This article by Setu Goyal, a student from TERI University, deals with supply change management issues related to biomass-based projects and tries to suggest plausible solutions for these issues.
Biomass resources have been in use for a variety of purposes since ages. Their multitude of uses includes usage as a livestock feed, or for meeting domestic and industrial thermal requirements, or for the generation of power to fulfill any electrical or mechanical needs. However, one of the major issues associated with the use of any of biomass resources is its supply chain management. The resource being bulky, voluminous and only seasonally available produces serious hurdles in the reliable supply of the feedstock, regardless of its application.
The idea is, thus, to have something which plugs in this gap between the biomass resource availability and its demand.
The supply chain management in any biomass based project is nothing less than a big management conundrum. The complexity deepens owing to the large number of stages which encompass the entire biomass value chain. It starts right from the resource harvesting and goes on to include the resource collection, processing, storage and eventually its transportation to the point of ultimate utilization.
Owing to the voluminous nature of the resource, its handling becomes a major issue, since it requires bigger modes of logistics, employment of a larger number of work-force, and a better storage infrastructure, as compared to any other fuel or feedstock.
Not only this, their lower energy density characteristics make it inevitable for the resource to be first processed and then utilized for power generation to make for better economics.
All these hassles associated with such resources, magnify the issue of their utilization when it comes to their supply chain. The seasonal availability of most of the biomass resources, alternative application options, weather considerations, geographical conditions, and numerous other parameters, make it difficult for the resource to be made consistently available throughout the year.
This results in poor feedstock inputs at the utilization point which ends up generating energy in a highly erratic and unreliable manner.
Although most of the problems discussed above, are issues inherently associated with the usage of biomass resources, they can be curtailed to a larger extent by strengthening the most important loophole in such projects – The Resource Supply Chain.
World over, major emphasis has been laid in researching upon the means to improve the efficiencies of such technologies. However, no significant due diligence has been carried out in fortifying the entire resource chain to ensure such plants with a continuous resource supply.
The usual solution to encounter such a problem is to have long term contracts with the resource providers to not only have an assured supply but also guard the project against unrealistic escalations in the fuel costs. Although this solution has been found to be viable, it becomes difficult to sustain such contracts for longer durations since these resources are also susceptible to numerous externalities which could be in the form of any natural disaster, infection from pests or any other socio-political or geographical disturbances, which eventually lead to an increased burden on the producers.
All these problems call for a mechanism to strengthen the value chain. This can be done by considering the following things:
- Assuring a readily available market for the resource providers or the producers
- Assuring the project developers of a reliable chain and consistent feedstock availability
- Awareness to the project developer of the resources in closest proximity to the plant site
- Assurance to the project developer of the resource quality
- Timely pick-up and drop of resource
- Proper fuel preparation as per technology requirements
- Removal of intermediaries involved in the process – to increase value for both, the producers as well as the buyers
- No need for long term contracts (not an obligation)
- Competitive fuel prices
- Assistance to producers in crop management