AI developments in the timber industry

How AI can help the trading of timber become more efficient

While digitalisation has already shown its advantages in many markets, the wood industry is still largely traded through traditional channels, which is often resulting in unnecessary complexity. Prices are not transparent and information about previously concluded deals is difficult to obtain.

Online trading platforms are bringing together buyers and sellers of timber and puts them in direct digital contact with each other. This not only offers access to up-to-date information about the availability of wood, but also information about its origin, quality and sustainability. By connecting all supply and demand digitally, it also offers opportunities for the use of artificial intelligence (AI).

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AI offers advantages for wood trading

The use of AI offers numerous advantages in various sectors and is already almost indispensable. This includes well-known systems such as ChatGPT, Google Bard and many others. The wood industry is also experimenting with and profiting from AI to a certain extent. The great advantage is that it contributes to more efficient and accurate processes within production, both in sawmills and at prefabricators.

Companies can use this to optimise inventory management and planning of logistics processes, but it can also be used for quality controls. Systems then automatically carry out timber inspections and detect deviations, which results in improved product quality.

A good example is an American startup that uses the technology to analyse each felled tree and determine how it can be sawn as efficiently as possible so that as little wood as possible is lost. In Sweden, forestry companies also make extensive use of AI by using it for monotonous production processes, such as determining how long wood chips have to be cooked before they turn into pulp or recognising traces of the bark beetle.

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AI for better deals

After almost two years of bringing buyers and sellers of wood together, VonWood's data offers a lot of interesting information about the trade. In combination with the data collected in recent years, it also gives a glimpse into the future. The data is only becoming more extensive with the connection of more and more users.

Based on this data, models are built that make it easier to enter into future deals. For example, VonWood can help buyers to make smart purchases and sellers to stock the right wood or determine a better price point. And with each purchase through the platform, the models become even better and more specific.

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Computer-controlled price predictions

Ultimately, supply and demand are the most important factors in determining the price of wood. And precisely this supply and demand can be predicted better and better, which reduces fluctuations, friction and waste in the chain. Traditionally, wood price indications are based on historical data, market analyses and expert opinions. However, AI offers the possibility of making more accurate and real-time predictions based on much more and more detailed data.

This can be achieved by training models on the basis of data from previous purchase prices and with more relevant external variables. For a good prediction of the demand for wood, it is possible to look at, among other things, price fluctuations of other building materials that also determine how attractive it is to choose wood. And on the other hand, currency fluctuations can be an indication.

Another application of AI in the wood trade is to predict prices based on location. AI models can use historical price data, logistics information, current requests and market trends to predict where the most competitive prices can be offered at a given time. For example, it may be more interesting to buy a little further from home if the data shows that the supply is a lot more attractive elsewhere at that time, of course taking into account the possible negative impact on the environment and transport costs due to longer distances. This helps to optimise purchasing and distribution strategies and can lead to significant savings.

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Reducing residual waste with AI

With all the available data, we expect to soon start making price predictions, but we are also thinking ahead about the possibilities for the future. For example, our platform is considering helping sawmills to reduce their residual waste in the future, a major challenge in the wood trade.

Determining the ideal diameter of wood blocks for sawing is a complex task. Too many cuts lead to waste, while a low production of particular sizes offers too little returns. AI can play a crucial role here. By using algorithms and collecting data on wood requests, purchase orders and trends, AI can determine the optimal diameter for each wood block.

This not only minimises residual waste, but also increases sawing efficiency and overall profitability.

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Sustainable future

Nothing is as volatile as prices and it will remain a challenge to make good price predictions. However, with the help of large amounts of data, AI models can recognise patterns and trends that we humans cannot see so easily ourselves. This then enables wood buyers and sellers to make better informed decisions about purchasing, sales and inventory management.

Based on these predictions, they can respond to expected price fluctuations and thus also improve their efficiency. In this way, artificial intelligence offers exciting opportunity that opens the doors to a more transparent and sustainable future.

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Important note: Currently all negotiations on the VonWood platform are handled by actual people and there is no artificial intelligence directing or coordinating pricing, offers or requests. The above mentioned examples are tests conducted in isolated datasets and do not influence any market pricing.

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At VonWood, we lie at the crossroads where production meets trade. We’re proud of being at the cutting edge of the industry, while it’s just as important to us that we maintain a deep respect for how our industry has evolved to get us here. With this in mind, we are always excited to share innovations such as those in prefabrication with you, knowing that together we safeguard the rich legacy of our trade by embracing its evolution into the future. To find the right timber for your needs, you can get in touch with us at info@vonwood.com.

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