Suppliers — The Fraud Focal Point of the Timber Supply Chain

Suppliers — The Fraud Focal Point of the Timber Supply Chain

We’ll start with a look at red flags that might indicate an issue with theft, fraud, and contractual violations. These generally stem from processes and practices that are sloppy and/or undisciplined. 

Here are some things that should trigger further investigation when overseeing logging operations:

1. Unfocused operations and processes: 

–      Loggers delivering wood from more than two sources at any one time, especially from company stumpage and private sources.

–      Loggers frequently move from one tract to another.

–      Poor utilization.

–      Improper merchandizing.

–      Loggers not knowing tract names.

2. Diversions and questionable practices:

–      Diverted wood (logger’s trucks seen heading the wrong way or in an unauthorized wood yard.

–      Loggers operating where they shouldn’t be operating.

–      Products separated on the landing which the contract doesn’t mention.

–      Firewood cutting during normal logging operations.

–      Loggers who divert your attention away from a specific area of the sale.

–      A sudden change in production (without a change in equipment) UP or down.

3. Confusing Company Structures

–      Loggers that have multiple names in which to haul wood.

–      Loggers who have multiple crews.

4. Contracts and payments:

– Producers being paid different rates for wood from the same source.

–      Products not listed in the contract being harvested or delivered on that contract.

–      Wood delivered on contracts that have expired or been closed.

–      Wood delivered from timber tracts that have not yet been opened.

5. Trucking and Delivery:

–      Sporadic deliveries of wood from one tract which interrupt the regular flow of wood from another tract.

–      Changes in trucking zones or trucking rates in excess of a ten-mile move toward or away from the mill

–      Multiple trucking contractors hauling from the same site


1. Start on the right foot by clearly expressing your expectations in the very beginning of the business relationship. Doing this enables you to establish a solid, long-term partnership that can be mutually beneficial to both parties. 

  • Outline your expectations and what the supplier can expect from you in the terms and conditions of the contract. 
  • Establish the level of record-keeping you expect and ensure the producer has well-established and effective policies and work procedures. 
  • Have a clear contract including well-defined expectations for delivery, tract identification, land usage, ownership of residual products, and payment terms. 
  • Be wary of producers who seem to lack clear operating procedures, and have multiple company names, multiple crews, and multiple trucking contractors as this could be a means of shifting timber. 

2. Once agreement is reached and work has begun, the following precautions will go a long way to ensure the agreements you established up front are maintained and taken seriously:  

  • Periodically check the work site and look for the red flags mentioned above.
  • Check the work site in unpredictable patterns and remember, loggers are not bankers, their work schedules vary widely.  Your work schedule should also vary widely.
  • Keep accurate and updated records of contracts and check invoices for conformity with existing contract rates, products and terms and conditions.

3. As a long-term strategy, seek suppliers who work with integrity already and who can meet the quality and integrity standards you have for your own company. Consider looking for suppliers who have the potential to develop long-term relationships and help you find creative, sustainable solutions for moving your business forward. Begin building that long-term partnership by discussing and reaching agreement in detail on how the following areas will be handled: 

  • Insist on maximum safety standards and performance.
  • Promote business and environmental sustainability.
  • Protect the company’s interests in dealings and transactions.
  • Comply with all legal and regulatory requirements.
  • Protect confidential information from disclosure to unauthorized sources.
  • Maintain relationships based on fairness, trust, respect, and compliance.
  • Continuously improve the value of the relationship by seeking new ways to conserve resources, reduce pollution and waste, and enhance the communities in which they operate.