Towards Supplier Partnership in Timber Harvesting and Transportation

In recent years there has been interest in developing partnerships with contractors in timber harvesting and transportation. At Metsähallitus (The Finnish Forest and Park Service) the interest in these close business relationships may be more pronounced than in other organisations due to the rapid development of the timber supply chain and the contracting policy enforced at the beginning of the 1990’s.

The perceived interest in partnership-type relationships springs from the need for closer governance necessitated by increasing specific investments and the greater uncertainty and/or complexity involved. The changes are related to new logistic control systems, the improved management of quality and the environment and the changed logistic pattern in timber supply. The development of partnerships rather than power-controlled relationships may be explained by the better atmosphere which has been encouraged by new values and norms. Especially in timber harvesting, the dependence between the parties may also be more balanced. The dimensional structure of relationship formation seems to work for the buyer as well as for the supplier. Moreover, the suppliers’ current situation involving a concentrated customer base combined with small company size and narrow scope of business may serve to make partnerships even more interesting for a supplier than for a buyer.

Some preliminary experiences show that market or small-scale co-operation relationships as a buyer-driven activity can be deepened into partnerships by strengthening the expectation of relationship continuity, increasing the amount of interaction and making investments in the competence of the suppliers. Less control might be expected for mature relationships.

A model is presented for the development of supplier relationships. At the individual supplier level, the model involves the use of the balanced scorecard technique.

The paper is based on the author’s doctoral dissertation.