Collaboration for a two-echelon supply chain in the pulp and paper industry: the use of incentives to increase profit

In our research, we study the case of a pulp and paper producer who decides to establish a partnership with one buyer. Using two different types of relationship, namely a traditional system without any collaboration scheme and Collaborative Planning, Forecasting and Replenishment, we develop decision models describing the producer and the buyer planning processes. We also identify which approach is more profitable for each actor as well as for the network, based on real costs and parameters obtained from the industrial case. We then test how different incentives can improve the traditional system and provide higher gains for each partner. Our results show that using incentives increases the system’s profit by up to 4% if parameters are well defined. Journal of the Operational Research Society (2011) 62, 581–592. doi:10.1057/jors.2009.167 Published online 6 January 2010