The encyclopedia · Strategy & Leadership · Operational decision · 1988–1998
Chile's forest firms put harvesting and trucks on the same model instead of intuition
Arauco and its peers ran truck dispatch, harvesting, machinery and road planning on optimization, saving millions a year.
Bosques Arauco · Chilean forest industry
the move
Chile's forest sector is a big export industry built on private firms that combine large pine and eucalyptus plantations with sawmills and pulp plants, competing in a tough global market where productivity gains are survival.
Starting in 1988, the principal Chilean forest companies — whose timber sales run to about a billion dollars — began implementing operations-research models developed with University of Chile academics. The systems support the everyday decisions of dispatching trucks, scheduling the short-term harvest, locating harvesting machinery and access roads, and medium-term forest planning.
The payoff was not one big algorithm but a coordinated suite, re-run weekly, that let each part of the operation see what the others were doing. The systems changed how decisions were made, not just what was decided.
why it works
- It addressed the whole chain — trucks, harvest, machinery, roads, planning — rather than a single bottleneck.
- Linking the decisions meant truck routes, harvest timing and road building reinforced rather than conflicted with each other.
- Re-running the models weekly embedded them into normal operations instead of a one-off study.
- The systems were portable, and were adopted in Brazil and South Africa too.
what transfers
When a chain of decisions each depends on the others, optimizing one piece in isolation just shifts the cost — build linked models and run them on a cadence.
what came after
Total gains from using the systems were estimated at at least US$13 million a year, alongside qualitative benefits in management productivity, worker quality of life and reduced environmental damage in some areas. The work won the 1998 INFORMS Edelman Award, the first time the top award went to a South American company.
references
- Un Caso Exitoso: Sistemas de Optimización en la Industria Forestal Chilena
- Use of OR Systems in the Chilean Forest Industries
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