable to investigate is the price

per RFID tag. It is the main cost driver of the system and

finding the right price level is crucial in order to maintain

the economic viability of the system. As tag prices and

properties vary greatly, it is crucial to know the break-

even point for the price per tag. As was explained above,

there are two factors, namely inventory and downgrading

Cost Analysis of Introducing a Log Identification System Using RFID in the Wood Supply Chain:

A Case Study at a Swedish Forest Company

132

co s t s t h at are expected to be influenced by an implementa-

tion of RFID. To discover the break-even price per tag

when these t wo fact ors a re assu med to behave i n a particul ar

way , i n v o l v e s t h e d e vel opment of different scenari os.

One assumption is to take into account the worst case

scenario namely, that RFID does not fulfil the expec-

tations and no reduction of inventory can be achieved.

Another reasonable assu mption is that RFID leads to a

particular reduction in inventory, but does not actually

minimize the inventory costs. The value chosen through

discussions with SCA Skog for this moderate change is

that the inventory level should be reduced down to

83.3% of its original cost.

In an ideal situation, SCA claim that they will only

require 60% of the present inventory level to support

their operations. Thus an interesting assumption for in-

vestigation is that by implementing RFID, SCA actually

manages to reduce its inventory to that level. To summa-

rize, the three chosen assumptions regarding inventory

are:

• No change (n/c ) 10 0% o f p resent costs;

• Moderate change (mod/c) 83.3% of present costs;

• Maximum change (max/c) 60% of present costs.

In a manner similar to that for the inventory, the pos-

sibility of no change in downgraded volume must be

taken into account. Thus, downgrading costs would re-

main unchanged even if RFID was used.

Since downgrading is a problem caused directly by

insufficient information there is no “ideal” level of down-

gr ading . However, one may hope to eliminate down grad-

ing as far as possible by implementing RFID. Therefore,

the value chosen for the assumption of a moderate change

is a reduction of downgraded wood by 50 percent .

Even though the id eal would be the total elimination of

downgrading, it is no t reasonable to assume that this is in

fact achievable. Even when the most sophisticated tech-

nology is available, human error remains a factor that is

extremely difficult to eliminate entirely. Furthermore,

the pace of deterioration of wood fiber is highly de-

pendent on weather conditions, which may affect, for

instance, the standard of forest roads [14], which is

subject to daily fluctuations that are difficult to predict

with an y d egr ee of c er ta in ty. Thu s, it is more r e ason ab le

to assume that a certain volume will always have to be

downgraded. Taking that into account, the assumption

regarding the maximum change is that downgrading will

be reduced to no more than 20 percent of the present

volume. Thus, the three assumptions involved in the

downgrading result in:

• No change (n/c ) 10 0% o f p resent costs;

• Moderate change (mod/c) 50% of present costs;

• Maximum change (max/c) 20% of present costs.

Based on these six assumptions, the nine different

scenarios descri bed i n Table 1 are developed.

In Table 1, a) stands for the price per RFID tag for

which the break-even point for the costs for the corre-

sponding scenario are achieved .

In the no change/no change situation, a figure b) is

added, which represen ts the price per tag in a situation in

which the marking costs are doubled. This is the maxi-

mum additional costs approved by SCA for the case

where there are no benefits from RFID. Thus, in the no

change/no change situation, this is another possibility

that has been taken into account. Nevertheless, it must be

kept in mind that these additional costs can only be toler-

ated on a temporary basis.

Note, that b) refers to a situation in which only mark-

ing costs are doubled, not a situation in which overall

costs (marking, inventory and downgrading) are twice as

high. By contrast, a) shows the price per RFID tag at

which the total costs (marking, inventory and downgrad-

ing) equal the current total costs.

After developing the nine scenarios regarding inven-

tory and downgrading, three different degrees of RFID

implementation are chosen.

The first of the three analyses shows how much a tag

may cost if each stack (i.e. a package that goes on the

truck) receives one RFID tag, but no tags are placed on

the piles. The second analysis assumes that each pile and

each stack receive one RFID tag and shows the corre-

sponding price per tag levels that can be tolerated. Fi-

nally, the third analysis is based on the assumption that

each pile receives one tag while each stack receives two.

By granting two tags to each stack, the final analysis

takes into account the possibility that on e may sometimes

need to compensate for malfunctioning tags. The level of

two tags per stack and one per pile was chosen because it

is reasonable to assume that with th is additional number,

it will always be possible to identify log piles and stacks.

However, this does not necessarily mean that these ad-

ditional tags mu st actually all be attached to the stacks as

it is equally possible to place them on the piles, without

the results of the calculations being affected.

3. Results

It is important to realize that the figures used in this study

Table 1. The nine different scenarios used in the break-even

analysis put in a matrix.

change Downgrading

mod change Max

change

No change a), b) a) a)

Mod Changea) a) a)

Inventory

Max Changea) a) a)

Cost Analysis of Introducing a Log Identification System Using RFID in the Wood Supply Chain:

A Case Study at a Swedish Forest Company 133

are estimates and averages and that the actual values may

fluctuate with seasonal changes. Furthermore, the vol-

ume per pile varies widely but it may be assumed that the

total number of piles processed during the course of one

year is 1963 and the number of stacks is approximately

33 times greater than this figure.

After careful evaluation of the situation at hand it was

decided that a closed loop RFID system is not feasible in

the Ortviken supply chain. Thus, the following cost ana-

lysis was undertaken in order to design an open loop

system.

When evaluating the different scenarios, the assump-

tion has been that the marking-related labour costs will

remain at the present level for all the scenarios. The ac-

tual labour costs for an RFID implementation are highly

dependent on the technique used to mount the tags.

However, at present, marking takes between 10 and 20

minutes per pile and it is reasonable to assume that this

will not significantly change with the switch to RFID.

3.1. First Assumption: One Tag/Stack

Table 2 shows the different prices per RFID tag for the

situation where the corresponding scenario arrives at

present day cost levels. It illustrates, for instance, that if

there is a modest change in downgrading and a maximum

change in inventory levels, RFID tags may cost SEK

62.03 at most for the system to be economically viable.

As was mentioned previously, the no change/no change

scenario includes an extra figure that refers to a situation

where marking costs are twice as high as at present.

What can be seen in Table 2 is that the greatest po-

tential to make actual cost savings involves reducing the

inventory levels because the costs per volume for inven-

tory are much higher than those for downgrading.

Regardless of the amount of downgraded volume, a

reduction in inventory levels from a “no change” situa-

tion to “maximum change” always frees up an additional

SEK 55 per tag. By contrast, assuming that inventory

levels are fixed, moving from a no change in downgrad-

ing to a maximum change only involves savings of addi-

tional SEK 10.

It must be realized that actually achieving a price level

Table 2. Results from the assumption of one tag per stack.

change Downgrading

mod change Max

change

change SEK 0.9,

SEK 6.6 SEK 7 SEK 10.68

Mod

Change SEK 23.8 SEK 29.93 SEK 33.6

Inventory

Max

Change SEK 55.9 SEK 62.03 SEK 65.7

of only SEK 0.90 per tag in a no change/no change situa-

tion will be very challenging. It is more realistic to as-

sume that an actual price per tag will be closer to the

tolerable upper limit of SEK 6.60 for this scenario.

3.2. Second Assumption: One Tag/Stack and

One Tag/Pile

In Table 3 a situation is referred to in which each stack

and each pile are marked with an RFID tag and shows

the corresponding break-even price levels, as well as the

pr eviously explained extra figure in a no change/no c ha ng e

situation.

Note that when comparing Ta ble 2 with Table 3, mov-

ing from only marking stacks to marking piles and stacks

does not have a significant influence on the allowable

cost levels. The maximum deviation from the figures in

Table 2 occu rs in th e sc en ar io wher e th e re is a max i mu m

change for both inventory and downgrading levels. In

that case, the break-even price limit is SEK 1.90 lower

under this second assumption than was the case in the

first scenario.

3.3. Third Assumption: Two Tags/Stack and One

Tag/Pile

As was mentioned previously, the third assumpt ion, with

results presented in Table 4, represents a situation where

the maximum possible number of tags is taken into ac-

count. However, this does not imply that all of these tags

must actually be distributed in the way suggested by the

calculation. It is equally possible for them to be placed

on piles, which provides an increased protection against

theft.

Note that, under this assumption, moving from a no

change to a maximum change in inventory while retain-

ing the same downgraded volume, merely frees an addi-

tional SEK 27. The extra amount of money that can be

spent if downgrading is reduced to a minimum while the

inventory remains constant is roughly SEK 5.

4. Discussion

An analysis of the processes in the supply chain at the

Table 3. Results from the assumption of one tag per stack

and one tag per pile.

change Downgrading

mod change Max

change

change SEK 0.88,

SEK 6.4 SEK 6.8 SEK 10.37

Mod

Change SEK 23.12 SEK 29. 06 SEK 32.6

Inventory

Max

Change SEK 54.3 SEK 60.2 SEK 63.8

Cost Analysis of Introducing a Log Identification System Using RFID in the Wood Supply Chain:

A Case Study at a Swedish Forest Company

134

Table 4. Results from the assumption of two tags per stack

and one tag per pile.

change Downgrading

mod change Max

change

change SEK 0.45,

SEK 3.25SEK 3.45 SEK 5.25

Mod

Change SEK 11.73SEK 14.75 SEK 16.55

Inventory

Max

Change SEK 27.45SEK 30.55 SEK 32.36

Ortviken paper mill revealed that the potential exists to

streamline operations and make more efficient use of

resources by implementing an RFID-based log tracking

system in this supply chain. This system should be an

open loop, using inexpensive, passive, RO RFID devices.

However, it is impossible to provide general recom-

mendations with regards to the specific properties for

future RFID log tracking systems as they are dependent

on the specific requirements of the particular supply

chain. Technically, satisfying both the material cons-

traints set by paper mills and the requirements for the

working environment is challenging but not impossible.

When considering an implementation of RFID, two

issues must be considered carefully. One involves the

question regarding what log units need to be identifiable

at what point in the chain. Once these units and points

have been identified a decision must be taken regarding

whether to implement a closed loop system or an open

loop system.

Furthermore, the analysis of cost structures along the

chain and the examination of the various scenarios have

shown that there is considerable potential to design a

customized tag without exceeding tolerable cost levels

regarding prices per tag. It can also be shown that fa-

vourable changes in inventory levels and the volume of

downgraded wood resulting from RFID both lead to sig-

nificant cost savings. That, in turn, enables additional

money to be spent on RFID tags without violating break-

even price limits.

It is reasonable to assume that a suitable tag for the

application can be designed without violating the price

limit of SEK 3.25 (ca. US-$ 0.43), calculated for the

worst case scenario using the highest percentage of

marked logs. Thus, it can be concluded that the prospect

exists to create an RFID-based log tracking system using

customized RO RFID labels that operates at tolerable

price levels for day-to-day operations, even when the

assumption is made that no reduction in inventory levels

or downgraded volume can be achieved.

Therefore, it makes sense to further investigate the

technical aspects of such customization, while bearing

the cost restrictions in mind. Furthermore, it is advisable

to investigate how RFID can be integrated with other

technologies (e.g. GPS) to further au tomate and facilitate

log tracking procedures in the wood supply chain for the

future.

5. Acknowledgements

First of all we thank Daniel Timpe for doing his his

bachelor thesis at Mid Sweden University and an Intern-

ship at SCA Skog working with the presented problems.

We thank Mårten Larsson and Per Anders Hedström at

SCA Skog and Hans-Erik Nilsson at Mid Sweden Uni-

versity for their assistance and guidance throughout this

project. We also thank FSCN at MIUN and SCA Skog

for financing the investigation.

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