Management of outsourced forest harvesting operations for better customer-contractor alignmentby Mattias Eriksson, Luc LeBel, Ola Lindroos

Forest Policy and Economics

About

Year
2015
DOI
10.1016/j.forpol.2015.01.002
Subject
Management, Monitoring, Policy and Law / Economics and Econometrics / Forestry

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ng es, S rue

Keywords:

Forest harvesting contractor

Service attributes

Supplier relations

Customer-perceived value era ce. C , but few of these have investigated the critical issue of whether contractor perfordecades. In forestry, large forest companies all over theworld common- were no longer under their direct control, but also new opportunities

Forest Policy and Economics xxx (2015) xxx–xxx

FORPOL-01233; No of Pages 11

Contents lists available at ScienceDirect

Forest Policy an j ourna l homepage: www.e lly outsource operations such as silviculture, harvesting, trucking and road construction to independent contractors.1 Many forest companies started to outsource most of their harvesting operations to small contractors in the 1980s and early 1990s, usually by offering to sell their machinery to selected machine operators who could then continue as independent contractors (e.g. Hultåker, 2006). The outsourcing of harvesting operations introduced a new business interface to the wood supply system and put both forest companies and newly-started contracting businesses in new roles as customers and contractors of such as the increased flexibility associated with outsourced resources.

These new conditions changed theway forest companies couldmanage their harvesting operations and, consequently, their supply chain.

The fact thatmost harvesting contractors can be classified as small or medium-sized enterprises (SMEs) implies certain diversity among them. While some contractors are entrepreneurially oriented (St-Jean et al., 2010), and, by taking entrepreneurial action are likely to vitalise the wood supply system, other contractors are likely to be motivated by lifestyle objectives rather than business objectives (Drolet and

LeBel, 2010; Wang et al., 2007). Small and medium-sized businesses⁎ Corresponding author at: Department of Forest Bioma

University of Agricultural Sciences, Skogsmarksgränd, 90 60193174.

E-mail addresses:mattias.eriksson.skog@sca.com (M. (O. Lindroos). 1 In this article, the term “contractor”, which is commo is preferred over its near-synonym term “supplier”, whic from research fields such as supply chain, and production http://dx.doi.org/10.1016/j.forpol.2015.01.002 1389-9341/© 2015 Published by Elsevier B.V.

Please cite this article as: Eriksson, M., et al.,

Forest Policy and Economics (2015), http://dits and service functions panies over the last few contractors (Ager, 2012). The immediate consequences for forest companies were new challenges due to the fact that harvesting crewsThe outsourcing of non-core production un has been a strategy frequently adopted by comWood supply chain 1. Introductionthat 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 themost beneficial response from each contractor, and eventually to improved performance of thewood 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. © 2015 Published by Elsevier B.V. harvesting services. This shift promoted dramatic improvements in harvesting operations efficiency, but also put considerable pressure on theAccepted 5 January 2015

Available online xxxx mance is in alignment with downstream needs. Furthermore, no previous study has suggested a clear routeReceived in revised form 18 November 2014 many studies over the yearsManagement of outsourced forest harvesti customer-contractor alignment

Mattias Eriksson a,c,⁎, Luc LeBel b, Ola Lindroos a a Department of Forest Biomaterials and Technology, Swedish University of Agricultural Scienc b Département des sciences du bois et de la forêt, Faculté de foresterie et de géomatique, 2405 c SCA Forest Products, Skepparplatsen 1, 851 88, Sundsvall, Sweden a b s t r a c ta r t i c l e i n f o

Article history:

Received 23 May 2014

Performance of harvesting op right market at the right priterials and Technology, Swedish 1 83 Umeå, Sweden. Tel.: +46

Eriksson), ola.lindroos@slu.se n in forest operations literature, h is more common in literature management.

Management of outsourced f x.doi.org/10.1016/j.forpol.20operations for better kogsmarksgränd, 901 83, Umeå, Sweden de la Terrasse, Université Laval, Québec, Canada G1V 0A6 tions is vital forwood supply chains to enable delivery of the right product to the onsequently, the performance of harvesting contractors has been the topic of d Economics sev ie r .com/ locate / fo rpo l(such as the majority of harvesting contractors) have been found to put little emphasis on strategic planning (Wang et al., 2007), lack adequate follow-up routines (Cacot et al., 2010) and be resistant to change (Gray, 2002). As a consequence of the contractor base complexity caused by this diversity, large companieswith a need for harvesting services that require efforts from multiple contractors are likely to experience challenges in managing their contractor force (Christopher, 2011). orest harvesting operations for better customer-contractor alignment, 15.01.002 2 M. Eriksson et al. / Forest Policy and Economics xxx (2015) xxx–xxxIdeally, all contractors in a company’s contractor force strive to conduct and improve their operations for the overall good of the supply chain of which they are part. However, this ideal state requires the contractors’ strategy, their organization’s culture and leadership style to be aligned to those of the customer’s and, ultimately, to all the downstream actors’ needs (Chorn, 1991). Normally, alignment can be assessed using several dimensions such as, for instance, cost reduction efforts, pricing, reliability, responsiveness, and quality management (Siguaw and