Portfolio Management

The following discussion was developed by Dr. Chad Oliver as supportive guidelines for the LMS management process. It is included in this web project as an important reference.

Specific Information & Information Access

The Pack Forest Landscape Plan provides specific information on what stands will be treated, and how, at each time. It also provides specific information on what objectives (values) to expect, and when and where they will be provided.

For example, it shows how much thinning VS clearcut harvesting will be done during each planning period, what mix of tree sizes and species will be harvested, and when and where there will be different forest structures. Each structure provides different values-mushrooms, berries, floral greens, different animals, and different aesthetic and recreation experiences.

This access to information allows the forest to be managed as a "portfolio" of different commodity and non-commodity outputs that will mature in different amounts at different times. Portfolio management is different from previous approaches where the forests were managed to produce a few uniform products to meet narrow market, mill, and harvesting machinery needs. The uniformity was in part because foresters lacked the information technology to manage diverse, changing products targeted for many markets.

Long Term Information

The "Needed Operations" and "Expected Outcomes" tables and maps (on this web) give long term information. More detailed information can be obtained from the "Consequences" table in LMS when the chosen scenario is run.

It is important to realize that the Pack Plan will be revised at the end of each management cycle (5-years in this case) following monitoring, adaptive management, and continuous quality improvement as well as shift in people's values. Because of the nature of forest growth, it is highly unlikely that the outcomes will shift dramatically with plan revision.

This long term projected information means that an efficient infrastructure of forest labor, processing facilities, and markets can be developed and modified to target the specific operations and commodity and non-commodity values that are intended at different times.

Short Term Information

For the current Management Cycle (2000 - 2005), the forest manager has a specific list of what stands are to be treated, how the stands should be treated, and the expected outcomes in terms of the various objectives. The Field Plan shows those stands to be treated during the management cycle-as well as the treatment to be done and expected outcomes. The "All Stands" worksheet shows all stands, both treated and not treated. And the expected outcomes.

The forest manager has flexibility of when to perform each operation within the 5-year management cycle, although the targeted operations and locations must all be accomplished.

(Note that the 5-year flexibility will cause variation between the projected and actual output. This variation is expected and is consistent with general systems theory and systems management approaches [See "Systems Approach" under "Landscape Management: Ecosystems and Systems Thinking" on the present web site.] The variation will be dealt with during monitoring and continuous quality improvement while revising the plan at the beginning of each new management cycle.)

The portfolio can be sorted by treatments, amount of any objective provided, stand acreages, and other classifications. By knowing exactly what operations and outcomes to expect, the manager can be efficient in performing these operations and providing many values. For example, the manager has the following business opportunities:

Bundling products

To have costly or low value operations accomplished (e.g., thinning small diameter stands), the manager may want to combine these operations in a contract with a another targeted operation that provides high value-such as clearcutting high quality timber. The person awarded the contract would be expected to accomplish both operations.

Playing the Market

Information on the mix of products from the different stands that are to be provided by the forest during the management cycle are readily accessible to the manager. The manager can then watch the markets for each product and treat each stand when its product demand is high.
(It is convenient to prepare in advance the operation layout and administrative paperwork for each stand to be treated during the management cycle. In this way, the manager can respond rapidly to opportunities to market each stand.)

Providing Additional Values

Because detailed information on each stand is readily available, the manager knows how much and where to find different objectives (values). Thus, the manager can market or otherwise make accessible values that previously appeared too ephemeral and inefficient to address. The information on stand structures would show those stands where, and in how much area, one would expect to find various values such as mushrooms, berries, butterflies, floral greens, and different wildlife species.

(For example, hunting leases could be sold for the property. A premium bid could be obtained if the lessees both knew that very good habitat for their target species existed and could be given maps showing where that habitat is.)

Also, a manager may market a concentration of products that are usually considered waste.

Synergism

The manager may combine contracts for seemingly unrelated operations and products to make their management more efficient and profitable.
For example, the contract for floral greens could be combined with the contract for precommercial thinning since the floral greens purchaser obtains better products if the cut trees are piled in certain ways during precommercial thinning.

Economies of Scale

The manager knows how much of each operation will be applied during the management cycle (and projections of future management cycles). The manager can then decide which operations will be done frequently enough to develop efficient machinery, techniques, expertise, and/or contracts-and which operations are too infrequent to necessitate investments in efficiency.

Ensuring and Documenting Sustainability

The manager can overcome public concerns about the sustainability of the forest's management since the outcomes and effects of all operations are well documented and displayed.

(In fact, the manager could be criticized if he/she did NOT do designated operations, because the result may mean that the forest as a whole is not being sustained.)

The organization and documentation would allow the forest to be certified quite easily by various certifying agencies, if this were desired.

Prof. Chadwick Oliver, College of Forest Resources