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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
can affect the ability of individuals, groups and organisations to work together
[12]. It is important to settle these disputes because they negatively affect the
relationship between organisations, with possible dire consequences. The
following strategies are helpful in settling disputes between buyers and suppliers.
5.5.1 FIND THE ROOT CAUSE OF THE PROBLEM
This is the first step in solving the problem. The resolution of a dispute between
business partners requires an understanding of the root causes. What seems
like a surface issue often goes much deeper than either party knows or is willing
to admit. A sincere examination of the reasons behind the problem is necessary
as it will reveal if the problem is due to personal incompatibilities, hurt feelings,
or a desire for more input into daily operations. An accurate diagnosis of the
problem often paves the way for an effective solution to any dispute.
5.5.2 DISCUSS THE PROBLEM WITH SUPPLIERS
Negotiating with the supplier is important if the buying organisation intends to
avoid any further disputes. Solving the problem in any other way may consume
time, be costly, complicated, stressful, embarrassing and damaging. Therefore,
by discussing the problem with the supplier, the organisation is able to avoid
associated complexities.
5.5.3 USE PRE-EXISTING EXIT STRATEGIES
When going into a business partnership, it is important to ensure that an exit
strategy is included in the contract.
5.5.4 INVOLVE A MEDIATOR
When negotiation and/or an attempt to exit the relationship fail, a mediator may
be invited to intervene. A mediator is a third party who does not have a stake
in the relationship. The role of the mediator is to listen, sympathise, empathise
and persuade. Sometimes, an expert mediator can even propose or encourage
a possible solution so, in order for this process to be effective, the mediator
should be trustworthy and respectable. However, the mediator does not have
the power to make a decision.
5.5.5 ARBITRATION
Decision-making authority is removed from the disputing parties and is
transferred to an arbitration panel. The panel listens to both sides of the dispute
and then makes a decision based on law.
5.5.6 COURT ACTION
The dispute is brought to a legitimate court of law and is presided over by a judge,
who has the power to make a decision after hearing the evidence from both sides.