SAWMILL INDUSTRY

How does Sawmill Industry select a supplier and manage its relationship?

How does Sawmill Industry select a supplier and manage its relationship?

Introduction

A number of papers have examined the competitive effects of co-operation with either suppliers or buyers, but simultaneous research into both types of co-operation is less frequent. Although many papers recommend supply chain integration, very few empirical studies examine more than one link in the chain. Similarly, recent research suggests that co-operation can be affected by contextual variables, but this line of research has hardly been tested. We believe it is important to fill this gap by jointly researching the effect of co-operation with suppliers and buyers on company performance in specific contexts, and controlling a number of the variables that could alter the relationship (Rese, 2006, 91).

Thus, the purpose of this paper is to analyze the relationship between co-operation and performance in a specific supply chain (the wood supply chain) and a specific stage in the chain (the sawmill industry). The question is whether, in this specific context, the effects predicted in the literature on co-operation are fulfilled. In other words, for sawmills, is it more advantageous to maintain co-operative relationships with suppliers or with buyers? Or, alternatively, is co-operation with both equally beneficial?

To this end, during the last quarter of 2003 a questionnaire was applied to managing directors at sawmills in the UK regions of London. The study develops a correlations test, two multivariate regression models and a cluster analysis, to identify the competitive effects of co-operation with suppliers and customers in the context.

The paper is structured in six sections. The next section reviews the literature on co-operative relationships in the supply chain, and discusses evidence for the lack of empirical research into more than one link in the chain. The third section analyses the competitive effects of co-operation with suppliers and buyers and develops a set of research hypotheses in the specific context of the sawmill industry. The fourth section provides a discussion of the methodology employed to contrast the hypotheses. The fifth section summarizes the results of the study, and the sixth section discusses the findings and their implications, the limitations of the study, and guidelines for future research (Rese, 2006, 91).

Description

The decision whether to make or buy was originally explained as a choice between two extreme situations: fully integrated manufacturing processes or the use of market transactions. During the 1980s, a series of papers described an alternative corporate governance structure for buyer-supplier relationships of Sawmill Industry, based on co-operation and long-term relationships with suppliers. Much of this research stems from observation of Japanese manufacturing companies, which were then in continuous international expansion and achieved outstanding supply chain performance without vertical integration. Then, market relationships appeared to fall into one of two extreme categories, traditional (or transactional) relationships, and co-operative relationships. Transactional relationships carry out isolated transactions with no commitment to continuity. Partners exchange only minimum information and establish safeguards to defend their companies against possible opportunistic ...