University of Oulu

Supply chain management and industry cyclicality : a study of the Finnish sawmill industry

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Author: Holma, Heikki1
Organizations: 1University of Oulu, Faculty of Economics and Business Administration, Department of Marketing
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1.8 MB)
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Language: English
Published: 2006
Publish Date: 2006-05-02
Thesis type: Doctoral Dissertation
Defence Note: Academic Dissertation to be presented with the assent of the Faculty of Economics and Business Administration, University of Oulu, for public discussion in Auditorium TA105, Linnanmaa, on May 12th, 2006, at 12 noon
Reviewer: Docent Mats B. Klint
Docent Juha S. Niemelä


The aim of this study is to deepen current understanding concerning cyclicality in the Finnish sawmill industry. Traditionally, economic actors in the sawmill industry have faced dramatic price and demand fluctuations. Managers often regard cyclicality as natural and unavoidable in the industry. Accordingly, research related to business cycles in the Finnish sawmill industry has consisted of short-term studies that have mainly focused on predicting the turning points of cycles. In contrast to these short-term investigations, this study proffers research on cyclicality that is both empirical and historical. It aims to emphasise the actor perspective that seems to be absent in existing research on business cycles and cyclicality. In line with the adopted perspective, business cycles are not merely objective economic phenomena external to their observers. As regards the research, the above view necessitates a more complete understanding of business cycles and historical knowledge of the industry and the actors in its supply chain.

The idea that heavy economic fluctuation is detrimental to all is emphasised in this thesis, though it has been argued that in the short term, some actors at the lower end of a distribution chain may take advantage of cyclicality by game playing. However, in the long run there are very few actors, if any, who profit from business cycles. The empirical data was primarily collected during a number of discussions with sawmill experts and in essence, the problem of cyclicality is observed through the eyes of Finnish sawmill managers. However, interviews with intermediaries as well as many public statistics and archive documents were also used to describe and explain the economic fluctuations over three decades in the industry.

Industry-, supply chain- and dyadic business relationship-levels are used in the empirical and theoretical parts of the thesis. Business cycle theories by economists form the context for the study of cyclicality. Systems thinking presents the total picture of cyclicality as a problem in a specific industry, whereas the Bullwhip/Forrester effect describes cyclicality in a supply chain, and explanations for cyclicality in the Finnish sawmill industry are studied in terms of supply chain management. In particular, the presented sub-cases of dyadic business relationships shed light on the power of long-term business relationships as a smoothing-out strategy.

The findings of this study reveal that there is another option for managers other than considering the cycles as being "natural", and that there is an opportunity to affect the traditional mode of behaviour in coping with business cycles. It is argued that the structures, behavioural patterns and management components of supply chain management play major roles when the sources of cyclicality and opportunities to moderate business cycles are investigated.

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Series: Acta Universitatis Ouluensis. G, Oeconomica
ISSN-E: 1796-2269
ISBN: 951-42-8074-1
ISBN Print: 951-42-8073-3
Issue: 22
Copyright information: © University of Oulu, 2006. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.