Management of outsourced forest harvesting operations for better customer-contractor alignment

Abstract

Performance of harvesting operations is vital for wood supply chains to enable delivery of the right product to the right market at the right price. Consequently, the performance of harvesting contractors has been the topic of many studies over the years, but few of these have investigated the critical issue of whether contractor performance is in alignment with downstream needs. Furthermore, no previous study has suggested a clear route that forest companies can take to promote alignment of their employed contractors. This paper presents a framework specifically designed to help managers measure and foster contractor alignment within their wood supply chain.The framework was tested on a large sample of harvesting contractors operating in Sweden, for which a performance survey and a statistical procedure was utilized to segment contractors into groups of varying levels of alignment with their customer company. Results from the test were then used to suggest to the customer’s managers the most viable blend of four generic alignment approaches for each contractor group: active sourcing, adapted incentives, active use of power advantage, and tailored contractor development programmes. If implemented, such a structured but differentiated approach to contractor alignment should lead to the most beneficial response from each contractor, and eventually to improved performance of the wood supply chain. Consequently, forest companies need to use, and be proficient in the use of, a variety of approaches to contractor alignment to make the most of their contractor force.