Procurement and Contract Management

British Consolidated Agricultural Machinery (BCAM) was established by Harry Irwin’s father hundred years ago during the period of mass industrialization manufacturing tractors and other agricultural pieces of machinery such as harvesters, balers, mowers, seed drills, and sprayers. While reviewing the purchasing procedure at BCAM, it is revealed that orders are placed in bulk even though if the materials are not required for the purpose of production so as to avoid logistical time and costs. BCAM supplier development strategy was weak considering the fact they placed their orders with the suppliers who were associated with the company for many years. According to Crocker (2009), supplier development is necessary to develop the supply base in areas of recognized weakness, develop a long term relationship with few reliable suppliers, reduce the risk by sharing information, enhance the benefits of mutual goals and synchronize the overall process of supply chain process. This shows that the company’s transactions were limited to few suppliers and the relationship between both is adversarial as BCAM doesn’t pay them as agreed during the contract. Saunders et al (Swamidass 2000) mentioned that adversarial relationship is promoted when they operate at arm’s length with communication without personal contact and gains by one partner are seen as being at the expense of other contributing to apparent lack of trust and not ready to share information. According to Handfield and Bechtel (2002, reliance on trust at the interpersonal level may be conditioned by legal systems or organizational role responsibilities, mitigating the ability of parties to rely on trust as a matter of first preference. The relationship between BCAM and its suppliers exceeds their contract and operates beyond it resulting in breakage of supply chain management. The company had to face the consequences of such relationship as their orders placed by BCAM would not be taken as top priority leading to purchase departments failure to provide required material for production resulting in delayed customer delivery. The fact that both maintained cordial relationships and confidence on the suppliers’ side that they would definitely receive their payment made it possible to continue the transaction. Moreover, in such type of relationships, complaints are not addressed due to the negligence from buyers’ side as evidence in BCAM Company wherein complaints by purchasing department were snubbed by suppliers owing to late payments. b) Buyer-Supplier Relationship Approach Organizations are more actively involving suppliers in their integrated development process and identify suppliers as a source of a competitive advantage which means that there is an opportunity to develop and identify the factors that could help sustain or improve the relationship between the buyer and the supplier (Nellore, 2001).Developing partnerships with suppliers is resource-intensive and can be justified only when the costs of extended involvement are exceeded by relationship benefits (Gadde and Snehota, 2000).