Quality of beech (Fagus sylvatica L.) wood was studied through different phases of peeled veneer production. These phases included control of logs at the timber-yard and their cutting (shortening), as well as veneer peeling, its cutting on wet shears, drying, and cutting on dry shears. The loss of raw material in each of the phases was determinated, and solutions for its reduction recommended. The results show that the quality of supplied raw material has been decreasing over the period of the last 5 years. The analysis of cut logs reveals that the biggest losses occur due to released growth stresses. The computer controlled cutting of logs can reduce these losses. A majority of losses caused during the computer controlled peeling is due to rounding of the logs, because of inability to use the central parts of the logs remained after peeling, and in case the logs are oversized (too long). The veneer is checked with optical scanners before cutting on wet shears. The scanners recognize only the defects that transmit the light, but they cannot detect the ones in wood colour and grain. The volume shrinkage of the peeled veneer during drying is 12.6 %, which is expected. The quality of dry veneer proved to be in acordance with the quality of the raw material. The defects like growth stresses, tension wood, and knots provoke twisting and splitting of the veneer in the process of drying. Final cutting of the veneer on dry shear depends on its end use. The veneer for outer layers of the plywood needs to be of the highest quality and without defects.