Performance analysis of log yards using data envelopment analysis

Log yards are an important component of the forest value chain. Yet, the performance of log yards, which are a specific case of warehouses, has not been thoroughly studied. The aim of this paper was to investigate log yard efficiency, explore the relationship between efficiency and operational conditions, and identify management practices that lead to best/worst performance. A benchmarking analysis of technical efficiency of 38 log yards in Quebec, Canada, was conducted by means of a Data Envelopment Analysis (DEA) approach. Three input factors (area, equipment, labor), and one output factor (annual volume), were considered in an input-oriented model. Technical efficiency scores were analyzed using a complexity factor that expressed the combined influence of seasonality, shape, and number and sort to be handled. The average technical efficiency of log yards is 61%, and 81%, when assuming constant and variable returns to scale respectively. Inefficient log yards operate under increasing returns to scale and the source of inefficiency is both technical (inefficient transformation of inputs into output) and managerial (inadequate scale of operations). The results suggest possible median reduction in input consumption of 17%, 20%, and 14%, respectively for area, equipment and labor utilization. Log yard technical inefficiency is mainly due to an inadequate utilization of area and moving equipment.