Negotiation-based distributed wood procurement planning within a multi-firm environment

The complex task of wood procurement planning includes a multitude of factors that must be taken into consideration. Shared procurement areas and co-production further complicate the task, elements which typify the eastern Canadian forest industry. A procurement forester must routinely coordinate and synchronize forest operations with those of other companies over several procurement areas. In a multi-firm context, collaboration cannot be taken for granted and decision-making power cannot be centralized. First, this paper presents a formalization of firms' procurement interdependence in a context of shared procurement areas and co-production. A planning and coordination approach is then presented for the context under study. Four different planning and coordination modes are tested, including a central planning mode used as a benchmark (i.e., upper bound). Statistics on profitability and timber license fulfillment are gathered. Pair wise comparisons among the different modes are performed and profitability gains from greater coordination within and among firms are quantified. The proposed collaborative planning and coordination mode results in local and global profitability increases, especially in difficult economic setting, when compared to the planning and inter-firm coordination approach currently in use.