Profiles of forestry contractors and development of the forestry-contracting sector in Sweden

Abstract:In forest operations, the interface between forest companies and harvesting contractors is of special importance, considering that it is the first link in the forest industry's supply chains. Supply operations account for a significant share of the final costs of wood products (up to 50%). This study investigates the effect of customer-contractor alignment on contractors' profit margins and on the risk for business relationship breakdown. Alignment is empirically measured for a Swedish forest company and 74 of its harvesting contractors, who were monitored during a four-year period. Two measures of alignment are employed: (1) the customer-perceived value of the contractors' services; and (2) the contractors' perceived alignment with the forest company expectations. Results indicate that the two measures of alignment are largely independent from each other, and that customer-perceived value affects both contractor profitability and the risk of relationship breakdown. Conflict between the two parties and lack of trust for the customer were found to be common complaints among contractors who ceased working for the studied forest company. Consequently, customer-contractor alignment should be considered a key objective by contractors who strive for business success, and also by forest companies who wish to improve their supply chain performance.

Section: Supply Riskmentioning

confidence: 99%

The Effect of Customer–Contractor Alignment in Forest Harvesting Services on Contractor Profitability and the Risk for Relationship Breakdown

Eriksson

LeBel

Lindroos

2017

“…Ager [3] estimates that presently 75%-85% of the harvested roundwood volume in Sweden is carried out by specialized contractors. Typically they are small companies with one or two machine units (one harvester-one forwarder), and less than nine employees [12].…”

Section: Outsourcing Of Harvesting Servicesmentioning

confidence: 99%

The Impact of Industrial Context on Procurement, Management and Development of Harvesting Services: A Comparison of Two Swedish Forest Owners Associations

Erlandsson

2013

Increasing demands to harvesting production and quality require improved management practices. This study's purpose was to analyze the impact of industrial context on procurement, management, and development of harvesting services. Using interviews, functions were modeled at two forest owners associations (FOAs) with outsourced harvesting services. One FOA had its own sawmills, requiring frequent harvesting production adjustments to meet varying volume demand in the short-term. The long-term uncertainty was however low because of good visibility of future demand (>6 months). The other FOA did not own mills and produced wood according to fixed six-month delivery contracts. This meant few short-term production adjustments, but long-term uncertainty due to low visibility of future demand. Demand uncertainty resulted in corresponding needs for harvesting capacity flexibility. This could have been met by a corresponding proportion of short-term contracts for capacity. In this study, however, a large proportion (>90%) of long-term contracts was found, motivated by a perceived contractor shortage. It was also noted that although contractor investment cycles (4-6 years) matched the FOAs' strategic horizons (3-5 years), contractors' investment plans were not considered in the FOAs' strategic planning. The study concludes with a characterization of different FOA contexts and their corresponding needs for capacity flexibility.

“…Some companies procure only a few services from contractors, whereas other companies have chosen to outsource all their operations to contractors. Typically, these contractors, similar to Slovakia, are micro-companies with one or two machine units and less than nine employees [7].…”

Section: Introductionmentioning

confidence: 99%

Innovation Strategy in Slovak Forest Contractor Firms—A SWOT Analysis

Štěrbová

Loučanová

Paluš

et al. 2016

Abstract:The aim of the study is to determine the innovation strategy of contractor firms in the Slovak forestry service sector in the area of further innovation activities development. The strategy identification was based on the analysis of the strengths, weaknesses, opportunities and threats in this sector. The results indicate that weaknesses of contractor firms exceed their strengths and, considering the degree and importance of their impact, opportunities exceed identified threats. Based on these findings revealing the relations in the area of innovation activities of forestry service contractors, the "Strategy of Partnership" was suggested as the most suitable type of strategy. It can be concluded that such a form of grouping cooperation brings many benefits to contractors in the form of information availability, guidance, training, and management of conflicts, risks and uncertainty, which are associated with the innovation process.