Digital transformation of the timber supply chain is more relevant at present than ever before. Timber tracking is one example of digital transformation, and can be performed in various locations, from the forest to the mill, or even beyond, to the final timber product. The integration of new technologies in the forestry and timber industries should contribute to enhancing supply chain efficiency and safety. For this purpose, a new timber tracking and processing system was tested by integrating RFID (Radio Frequency IDentification) technology with digital survey tools and intelligent machines, into a smart timber supply chain. A case study on this process was carried out in a mountain forest in Austria. The tags were used to link information to single items (trees and logs) and transfer relevant data (species, diameter, length, volume, defects, density, stiffness, branchiness, etc.), throughout the whole supply chain. The performance of the technology was analyzed by means of process flow, bottleneck, and risk analyses. Fourteen spruce trees went through the supply chain process from the forest stand to the log yard, monitored by the new timber tracking and processing system. The results revealed that the new system is useful for transferring information through the timber supply chain, and the system costs remained at a normal market level. The weakest point in the supply chain was the processing of the trees by the intelligent prototype processor. A high error rate and low durability lead to higher idling time and harvesting cost, but the findings of this study can be used to further improve this system. All other processes worked well and were at a marketable level.