Assessment Workbook: TLIR5014
Manage suppliers
Version control |
||||
Version No. |
Date |
Dept. |
Change |
|
1.0 |
06/06/2016 |
Training |
Original |
|
2.0 |
03/10/2016 |
Moodle updates and changed the title from Assessment Guide to Assessment Workbook |
||
Copyright Statement |
|
© Copyright National Training |
|
Disclaimer |
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, scanning, recording, or any information storage retrieval system without permission in writing from National Training. No patent liability is assumed with respect to the use of information used herein. While every effort has been taken in the preparation of this publication, the publisher and authors assume no responsibility for errors or omissions. Neither is any liability assumed for damages resulting from the use of information contained herein. |
Contents
4
Introduction 5
Application 5
5
Pre-requisites 6
Appeals and reassessment 6
Plagiarism 6
7
Understanding your results 7
Results Legend 7
Assessment activity 7
8
10
10
11
12
12
13
13
13
13
13
13
13
14
14
14
14
14
14
14
14
15
15
15
15
15
15
How do I use this guide?
This guide is divided into two sections:
· The introduction section gives you information about the unit of competency you will be assessed in. For a comprehensive overview of the assessment process, the principles of assessment, refer to your ‘Student Handbook’ which was provided to you, by National Training, when you commenced your training. It’s also available online via the website: nationaltraining.edu.au
· The second section contains assessment activities each detailing:
· Description of the assessments
· Instructions for completing the assessment activities
Introduction
This guide, together with the Assessment Activity forms the assessment tools for:
Unit code
Title
Training Package
TLIR5014
Manage suppliers
Transport and Logistics Training Package
Application
TLIR5014
This unit involves the skills and knowledge required to manage suppliers in various contexts within the transport and logistics industry.
It includes assessing and building productive relationships with suppliers, and evaluating the delivery of goods/services against agreements. It also includes negotiating arrangements, resolving disagreements with suppliers and reviewing supplier performance.
The unit generally applies to those who lead individuals or teams.
Elements and Performance Criteria
1.0 Assess suppliers and build productive relationships
1.1 Criteria to effectively evaluate supplier services are developed and documented
1.2 Existing suppliers are assessed against criteria
1.3 Availability and suitability of alternate suppliers who can meet the service support requirements within legislative requirements are identified
1.4 Terms and conditions of suppliers to achieve service requirements are established and communicated
1.5 Cooperative relationships are developed with suppliers in accordance with organisational policies and procedures
2.0 Evaluate delivery of goods and/or services against agreements
2.1 Quality of goods and services supplied is assessed against criteria
2.2 Non-compliance is identified, documented and corrective action is implemented within the terms of contractual arrangements
2.3 Contingency plans are developed should suppliers fail to deliver
2.4 Relationships with suppliers are managed to support effective delivery
3.0 Negotiate arrangements with suppliers
3.1 Arrangements with suppliers are negotiated and implemented in accordance with organisational policies and procedures
3.2 Market factors that may affect the supply of goods and services are identified and communicated to relevant personnel
3.3 Immediate corrective action is taken in consultation with suppliers where potential or actual problems are indicated
4.0 Resolve disagreements with suppliers
4.1 Disagreements with suppliers are investigated to identify validity and causes
4.2 Disagreements are negotiated and resolved
4.3 Amendments to agreements, as a consequence of the resolution of disagreements, are documented
4.4 Approval is sought and obtained for amendments
4.5 Approved amendments are communicated to suppliers and relevant personnel
5.0 Review performance of suppliers
5.1 Suppliers are continuously reviewed for quality, profitability, service, delivery status and other relevant performance indicators
5.2 Supplier performance is evaluated against purchasing agreement requirements
5.3 Suppliers are informed of evaluation outcomes as required
5.4 Recommendations about future use of suppliers are made to relevant personnel
5.5 Suppliers are deleted from supplier shortlist according to criteria
Pre-requisites
Not applicable
Appeals and reassessment
If you disagree with the assessment decision and result, you have the right to appeal and be reassessed if necessary. Details of the appeals process is contained in the Complaints and Appeals Policy & Procedure, provided to you prior to enrolment. See Complaints and Appeals Policy & Procedure for more details.
Plagiarism
While co-operative effort and the sharing of information are encouraged, you must ensure your assignments and assessments are representative of your own effort, knowledge and skills. You must not take the work of others and present it as your own. Plagiarism may result in the assignment/assessment being deemed to be “not yet competent” by the assessor.
Students accused more than once of academic misconduct, including plagiarism, may be dismissed or cancelled from their course at the discretion of the National Training Manager.
Plagiarism can take several forms;
· Quoting from a book or an article without acknowledging the source
· Handing in someone else’s work as your own
· Stealing and passing off another person’s words or ideas and claiming them as your own
· Giving incorrect information about the source of a quotation or idea
· Downloading information from the internet without acknowledging the source
· Copying a section of a book or article and submitting it as one’s own work
· Presenting as a new and original idea or produce something which was derived from an existing source
Referencing Materials
National Training prefers that students utilises Harvard Style referencing. Generally, Harvard Reference List citations follow this format:
Books: Last name, First Initial. (Year published). Title. City: Publisher, Page(s).
Journals/publication: Last name, First initial. (Year published). Article title. Journal, Volume (Issue), Page(s).
Websites: Website name, (Year published). Page title. [Online] Available at: URL [Accessed Day Mo. Year].
Understanding your results
The great thing with competency based training is that you either deemed ‘competent’ (you can demonstrate the required skills and knowledge) or ‘not yet competent’ (at this time you haven’t been able to demonstrate required skills or knowledge). The key word is “YET”.
Your trainer will provide you with feedback on your assessments so that you know what you have done well in your assessment and what you need to improve upon or fix. An “NYC” result does not mean that you have failed and that is it – you have the opportunity to try again. It could be that one question in your assessment was deemed not yet satisfactory and this is the only question that will require review.
Results Legend
C
Competent
Has successfully completed unit and has met the minimum competency criteria and demonstrated the required skills and knowledge
NYC
Not Yet Competent
Has not met minimum competency criteria for the unit – certain section/s require review due to not meeting the requirements and being deemed not yet satisfactory
CT
Credit Transfer
Application required
RPL
Recognition of Prior Learning
Application required
For further information regarding Recognition of Prior Learning (RPL) and Credit Transfers (CT), please contact on our office on (03) 9674 0331
Assessment activity
The assessment activities contained below have been designed for the following unit(s) of competency:
TLIR5014 Manage suppliers
This is a summative assessment process. For the student to be assessed as competent in each Unit of Competency, all questions and activities need to be satisfactorily completed.
Each assessment activity contained within:
Assessment 1:
Case Study 1
All parts need to be completed.
This is a summative assessment activity, which means it is an assessment of what you have learnt and used towards the assessment of your overall competency.
This Case Study is split into 2 parts, all questions and reports must be answered, uploaded to a Word Document and uploaded as your assessment.
Documents required to filled out in full.
Assessment 2:
Case Study 2
All parts need to be completed.
This is a summative assessment activity, which means it is an assessment of what you have learnt and used towards the assessment of your overall competency.
Assessment 3: Short Answer Question
This requires the completion of all comprehensive questions.
This is a summative assessment activity, which means it is an assessment of what you have learnt and used towards the assessment of your overall competency.
Each question must be submitted and of 100 – 300 words minimum.
Assessment 1, 2 & 3 Instructions
Student Instructions
Type of Assessment
This is a summative assessment activity, which means it is an assessment of what you have learnt and used towards the assessment of your overall competency.
General
There are a number of short answer questions and case studies. You must attempt each one. If you have difficulty with understanding the question or completing the answers then talk to your trainer.
Your trainer is there to help you understand and help you demonstrate your understanding, not to complete the answers for you.
You are required to answer all questions and provide as much detail as you can. These questions are not required to be completed under exam conditions.
Context and purpose of assessment
The short answer questions and the case studies have been drawn from the information contained in your workbook/ learning materials. Therefore you should have a good understanding of the answers
Assessment instructions
Read information provided and fully complete all questions as asked.
Resources, equipment & material required
Learner Guide
Computer
Internet
How you will be assessed
Upon completion of your responses will be assessed against a standard answer sheet to ensure that you have covered the question and are consistent with others. You are required to get every question correct,
For more information on the specific criteria contained in the unit descriptor, speak with your trainer. They will provide you with a copy of the criteria or see your learner guide which includes the performance criteria.
Assessment Workbook – TLIR5014 14 | Page Version 2.0
Assessment 1: Case Study 1
The objective of this section is to demonstrate TLIR5014 Manage suppliers
Case Study 1A
You are a purchasing manager at National Camper Trailers Pty Ltd. One of your suppliers of a component of the Stargazer Series of trailer, Acme Widgets and Wodgets Pty Ltd, supply the 2 different types of bearings for the Axel shafts. They have been your supplier for 5 years. The contract is now up and you have been asked to do an evaluation of this supplier. Here are some historical facts from the last year.
· This supplier only supplies 2 components.
· The price has increased 5% each year. This year they have targeted a 10% increase.
· There have been 4 instances of nondelivery / delayed delivery due to: –
· Industrial action that lasted 4 weeks
· Raw materials unavailable causing 6-week delay
· Plant break-down twice first time 2 weeks’ delay second was 3 weeks’ delay.
· In every instance AWW kept in constant contact and bent over backwards to correct the problems
· 5 times the components didn’t meet the standards required.
· Management has flagged that they are not interested in sourcing replacements from overseas, they believe in Buy Australian if possible.
· Previous Criteria established in supplier evaluation:
a. Price increments to 5%.
b. Monthly Delivery performance:
i. 90% delivery on time
ii. 95% standards achieved
a. Notification within 2 days of possible delay in delivery.
Delivery Performance of AWWM Pty Ltd July 2015 – June 2016
Month
Single Axle UN-BRAKED Trailer Kit 1400kg Rating, with EYE TO EYE SPRINGS 45X8MM
1000KG Mechanical Drum Brake Single Axle Trailer Kit with Slipper springs 1T
Ordered
Delivered
Returned
Ordered
Delivered
Returned
July
25
25
Nil
10
10
2
August
30
nil
Nil
15
Nil
Nil
September
30
50
5
15
25
Nil
November
20
35
2
10
19
Nil
December
35
37
Nil
25
25
Nil
January
Nil
Nil
Nil
Nil
Nil
Nil
February
20
10
Nil
15
5
Nil
March
25
35
3
10
22
4
April
25
15
Nil
10
14
Nil
May
20
25
Nil
15
10
Nil
June
30
20
To assist you with your decision you can access the AWWM Pty Ltd Purchasing Contract, the NCT Terms and Conditions applying to Procurement Purchase Orders from the TLIR5014 Attachments.
You must prepare a report to the CEO on your recommendations on this year’s contract:
1. Established criteria to effectively evaluate supplier services.
2. Evaluate this current supplier against the criteria you establish. (Including: Quality of goods and services supplied)
3. Make recommendations of Terms and Conditions of future suppliers to achieve service requirements and details of how this would be communicated.
4. Make recommendations of how you could develop cooperative relationships with suppliers in accordance with National Camper Trailers policy and procedures.
5. Describe how you would apply relevant legislation and workplace procedures in this process.
Your report must be between 1000 – 3000 words in length.
Case Study 1B
Your report to the CEO regarding the Contract extension for Australian Widgets and Wodgets Manufacturing Pty Ltd has been discussed at board level and the following memo was returned to you.
NCT ~ MEMO
To: Purchasing Manager
From: Mick Dundee Chief Executive Officer
Date: 22nd June 2016
Subject: Contract Extension Report AWWM Pty Ltd
To (Your Name) Purchasing Manager NCT
Regarding the report that you prepared and lodged with the Board for discussion. We had a strong robust discussion around your report trying to decide to maintain this supplier or to no longer continue with this relationship. A big issue was the criteria and the performance against these KPI’s and the fact that this is a long term supplier with a good relationship.
At this point we wish you to enter into discussion with AWWM and put to them the following issues with some recommendations from you as to ways that they could improve their performance.
· Quality of goods assessed against our criteria.
· The non-compliance against the Purchasing Contract.
· Contingency plans should they have similar issues in a new contract 12-month period.
· Moving forward with our relationship upon support for effective delivery.
Michael Dundee
CEO
National Camper Trailers.
Prepare a report to be sent to AWWM as a prelude to Contract discussions.
You are to address the issues raised from the Board meeting, and your report to the Board.
1. Identify AWWM’s non-compliances and provide recommendations to AWWM on how they could meet the Contractual requirements and address their non-compliance to the current contract.
2. Prepare a Corrective Action Plan as part of your report and also include possible Contingency Plans to account for the Non-delivery situations from past year’s performance.
3. Address how you would like disagreements to be investigated to identify validity and causes under the new contract.
4. Address how disagreement will be negotiated and resolved under the new contract.
5. Provide details of how you would like approval and acceptance of above recommendations in the new contract.
6. Provide details of how approved amendments will be communicated to the supplier and relevant personnel
Your Report should be at least 1000 – 3000 words.
Assessment 2: Case Study 2
The objective of this section is to demonstrate TLIR5014 Manage suppliers
Case Study 2
You are a purchasing manager at National Camper Trailers Pty Ltd. After your report to the board the CEO has asked you to research possible new suppliers before the current contract is up.
Your research must take into account location and transport costs, product costs, availability of supply.
Products are: –
· Single Axle UN-BRAKED Trailer Kit 1400kg Rating, with EYE TO EYE SPRINGS 45X8MM
· 1000KG Mechanical Drum Brake Single Axle Trailer Kit with Slipper springs 1T
Complete the following:
1. Prepare a Purchase request for the products to the supplier/s you have researched with the criteria you outlined in Case Study 1A
2. List the companies you are going to research / List why you selected the one you did and explain why you deleted the unsuccessful ones.
3. Supply arrangements negotiation questions that again match both NCT’s Terms and Conditions and the Purchasing Contract.
4. What market factors could affect the arrangement with these new suppliers?
5. What problems could you anticipate and what corrective actions could be prepared in advance?
6. Detail the supply requirements and base these on the previous supplier non-compliance.
7. Explain to suppliers how they will be continuously reviewed for quality, profitability, service, delivery status and other relevant performance indicators.
8. Explain to the supplier the criteria for evaluation and process to inform suppliers of evaluation outcomes.
9. Provide recommendation about future use of suppliers will be made to relevant personal
10. Explain how suppliers will be deleted from supplier shortlist according to criteria.
Note: Use the Contract Template in the Unit Attachments to fill out a Purchasing Contract.
Assessment 3: Short Answer Questions
The objective of this section is to demonstrate TLIR5014 Manage suppliers
Question 1
Codes of Practice set out industry standards of conduct. Explain how codes of practice can assist you to deal collaboratively with Suppliers in your dealings with them.
Question 2
What is meant by “Common use Arrangements”?
Question 3
In the situation of Supply Contract Performance disputes, how would your company’s workplace procedures assist you to deal with this situation?
Question 4
When working with Suppliers, to maintain control and performance of these partnerships we must be able to do statistical analysis report and record findings. In Case Study 2 you were asked to research some possible replacement suppliers for AWWM Pty Ltd. and report your recommendations to the board. Based on this report and Using the Numeric Ranking System pick 2 of the prospective suppliers and give their Ranking points and your findings here as a short report to the board.
Question 5:
Why must financial viability be taken into consideration when evaluating a Supplier and going back to Case Study 1A what effect did this have on NCT?
Question 6
When conducting an evaluation of a Procurement and Supply Contract, why should we take our organisation’s policies, procedures, plans, guidelines and code of conduct into consideration before proceeding with this contract?
Question 7
What procedures should be in place for monitoring the performance of our suppliers and what information should we be monitoring?
Question 8
At NCT we have a Diversity Policy (This can be found on the Nat Train Dashboard > National Camper Trailers > HR Policies), taking this into consideration, why would this be important to take into account when forming partnerships and contracts with new or ongoing suppliers?
Question 9
What are the benefits of formulating organisational procedures and protocols for electronic communication equipment?
Question 10
It is essential for accounting systems that we maintain control of all receipt and payments of goods and services, why should we have procedures to cover these systems?
Question 11
In case Study 2 you were asked to research a new supplier of goods and to prepare a Procurement Contract. Explain here why a company would have a procedure to cover this situation and list some of the items that would be contained within this document?
Question 12
When looking at procurement contracts what relevant Federal and State or territory legislative and regulatory requirements and codes of practice should be taken into account?
Question 13
What relevant documentation would you be required to prepare for a Supply / Procurement contracts would you need to prepare for both your own company and the supplier?
Question 14
What steps must you take when planning your work activities? Outline these steps with regards to Case Study 2?
Question 15
What benchmarks are used to evaluate suppliers in your workplace to ensure they are meeting their contractual obligations?
Question 16
When building a productive relationship with suppliers, list three (3) behaviours that are important in the relationship.
Question 17
Provide the name of the Federal legislation covering consumers and fair trading.
Question 18
Which Government Agency is responsible for enforcing the legislation at either Federal or State levels?
Question 19
Define the role of a Supply Manager or Contract Manager responsible for managing suppliers.
Question 20
Should a supplier go into receivership or close down that supplies product that is essential for your workplace, what contingency plans could you apply and what would be the process that you will follow?
MEMO
To: Purchasing Manager
From: Mick Dundee Chief Executive Officer
Date: 22nd June 2016
Subject: Contract Extension Report AWWM Pty Ltd
To (Your Name) Purchasing Manager NCT
Regarding the report that you prepared and lodged with the Board for discussion. We had a strong robust
discussion around your report trying to decide to maintain this supplier or to no longer continue with this
relationship. A big issue was the criteria and the performance against these KPI’s and the fact that this is a
long term supplier with a good relationship.
At this point we wish you to enter into discussions with AWWM and put to them the following issues
with some recommendations from you as to ways that they could improve their performance.
Quality of goods assessed against our criteria.
The non-compliance against the Purchasing Contract.
Contingency plans should they have similar issues in a new contract 12-month period.
Moving forward with our relationship upon support for effective delivery.
Michael Dundee
CEO
National Camper Trailers.
To: (Sending to whom)
From
: (Sender)
Date: (When sent)
Subject: (What is the subject title)
To
(Subject)
(Conclusion)
From
Definitions: For the purpose of these T&C’s:
Contract Price shall mean the total price for the Items to be supplied by the Supplier as set out in the Purchase Order (PO).
Delivery Date shall mean the date as set out in the PO for delivery of the Items.
National Camper Trailers Pty Ltd shall mean National Camper Trailers Pty Ltd (ABN 90 989 989 989)
Items shall mean the goods (including equipment where applicable) and/or services (as specified in the Purchase Order) to be provided under the Purchase Order.
Supplier shall mean the person, firm, enterprise or corporation as set out in the Purchase Order.
PO shall mean the goods and/or services and any instructions given in the document referred to as “the Purchase Order” for the supply of the goods and/or services and includes all documents annexed or attached thereto or referenced therein and these T&Cs.
1. Validity of Purchase Order. Only Purchase Orders authorised by an officer of National Camper Trailers Pty Ltd will be recognised. Commencement by the Supplier of the supply of the goods or services detailed in the Purchase Order will be taken to be acceptance of the Purchase Order, including these T&Cs.
2. Variations. Prior to the fulfilment of the Purchase Order, National Camper Trailers Pty Ltd may, by written notice at any time, make variations to the content, specifications, designs or drawings, samples or other descriptions or requirements to which the Items are to conform. If any such variations cause an increase or decrease in the cost of or time required for the performance of any part of the Purchase Order, then an equitable adjustment may be made by agreement between the parties in the price or delivery schedule or both and the Purchase Order will be modified in writing accordingly.
3. Risk, title and delivery.
3.1. The Supplier warrants that it holds title to the Items supplied under the Purchase Order and risk in them shall remain with the Supplier until they are delivered and accepted by National Camper Trailers Pty Ltd. All Items are subject to inspection and testing by National Camper Trailers Pty Ltd. If any of the Items are found by National Camper Trailers Pty Ltd to be defective or not in conformity with the requirements under the Purchase Order, National Camper Trailers Pty Ltd may at its option a) reject and return the Items at the Supplier’s expense or b) require the Supplier to replace the non-conforming Items with items that conform with the Purchase Order. National Camper Trailers Pty Ltd will have no payment obligation in respect of Items which are not accepted.
3.2 The Supplier will supply the Items by the Delivery Date. In the event that the Supplier fails to deliver the Items by the Delivery Date, National Camper Trailers Pty Ltd shall be entitled, at its election, to:
a. terminate the PO with immediate effect; or
b. apply late delivery charges calculated at 5% of the Contract Price of the Items for every day late, subject to a maximum amount of 100% of the Contract Price.
4. Price. Subject to these T&Cs, prices specified in the Purchase Order shall remain firm and fixed. Prices include any and all charges including but not limited to taxes, duties, inspection charges, packaging and shipping costs.
5. Invoices. The Supplier shall submit tax invoices. Tax invoices shall contain the following information as applicable: The Supplier’s details including ABN, Purchase Order number, description/quantity of Item(s) supplied, GST (shown separately if applicable) and total amount payable. National Camper Trailers Pty Ltd shall not be obligated to pay the Supplier for any Items invoiced 180 days after the date of supply of the Items.
6. Payment. Subject to its approval by National Camper Trailers Pty Ltd, National Camper Trailers Pty Ltd will pay the Supplier’s tax invoice 30 days from the end of the month in which the goods were received unless agreed or stated otherwise.
7. Warranties. The warranties here listed are in addition to any warranties referred to in the Purchase Order and to any other statutory conditions or warranties (whether expressed or implied) including those provided for under the Competition and Consumer Act 2010 (Cth).
Services warranty. The Supplier represents and warrants that it shall perform the services in a proper, workmanlike and professional manner with the degree of care and skill required by current, good and sound professional procedures of the relevant kind. Further, the Supplier represents and warrants that it shall perform the services in accordance with all applicable specifications and laws and the services shall be correct and appropriate for the purposes contemplated in the Purchase Order.
Goods (including equipment as applicable) warranty. The Supplier represents and warrants that the goods are of merchantable quality and are fit for purpose and conform to applicable specifications, drawings, samples or other descriptions in the Purchase Order.
8. Indemnity. In relation to the supply of the Items under the Purchase Order, the Supplier shall indemnify National Camper Trailers Pty Ltd against:
a. loss of or damage to the property of National Camper Trailers Pty Ltd; and
b. a claim or claims by any person against National Camper Trailers Pty Ltd in respect of any personal injury or death; and
c. any claim that the Items infringe a copyright, patent, trademark, trade secret or any other intellectual property or proprietary right of any third party; and
d. the Supplier’s breach of warranty, negligence, wilful misconduct, fraud, misrepresentation or violation of law,
but the Supplier’s liability to indemnify National Camper Trailers Pty Ltd shall be reduced to the extent that the act(s) or omission(s) of National Camper Trailers Pty Ltd or its employees, agents or other contractors contributed to the loss, damage, death or injury; and
e. any other loss or damage arising out of or in connection with the Purchase Order (including any incidental, indirect, special, punitive or consequential damages or damages for any loss of profits, loss of revenue, loss of business or goodwill, data or data use) where the loss or damage is due to the Supplier’s negligence, wilful misconduct, fraud, misrepresentation or violation of law.
9. Insurance. The Supplier shall take out and continue for the duration of the Purchase Order all necessary insurances of the class/classes and in the amount/amounts indicated in the Purchase Order. Certificates of insurance indicating such coverage shall be provided to National Camper Trailers Pty Ltd upon request.
10. Assignment. The Supplier may not assign its rights or obligations under the Purchase Order without the prior written consent of National Camper Trailers Pty Ltd.
11. Governing law. The Purchase Order is governed by the law of New South Wales and the parties submit to the exclusive jurisdiction of the courts of New South Wales.
12. Relationship of the parties. The Supplier is an independent contractor and nothing in the Purchase Order or elsewhere constitutes neither the Supplier as the agent or employee of National Camper Trailers Pty Ltd nor the parties as partners or joint venturers nor is the Supplier authorised to incur, nor may the Supplier incur, any debt or obligation on behalf of National Camper Trailers Pty Ltd, without the prior written consent of National Camper Trailers Pty Ltd.
13. Severability. Any provision of the Purchase Order held to be void, invalid or unenforceable shall be deemed amended to conform to applicable laws or regulations or, if it cannot be so amended without materially altering the intention of the parties, it shall be taken to be severed the extent that it is void or to the extent of voidability, invalidity or unenforceability, but the remainder of the Purchase Order shall remain in full force and effect.
14. Waiver. A waiver by either party of any default under the Purchase Order or of any term or condition under the Purchase Order shall not be deemed to be a continuing waiver or a waiver of any other default or any other term or condition.
15. Set off. National Camper Trailers Pty Ltd shall have the right at any time to set-off any amount owing from the Supplier to National Camper Trailers Pty Ltd against any amount payable by National Camper Trailers Pty Ltd pursuant to the Purchase Order.
16. Notices. All notices under this Purchase Order shall be sent to a party at their address indicated on the front page of the Purchase Order or to such other address as notified by a party.
17. Entire agreement. The Purchase Order shall constitute the entire agreement between the parties. No modifications may be made to the Purchase Order unless in writing and signed by both parties. The terms of the Purchase Order supersede any terms contained in all prior communications and representations, inducements, undertakings, agreements or arrangements between the parties or their respective officers in respect of the matters dealt with in this agreement.
18. Survival. The obligations set forth in clauses 7, 8, 9, 11, 12 and 14 – 21 of these T&Cs shall survive the expiration or termination of the Purchase Order.
19. Other Terms & Conditions. For the avoidance of doubt, to the extent of any inconsistency with the Supplier’s terms and conditions, these T&Cs prevail.
National Camper Trailer Pty Ltd is a fictional company created for educational and training purposes only.
Customer Service Charter V:1: June 2016 Page 1 of 1
PURCHASING CONTRACT ~ AWWM Pty Ltd
(the “Agreement”) dated this 21st day of June, 2015
BETWEEN:
Australian Widgets and Wodgets Manufacturing Pty Ltd of 29 Manufacturing Boulevard Narre Warren South Victoria 3805
(the ‘Seller’)
OF THE FIRST PART
-AND-
National Camper Trailers Pty Ltd. of 6 Gumnut Drv. Dandenong South. Victoria 3175
(the ‘Purchaser’)
OF THE SECOND PART
IN CONSIDERATION OF THE COVENANTS and agreements contained in this Sales Agreement, the parties to this Agreement agree as follows:
Sale of Goods
1. The Seller will sell, transfer and deliver to the Purchaser based on individual future orders the following goods (the ‘Goods’):
2.1
Single Axle UN-BRAKED Trailer Kit 1400kg Rating with EYE TO EYE SPRINGS 45X8MM!
2.2
1000KG Mechanical Drum Brake Single Axle Trailer Kit with Slipper springs 1T
Purchase Price
3. The Purchaser will accept the Goods and pay for the Goods based on individual future orders to be paid as follows for the life of the contract:
a) down payment of 25% of total order and
b) the remainder of the purchase price by bank draft on net 15 terms within 30 days of delivery
c) Agreed price item 2.1 $335.00
d) Agreed price item 2.2 $515.00
4. The Seller and the Purchaser both acknowledge the sufficiency of this consideration. In addition to the purchase price specified in this Agreement, the amount of any present or future sales, use, excise or similar tax applicable to the sale of the Goods will be paid by the Purchaser, or alternatively, the Purchaser will provide the Seller with a tax exemption certificate acceptable to the applicable taxing authorities.
5. The Purchaser will make payment for the Goods at the time when, and at the place where, the Goods are received by the Purchaser or, in the alternative, when any document of title or registrable bill of sale, bearing any necessary endorsement, is tendered to the Purchaser.
Delivery of Goods
6. The Goods will be delivered to the Purchaser at 6 Gumnut Drv. Dandenong Victoria. The method of shipment will be within the discretion of the Purchaser. However, the Seller will only be responsible for the lesser of truck fright or rail freight to the Purchaser.
Risk of Loss
7. Risk of loss will be on the Purchaser from the time of delivery to the carrier. The Purchaser will provide at its expense insurance on the Goods insuring the Seller’s and the Purchaser’s interest as they appear, until payment in full to the Seller.
Warranties
8. THE GOODS ARE SOLD ‘AS IS’ AND THE SELLER EXPRESSLY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. The Seller does not assume, or authorize any other person to assume on the behalf of the Seller, any liability in connection with the sale of the goods. The Seller’s above disclaimer of warranties does not, in any way, affect the terms of any applicable warranties from the manufacturer of the Goods.
9. The Purchaser has been given the opportunity to inspect the Goods or have it inspected and the Purchaser has accepted the Goods in its existing condition. Further, the Seller disclaims any warranty as to the condition of the Goods.
Title
10. Title to the Goods will remain with the Seller until delivery and actual receipt of the Goods by the Purchaser or, in the alternative, the Seller delivers a document of title or registrable Bill of Sale of the Goods, bearing any necessary endorsement, to the Purchaser.
Security Interest
11. The Seller retains a security interest in the Goods until paid in full.
Inspection
12. Inspection will be made by the Purchaser at the time and place of delivery.
Claims
13. The Purchaser’s failure to give notice of any claim within 10 days from the date of delivery will constitute an unqualified acceptance of the Goods and a waiver by the Purchaser of all claims with respect to the Goods.
Excuse for Delay or Failure to Perform
14. The Seller will be liable in any way for any delay, non-delivery or default in shipment due to labour disputes, transportation shortage, delays in receipt of material, priorities, fires, accidents and other causes beyond the control of the Seller or its suppliers.
If the Seller, in its sole judgment, will be prevented directly or indirectly, on account of any cause beyond its control, from delivering the Goods at the time specified or within one month after the date of this Agreement, then the Purchaser will have the right to terminate this Agreement by notice in writing to the Seller, which notice will be accompanied by full refund of all sums paid by the Purchaser pursuant to this Agreement.
Remedies
15. The Purchaser’s exclusive remedy and the Seller’s limit of liability for any and all losses or damages resulting from defective goods or from any other cause will be for the purchase price of the particular delivery with respect to which losses or damages are claimed, plus any transportation charges actually paid by the Purchaser.
Cancellation
16. The Seller reserves the right to cancel this Agreement:
a. if the Purchaser fails to pay for any shipment when due;
b. in the event of the Purchaser’s insolvency or bankruptcy; or
c. if the Seller deems that its prospect of payment is impaired.
Notices
17. Any notice to be given or document to be delivered to either the Seller or Purchaser pursuant to this Agreement will be sufficient if delivered personally or sent by prepaid registered mail to the address specified below. Any written notice or delivery of documents will have been given, made and received on the day of delivery if delivered personally, or on the third (3rd) consecutive business day next following the date of mailing if sent by prepaid registered mail:
SELLER: 29 Manufacturing Boulevard Narre Warren South Victoria 3805
PURCHASER: 6 Gumnut Drv. Dandenong South. Victoria 3175
General Provisions
18. Headings are inserted for the convenience only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
19. All and warranties of the Seller contained in this Agreement will survive the closing of this Agreement.
20. The Purchaser may not assign its right or delegate its performance under this Agreement without the prior written consent of the Seller, and any attempted assignment or delegation without such consent will be void. An assignment would change the duty imposed by this Agreement, would increase the burden or risk involved and would impair the chance of obtaining performance or payment.
21. This Agreement cannot be modified in any way except in writing signed by all the parties to this Agreement.
22. This Agreement will be governed by and construed in accordance with the laws of the State of Victoria Australia.
23. If any clause of this Agreement is held unconscionable by any court of competent jurisdiction, arbitration panel or other official finder of fact, the clause will be deleted from this Agreement and the balance of this Agreement will remain in full force and effect.
24. This Agreement will inure to the benefit of and be binding upon the Seller and the Purchaser and their respective successors and assigns.
25. This Agreement may be executed in counterparts. Facsimile signatures are binding and are considered to be original signatures.
26. Time is of the essence in this Agreement.
27. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise. The Purchaser acknowledges that it has not relied upon any representations of the Seller as to prospective performance of the Goods, but has relied upon its own inspection and investigation of the subject matter.
IN WITNESS WHERE OF: –
the parties have executed this Purchase Agreement on this 21st day of June, 2015.
Australian Widgets and Wodgets Manufacturing Pty
per: _____________________________________________
National Camper Trailers Pty Ltd.
per: _____________________________________________
National Camper Trailer Pty Ltd is a fictional company created for educational and training purposes only.
Customer Service Charter V:1: June 2016 Page 1 of 1
PURCHASING CONTRACT
(the “Agreement”) dated this _______________, ___ / ___ / 20___
BETWEEN:
(the ‘Seller’)
OF THE FIRST PART
-AND-
National Camper Trailers Pty Ltd. of 6 Gumnut Drv. Dandenong South. Victoria 3175
(the ‘Purchaser’)
OF THE SECOND PART
IN CONSIDERATION OF THE COVENANTS and agreements contained in this Sales Agreement, the parties to this Agreement agree as follows:
Sale of Goods
1. The Seller will sell, transfer and deliver to the Purchaser based on individual future orders the following goods (the ‘Goods’):
2.1 (Item Description)
2.2 (Item Description)
Purchase Price
3. The Purchaser will accept the Goods and pay for the Goods based on individual future orders to be paid as follows for the life of the contract:
a) down payment of 25% of total order and
b) the remainder of the purchase price by bank draft on net 15 terms within 30 days of delivery
c) Agreed price item 2.1 (Purchase price 2.1)
d) Agreed price item 2.2 (Purchase price 2.1)
4. The Seller and the Purchaser both acknowledge the sufficiency of this consideration. In addition to the purchase price specified in this Agreement, the amount of any present or future sales, use, excise or similar tax applicable to the sale of the Goods will be paid by the Purchaser, or alternatively, the Purchaser will provide the Seller with a tax exemption certificate acceptable to the applicable taxing authorities.
5. The Purchaser will make payment for the Goods at the time when, and at the place where, the Goods are received by the Purchaser or, in the alternative, when any document of title or registrable bill of sale, bearing any necessary endorsement, is tendered to the Purchaser.
Delivery of Goods
6. The Goods will be delivered to the Purchaser at 6 Gumnut Drv. Dandenong Victoria. The method of shipment will be within the discretion of the Purchaser. However, the Seller will only be responsible for the lesser of truck fright or rail freight to the Purchaser.
Risk of Loss
7. Risk of loss will be on the Purchaser from the time of delivery to the carrier. The Purchaser will provide at its expense insurance on the Goods insuring the Seller’s and the Purchaser’s interest as they appear, until payment in full to the Seller.
Warranties
8. THE GOODS ARE SOLD ‘AS IS’ AND THE SELLER EXPRESSLY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. The Seller does not assume, or authorize any other person to assume on the behalf of the Seller, any liability in connection with the sale of the goods. The Seller’s above disclaimer of warranties does not, in any way, affect the terms of any applicable warranties from the manufacturer of the Goods.
9. The Purchaser has been given the opportunity to inspect the Goods or have it inspected and the Purchaser has accepted the Goods in its existing condition. Further, the Seller disclaims any warranty as to the condition of the Goods.
Title
10. Title to the Goods will remain with the Seller until delivery and actual receipt of the Goods by the Purchaser or, in the alternative, the Seller delivers a document of title or registrable Bill of Sale of the Goods, bearing any necessary endorsement, to the Purchaser.
Security Interest
11. The Seller retains a security interest in the Goods until paid in full.
Inspection
12. Inspection will be made by the Purchaser at the time and place of delivery.
Claims
13. The Purchaser’s failure to give notice of any claim within 10 days from the date of delivery will constitute an unqualified acceptance of the Goods and a waiver by the Purchaser of all claims with respect to the Goods.
Excuse for Delay or Failure to Perform
14. The Seller will be liable in any way for any delay, non-delivery or default in shipment due to labour disputes, transportation shortage, delays in receipt of material, priorities, fires, accidents and other causes beyond the control of the Seller or its suppliers.
If the Seller, in its sole judgment, will be prevented directly or indirectly, on account of any cause beyond its control, from delivering the Goods at the time specified or within one month after the date of this Agreement, then the Purchaser will have the right to terminate this Agreement by notice in writing to the Seller, which notice will be accompanied by full refund of all sums paid by the Purchaser pursuant to this Agreement.
Remedies
15. The Purchaser’s exclusive remedy and the Seller’s limit of liability for any and all losses or damages resulting from defective goods or from any other cause will be for the purchase price of the particular delivery with respect to which losses or damages are claimed, plus any transportation charges actually paid by the Purchaser.
Cancellation
16. The Seller reserves the right to cancel this Agreement:
a. if the Purchaser fails to pay for any shipment when due;
b. in the event of the Purchaser’s insolvency or bankruptcy; or
c. if the Seller deems that its prospect of payment is impaired.
Notices
17. Any notice to be given or document to be delivered to either the Seller or Purchaser pursuant to this Agreement will be sufficient if delivered personally or sent by prepaid registered mail to the address specified below. Any written notice or delivery of documents will have been given, made and received on the day of delivery if delivered personally, or on the third (3rd) consecutive business day next following the date of mailing if sent by prepaid registered mail:
SELLER: (Sellers Address)
PURCHASER: 6 Gumnut Drv. Dandenong South. Victoria 3175
General Provisions
18. Headings are inserted for the convenience only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
19. All and warranties of the Seller contained in this Agreement will survive the closing of this Agreement.
20. The Purchaser may not assign its right or delegate its performance under this Agreement without the prior written consent of the Seller, and any attempted assignment or delegation without such consent will be void. An assignment would change the duty imposed by this Agreement, would increase the burden or risk involved and would impair the chance of obtaining performance or payment.
21. This Agreement cannot be modified in any way except in writing signed by all the parties to this Agreement.
22. This Agreement will be governed by and construed in accordance with the laws of the State of Victoria Australia.
23. If any clause of this Agreement is held unconscionable by any court of competent jurisdiction, arbitration panel or other official finder of fact, the clause will be deleted from this Agreement and the balance of this Agreement will remain in full force and effect.
24. This Agreement will inure to the benefit of and be binding upon the Seller and the Purchaser and their respective successors and assigns.
25. This Agreement may be executed in counterparts. Facsimile signatures are binding and are considered to be original signatures.
26. Time is of the essence in this Agreement.
27. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise. The Purchaser acknowledges that it has not relied upon any representations of the Seller as to prospective performance of the Goods, but has relied upon its own inspection and investigation of the subject matter.
IN WITNESS WHERE OF: –
the parties have executed this Purchase Agreement on this 21st day of June, 2015.
(Witness for the Seller)
per: _____________________________________________
National Camper Trailers Pty Ltd.
per: _____________________________________________
National Camper Trailer Pty Ltd is a fictional company created for educational and training purposes only.
Customer Service Charter V:1: June 2016 Page 1 of 3
Learner Guide: TLIR5014
Manage suppliers
TLIR5014 LEARNER GUIDE 2 | P a g e Version 2.5
Version control
Version No. Date Dept. Change
1.0 06/06/2016 Training Original
2.0 06/06/2016 Training Updated content
2.5 18/11/2016 Training Updated content
Copyright Statement
© Copyright National Training
Disclaimer
All rights reserved. No part of this publication may be reproduced or
transmitted in any form or by any means, electronic or mechanical,
including photocopying, scanning, recording, or any information storage
retrieval system without permission in writing from National Training. No
patent liability is assumed with respect to the use of information used
herein.
While every effort has been taken in the preparation of this publication,
the publisher and authors assume no responsibility for errors or
omissions. Neither is any liability assumed for damages resulting from the
use of information contained herein.
TLIR5014 LEARNER GUIDE 3 | P a g e Version 2.5
Contents
TLIR5014 Unit Description ………………………………………………………………………………………………………. 5
Application of Unit …………………………………………………………………………………………………………………. 5
Element and Performance Criteria …………………………………………………………………………………………… 5
Performance Evidence ……………………………………………………………………………………………………………. 6
Knowledge Evidence ………………………………………………………………………………………………………………. 6
Manage Suppliers Introduction ……………………………………………………………………………………………….. 7
Role of Supply or Contract Manager…………………………………………………………………………………………. 7
Contract Management Plan …………………………………………………………………………………………………….. 8
Probity Check………………………………………………………………………………………………………………………… 8
Section 1 Assess Suppliers and Build Productive Relationship ……………………………………………………..9
Be Trustworthy with Suppliers ………………………………………………………………………………………………… 9
Care about the Other Person …………………………………………………………………………………………………… 9
Commit to Excellence in Your Process …………………………………………………………………………………….. 10
Use Adventure to Grow a Relationship …………………………………………………………………………………… 10
Be Honest and Trustworthy in All Discussions ………………………………………………………………………….. 10
Financial Viability Must Be Considered ……………………………………………………………………………………. 11
Terms and Conditions of Supply …………………………………………………………………………………………….. 11
Policy and Procedures Review ……………………………………………………………………………………………….. 11
Have a Firm Knowledge of Your Suppliers ……………………………………………………………………………….. 11
What is ‘KEIRETSU’?……………………………………………………………………………………………………………… 12
Section 2 Evaluate Delivery of Goods and/or Services against Agreements …………………………………. 13
Establish Performance Indicators …………………………………………………………………………………………… 13
Possible Numeric Ranking System ………………………………………………………………………………………….. 14
Classify Multiple Suppliers and Vendors ………………………………………………………………………………….. 15
Develop an Evaluation Method ……………………………………………………………………………………………… 15
Maintain Good Relationships ………………………………………………………………………………………………… 16
Decide When to Issue a Warning or Red Flag …………………………………………………………………………… 16
Remove Poor Suppliers…………………………………………………………………………………………………………. 17
Monitoring by Customers a Good Process ………………………………………………………………………………. 17
Independent 3rd Party Monitoring…………………………………………………………………………………………. 17
Section 3 – Negotiate Arrangements with Suppliers ……………………………………………………………….. 18
Manage Your Time in Negotiation ………………………………………………………………………………………….. 18
Prepare Open Questions ………………………………………………………………………………………………………. 18
Design a Strategy Route Map ………………………………………………………………………………………………… 19
TLIR5014 LEARNER GUIDE 4 | P a g e Version 2.5
Consider Style & Personality ………………………………………………………………………………………………….. 19
Define Your Targets ……………………………………………………………………………………………………………… 19
List Your Tactics …………………………………………………………………………………………………………………… 20
Rehearse Your Opening Statement ………………………………………………………………………………………… 20
Section 4 Resolve Disagreements or Conflict with Suppliers …………………………………………………….. 21
Move from ‘Arm’s length’ deals to Alliance Relationships …………………………………………………………. 21
Trust in the Relationship ……………………………………………………………………………………………………….. 22
Fail to Supply ………………………………………………………………………………………………………………………. 22
Model of Buyer Supplier Conflict ……………………………………………………………………………………………. 23
Government Legislation ……………………………………………………………………………………………………….. 24
Competition and Consumer Act …………………………………………………………………………………………….. 24
Fair Trading Laws in Your State or Territory …………………………………………………………………………….. 24
Laws Affecting International Contracts …………………………………………………………………………………… 24
Code of Practice…………………………………………………………………………………………………………………… 25
Section 5 – Review Performance of Suppliers ………………………………………………………………………… 26
The Auto Industry Comments ………………………………………………………………………………………………… 26
TLIR5014 LEARNER GUIDE 5 | P a g e Version 2.5
TLIR5014 Unit Description
Application of Unit
This unit involves the skills and knowledge required to manage suppliers in various contexts within the
transport and logistics industry.
It includes assessing and building productive relationships with suppliers, and evaluating the delivery of
goods/services against agreements. It also includes negotiating arrangements, resolving disagreements with
suppliers and reviewing supplier performance.
The unit generally applies to those who lead individuals or teams.
No licensing, legislative or certification requirements apply to this unit at the time of publication.
Element and Performance Criteria
1. Assess
suppliers and
build productive
relationships
1.1 Criteria to effectively evaluate supplier services are developed and
documented
1.2 Existing suppliers are assessed against criteria
1.3 Availability and suitability of alternate suppliers who can meet the service
support requirements within legislative requirements are identified
1.4 Terms and conditions of suppliers to achieve service requirements are
established and communicated
1.5 Cooperative relationships are developed with suppliers in accordance with
organisational policies and procedures
2. Evaluate
delivery of
goods and/or
services against
agreements
2.1 Quality of goods and services supplied is assessed against criteria
2.2 Non-compliance is identified, documented and corrective action is
implemented within the terms of contractual arrangements
2.3 Contingency plans are developed should suppliers fail to deliver
2.4 Relationships with suppliers are managed to support effective delivery
3. Negotiate
arrangements
with suppliers
3.1 Arrangements with suppliers are negotiated and implemented in accordance
with organisational policies and procedures
3.2 Market factors that may affect the supply of goods and services are
identified and communicated to relevant personnel
3.3 Immediate corrective action is taken in consultation with suppliers where
potential or actual problems are indicated
4. Resolve
disagreements
with suppliers
4.1 Disagreements with suppliers are investigated to identify validity and causes
4.2 Disagreements are negotiated and resolved
4.3 Amendments to agreements, as a consequence of the resolution of
disagreements, are documented
4.4 Approval is sought and obtained for amendments
4.5 Approved amendments are communicated to suppliers and relevant
personnel
5. Review
performance of
suppliers
5.1 Suppliers are continuously reviewed for quality, profitability, service, delivery
status and other relevant performance indicators
5.2 Supplier performance is evaluated against purchasing agreement
requirements
5.3 Suppliers are informed of evaluation outcomes as required
5.4 Recommendations about future use of suppliers are made to relevant
personnel
5.5 Suppliers are deleted from supplier shortlist according to criteria
TLIR5014 LEARNER GUIDE 6 | P a g e Version 2.5
Performance Evidence
Evidence of the ability to:
applying relevant legislation and workplace procedures
communicating and working effectively with others when managing suppliers
completing documentation related to work activities
implementing contingency plans
modifying activities depending on operational contingencies, risk situations and environments
monitoring and prioritising work activities in terms of planned schedule
operating electronic communications equipment to required protocol
reading and interpreting instructions, procedures, information and signs relevant to managing
suppliers
reporting and/or rectifying identified problems, faults or malfunctions promptly, in accordance
with regulatory requirements and workplace procedures
sourcing, managing, evaluating and reviewing suppliers.
Knowledge Evidence
To complete the unit requirements safely and effectively, the individual must:
code of practice for working collaboratively with others
common use arrangements
contract performance and dispute policies and procedures
financial accountability requirements
operation of recording, reporting and statistical analysis systems and resources
organisational policies, procedures, plans, guidelines and code of conduct relevant to
procurement and supply contracts
organisational procedures for monitoring the performance of suppliers
probity requirements and ethical issues
procedures for operating electronic communications equipment
procedures for receipt and payment of goods and services
procurement approval procedures
relevant sections of national and state/territory regulatory requirements and codes of practice
related to procurement
requirements for completing relevant documentation
steps involved in planning the work activities
suppliers in the marketplace.
TLIR5014 LEARNER GUIDE 7 | P a g e Version 2.5
Manage Suppliers Introduction
It makes no difference what business you are in, suppliers and vendors play a key role in a company’s
success. Having a formalised system in place to track and evaluate supplier and vendor performance is
essential to the smooth operation and profitability of the company.
Successful companies embrace their suppliers and vendors, viewing them as partners in helping to grow
the business. Making sure that this is a mutually beneficial partnership will impact the price you are
negotiating today and the quality of service you get in future. If a supplier/vendor is a key part or
service to your operation invite that supplier or vendor to strategic meetings that involve the product
they sell. A common mistake companies make is to have a combative relationship with their suppliers
and vendors.
Who manages suppliers in the organisation?
In a small company the owner of the business will
probably manage and negotiate with all suppliers in
both a formal and informal manner. In a medium sized
business, a nominated person or group of persons will
be responsible for managing all purchasing and supplier
relationships.
In government at all levels, the process could be
handled at multiple levels by multiple departments.
Managers of government departments will have
government credit cards to allow a purchased up to
$25,000 while a government Ministers may have a level
of $50,000 or similar credit card authority levels. All
government departments will have a group of persons
responsible for purchasing and tendering or contracting
purposes. These persons may be referred to as a
purchasing officer, procurement analyst, and supply
officer, item clerk, buying manager, supply manager or
contract manager.
Large mining companies may have a procurement department or supply department that covers a large
region such as the Asia Pacific basin. With the internet and reliable communication and lower labour
cost in third level countries, this is becoming a common occurrence.
Role of Supply or Contract Manager
The supply or contract manager is responsible for ensuring that the contracted goods and/or services
are delivered in accordance with the specification and the terms of the contract, that all associated risks
are identified and managed and that effective communication is maintained between all parties. The
supply or contract manager is also required to make arrangements for the routine contract with the
supplier, administration functions, such as processing requests for variation to the contract, handling
bank guarantees and security deposits and processing claims for payment supported by invoices and
receiving documents. Processes will vary with different organisations.
TLIR5014 LEARNER GUIDE 8 | P a g e Version 2.5
Contract Management Plan
A contract management plan contains all of the key information about how the contract should be
managed. A contract management plan is an
essential tool in the proper management of
contracts. The contract manager should
regularly refer to the contract management plan
and should ensure that the plan is amended if
the circumstances change. Like all plans, it
should be a living document that changes to
reflect any changes in circumstances during the
operation of the contract.
The contract management plan should initially be
developed during the procurement or project
planning phase. It is usually further developed
and refined during contract formation activities
and may continue to be modified throughout the
period of the contract to reflect changes of
circumstances. Contracts may be for short,
medium and long term timeframes.
Probity Check
The buyer of goods or services should perform a probity check that investigates the background of an
organisation (company or other corporate body) or individual to determine their fitness to undertake a
specified activity for which authorisation is required.
Probity checks investigate the previous history and activities of organisations and individuals, especially
but not only in respect of financial records and legal involvements. The nature and detail of information
required for probity checks varies according to legislative requirements and the type of activity for
which authorisation is required.
TLIR5014 LEARNER GUIDE 9 | P a g e Version 2.5
Section 1 Assess Suppliers and Build Productive Relationship
Most work environments require interacting with others. Some people view these interactions as
separate events while others view them as enriching, ongoing relationships. The truth is you get out of
your work relationships what you put into them.
There are four key behavior traits that contribute to building strong relationships. You need to be
trustworthy, care about the other person, be committed to excellence in your performance, bond
through adventure and be trustworthy.
Let’s look at each of these in more detail.
Be Trustworthy with Suppliers
It is important for you to do what you say. When you commit to
something others listen and then watch. They want to know if you
can be trusted to deliver on your commitment or will you dismiss
it. When delivering something will you deliver it as requested and
on time or will it be incomplete or late.
Others also want to know if you are going to attempt personal gain
at their expense. They will watch how you go about getting things
you want, looking for methods or actions that take advantage of
others. Even if they are not involved, it will be a tell-tale sign that
they need to watch their back when working with you.
Care about the Other Person
People want to know if you care about them as a person or see them as an object or a means to an end.
No one wants to be viewed as a resource for someone else’s consumption. They want to be known as a
unique individual with life experiences, emotions, and a choice in their work demands. Showing
someone you care about them requires showing respect regardless of their position in the company and
gaining general knowledge of who they are and what they like and dislike.
In practice, this means scheduling a meeting or conversation instead of just dropping in or calling.
Schedule in advance so you do not interrupt an ongoing conversation or politely wait and then ask if it is
a good time to chat. Before you discuss any business discussions ask them about their personal life.
When you are first building the relationship, ask general questions
about their past and current experiences. Topics could include
family, hobbies, vacations, pets, past jobs, etc. As time goes on,
you can ask more specifics questions, but wait until you sense trust
developing between the two of you.
Another way to show you care is to reflect back the information
you receive. If Sally tells you she has a big holiday starting
tomorrow, then make sure you ask her about it the next time you
see her. If Bill tells you his dog died, don’t forget about it and then
ask him if he took his dog to the park a few weeks later. This is all
part of caring for the other person.
TLIR5014 LEARNER GUIDE 10 | P a g e Version 2.5
Commit to Excellence in Your Process
Very few people like to work with low performers. You can’t help but get a little upset from someone
else’s deficiencies and poor results. Working with a person who is a low performer requires twice the
effort and time of a competent worker.
This is why your work attitude and quality of work affects your work relationships. Committing to
excellence means showing initiative and not waiting for someone else to point work out to you.
Having a can-do attitude signals you are not afraid of a challenge and that you will carry your weight
when times get tough. Remember to be thorough and complete when you declare something finished.
This will not only make you pleasant to work with, but it will also inspire others to follow your
commitment to excellence.
Use Adventure to Grow a Relationship
Adventures are not all good or all bad; they are a mixture of both. In a work environment, they are
always experienced with a group of people and have a general beginning and end. Adventures never kill
us nor take us to nirvana and they usually have a central theme. In our personal lives, adventures may
be vacations, kid’s sports teams, neighborhoods, community efforts, etc.
In work environments, they may be projects, departments in transition, recessions, building moves,
working with a very difficult person, etc. Adventures almost always develop deeper bonds because they
are shared experiences that we get to survive together, laugh and cry about, reminisce about, and to
some extent relive the emotions again.
Be Honest and Trustworthy in All Discussions
This sounds basic, but it goes beyond not lying to your customers and employees. It’s about owning a
mistake when you make a mistake or mess up and admitting when you’re wrong. It’s also about refusing
to pretend that you’re something you’re not. It requires acknowledging the state of the business to your
employees and to customers.
It requires selling only what you can deliver effectively and always living up to your word. Done
properly, this kind of honesty begets a tremendous amount of loyalty from both customers and
employees. Both groups know they can trust you and more importantly, that you value the integrity of
the relationship.
Asking who benefits from business honesty can explain why virtue is also important. Examining the
negative effects of dishonest business practices provides insight into the importance of honesty. In fact,
it is as helpful as looking at the benefits of business honesty. Doing what is ethical because it is the right
thing to do is as essential as practicing ethical behaviour for the positive consequences
TLIR5014 LEARNER GUIDE 11 | P a g e Version 2.5
Financial Viability Must Be Considered
Big companies can get into financial difficulties as quickly as small
companies. When selecting a supplier for the organisation you need
to determine if the supplier will be in business in both the short and
long terms of the supply arrangements. With some commodities,
there may be a number of alternative suppliers that can fill in the
supply gap. It the product is a specialised product or one that is a
specialised manufacturer or supplier, financial viability is a key
decision to make. The process may be to have an accountant’s
opinion or and external credit agency provide an opinion on their
financial viability.
Terms and Conditions of Supply
As a Purchasing person, you will need to determine the required terms
and conditions of purchase. These organisation’s trading terms are
usually printed on the back of a purchase order and covers most legal
aspects of supply.
In contracts for major works the tender documents will set the terms
and conditions that the buyer organisation requires. These conditions
are used if there is a dispute for a delivery problem or issue.
Payment terms are mostly 30 or 60 days from date of purchase while
delivery timeframes will usually set a date such as 25 November or
seven (7) days from date of purchase. For purchased overseas the lead time or delivery time will be
longer compared to a local supply and delivery.
Policy and Procedures Review
As part of selecting a supplier the purchasing officer should ensure that the supplier has policy and
procedures to cover their business operations. This should include legislation requirements, insurances,
customer service, quality control and other processes covering their operations.
Have a Firm Knowledge of Your Suppliers
Do you have good knowledge of your suppliers? It is important to have a wide range of knowledge and
skills to be involved in purchasing and be aware of your business environment. Some suppliers’ operate
under different business names but are all owned by a single parent company. An example is where
there may be three suppliers of personal protective equipment (PPE) all trading under different names
and addresses. When further investigation is done they are all owned by the same head office company.
If you are working on a larger or global purchasing environment such as a mining company, the
purchasing department needs to be aware of the global structures of the supplier. The information
about “keiretsu” in Japan is most interesting.
TLIR5014 LEARNER GUIDE 12 | P a g e Version 2.5
What is ‘KEIRETSU’?
This is a Japanese term describing a loose conglomeration of firms sharing one or more common
denominators. The companies don’t necessarily need to own equity in each other’s organisations.
Copyright © 1996 Zona Research Inc.
This term has been in the business news every now and then, especially when they talk about Silicon
Valley. One example would be the close relationship between AOL (America on Line) and Sun Micro. The
two firms don’t have ownership in each other, but they work closely on various projects.
Japan’s corporate governance system known as a “keiretsu’ dates back to the 1600s, but was propelled
by the Japanese government’s newly formed Meiji Restoration in 1866 as the world entered the
industrial revolution. These early corporate formations were termed “zaibatsu,” translated to English as
monopoly.
Zaibatsu’s began as small, family-owned enterprises that formed in various Prefectures across Japan to
specialize in the separate business needs of the nation. As Japan’s economy grew, zaibatsu grew to later
form into holding companies.
When the U.S. rewrote the Japanese constitution after World War II, the United States and the Allies
eliminated zaibatsu holding companies because of their undemocratic nature as monopolies, and
Japanese governmental policies that perpetuated their existence.
Under a zaibatsu, the largest industrial groups allowed banks and trading companies to be the most
powerful aspects of each of the cartels and sit at the top of an organizational chart. Banks and trading
companies controlled all financial operations and the distribution of goods. The original founding
families were in full control of all “Cartel” operations.
Typical of a Japanese horizontal keiretsu is Mitsubishi where the Bank of Tokyo-Mitsubishi sits at the top
of the keiretsu. Also part of the core group is Mitsubishi Motors and Mitsubishi Trust and Banking
followed by Meiji Mutual Life Insurance Company which provides insurance to all members of the
keiretsu. Mitsubishi Shoji is the trading company for the Mitsubishi keiretsu. Their purpose of this
structure is to manage the distribution of goods around the world.
As a person responsible for managing suppliers you need to understand relationship of your potential or
current suppliers and who they may be linked to or not linked to. You may find that your current PPE
Physical
and
Broadcast
Info Keiretsu Structure
Sofware and
Hardware
Passive
Chaos
Content Delivery Consumption
TLIR5014 LEARNER GUIDE 13 | P a g e Version 2.5
supplier will be linked to another PPE supplier although trading under different names. Within the hotel
chains there are five hotel groups all in competition with each other and who trade under different
trading names. The parent company is the Accor group. Their names are Mercure, Pullman, Formula 1
and others in their chain.
Section 2 Evaluate Delivery of Goods and/or Services against
Agreements
A lot of companies will actually have an adversarial relationship where they hire purchasing people who
have on brass knuckles and try to beat up on suppliers or vendors to get better prices or trading terms.
This is a very short sighted way to do business.
Instead of getting stuck on price, focus on quality of service or value adding. A supplier can have the
lowest price and the lowest quality of work too. Your goal is understand what value-adding the supplier
is bringing to the company. Your business should have a system in place for evaluating, selecting and
benchmarking all suppliers. Here are some methods to effectively rate your suppliers and vendors, track
their performance, and ultimately increase the company’s overall productivity.
Establish Performance Indicators
At the onset of the supplier relationship you have to determine what characteristics a vendor needs to
have, demonstrate, or maintain to continue doing business with the company. Create specific
performance criteria for tracking and evaluating your suppliers and vendors on a regular basis.
Considerations include the:
size of the company
range of products provided
quality assured company
response time from initial
enquiry
trading terms and
conditions
financial stability
engineering or technical
advice
quality management
systems
transportation systems
technology including online ordering and payments
service / delivery
delivery in full on time
Your own processes and needs will dictate what criteria you apply. For a business owner who is looking
for a shipping or transport company, the biggest concerns might revolve around what is that supplier’s
on time delivery track record, how many trucks they own, how many accidents have their drivers
reported, and what insurances do they hold.
TLIR5014 LEARNER GUIDE 14 | P a g e Version 2.5
Possible Numeric Ranking System
The supplier with the highest points is better for the company compared to a supplier with a low
number.
Range of products provided by
supplier
A – Large company with 2500 products
B – Medium company with 1000 products
C – Small company with less than 200 products
Quality assured management
system
10 point has ISO QA
8 points for Australian Standards QA
5. Has in house quality standards
0. Has no quality control systems
Suppliers response time from
initial or other enquiry
10 points if response is in 4 hours
7 points if response is in 8 hours
5 points if response is in 24 hours
2 points if response is in 5 days
0 points if no response received
Trading terms and conditions 30 days credit – 10 points
14 days credit – 5 points
7 days credit – 2 points
Financial stability supported
by financial reports
20 points for a financial report
10 points supported by a credit rating agency
5 points based on past trading history
0 points for no financial information
Engineering or technical
advise
Depends on the industry requirements.
Manufacturing will have a different requirement compares to a café.
Delivery in full on time 10 points – delivery to requested timeframe
5 points is 4 hours late regularly
2 points if delivery is late consistently
Transportation systems and
technology systems
10 points – trucks well maintained and fully equipped
8 points – trucks well maintained but not fully equipped
2 points – trucks not reliable or fully equipped
Drivers are trained 5 points for trained drivers
3 points for partially trained drivers
1 point for some training provided
TLIR5014 LEARNER GUIDE 15 | P a g e Version 2.5
Online ordering and payment
systems
5 points for payment and online ordering system
3 points for some systems
1 point for payment gateways
Transport availability 5 points for transport available on request
3 points for transport in 24 hours
1 point for transport in 48 plus hours
Product delivered damaged 1 point for 20% of deliveries have damage
5 points for 5% of deliveries have damage
10 points for 2% or less damage
A basic consideration for every business owner should be whether the supplier has management system
in place. This doesn’t just apply to a particular industry but all industries.
Classify Multiple Suppliers and Vendors
If you have a huge number of suppliers and vendors and you intend to develop a survey to evaluate all
of them, it will be cumbersome to apply the same survey to each and every one.
It is better to separate suppliers into levels (1, 2, and 3) based on how critical they are to the business.
Decide the classification that is best for you and evaluate suppliers according to the effect they have on
your product or service in order of importance. If you apply the Pareto principle 80% of your purchasing
needs will come from 20% of your suppliers. Some will be critical to the business while others will not
be critical.
An example of classification
Company Level of service Trained Staff Hourly rate
Plumber 1 Good history of service All staff qualified $70.00
Plumber 2 Poor level of service Some qualified and some in
training
$65.00
Plumber 3 No knowledge of service
provided. New company
Master plumber with trained staff $50.00 with a $15.00
call out fee.
From the information in the table the purchasing officer will need make an informed decision as to
which plumber bests suits the organisations need.
Develop an Evaluation Method
There are common techniques for rating a supplier’s performance including evaluation forms, surveys,
benchmarks, system metrics, and software applications.
Accounting systems can quickly provide reports of purchases from one or many suppliers in a month, a
quarter or year.
You can develop a survey where you ask your own employees to answer questions and
rate suppliers and vendors. You can report to determine;
TLIR5014 LEARNER GUIDE 16 | P a g e Version 2.5
Accuracy with documentation
responsiveness to requested actions
how many products you had to scrap or return due to poor quality
how many products were not to specification
incorrect part or product supplier
how many internal or external customer complaints received
face to face evaluations
other important requirements
Your business may already have an analysis process to rank good from poor suppliers or vendors that
works to achieve a desirable outcome.
Determine who is the Decision Maker?
Once you establish the criteria for evaluating suppliers and vendors, who in the
company will be responsible for reviewing the data. It will depend on how many
resources you have to dedicate to the evaluating process.
You may want to assign one person or a team with the task. For instance, selecting
and evaluating level 1 or critical suppliers and vendors, might require the chief
financial officer or someone from the finance department with accounting
knowledge to do the analysis.
In small companies this may be the owner of the business to decide. With level 2 and 3 suppliers and
vendors, it may be the purchasing or procurement officer who approves the supplier and monitors their
performance. In both analysis, the end users should have input to the decision making process.
Maintain Good Relationships
Communicate often and openly with your suppliers and vendors as part of
the team and treat them as such. Be upfront and transparent with suppliers
and vendors and make sure they understand the needs of the business and
expectations.
Using technology to communicate is great but don’t overlook the personal
touch of a phone conversation or face to face meetings. Try to avoid
supplier and vendor conflicts by paying your invoices on time or at least
honestly addressing the reasons for a late payment of an invoice.
If your purchasing specification require two layers of bubble wrap or an extra layer of padding between
each part in a carton so that there is no scratching and it’s not happening, advice the supplier and
request that it happens with the packing process for your business. Discuss the level of detail requested
so that your business is not disappointed when parts come in.
Decide When to Issue a Warning or Red Flag
As you monitor a supplier’s performance, you have to decide when to praise them and when to issue a
warning or red flag. Show appreciation for a job well done and give a supplier additional business
because of excellent performance. A poor or bad supplier will provide you with mediocre or poor
TLIR5014 LEARNER GUIDE 17 | P a g e Version 2.5
products and services and could cause a problem with your business and your customers.
You can delete a supplier for poor performance but strategically it is better to retain your supplier or
vendors and not to move around all of the time to replace them. By giving a warning, you give the
supplier or vendor an opportunity to correct the problem and improve their level of service. Use data
that you have collected such as on-time delivery, return rate and number of incorrect prices on invoices
or applicable discounts.
The process is not just about reviewing your suppliers and deleting them but helping them to improve
their performance and in turn help you.
Remove Poor Suppliers
No business or individual should tolerate poor or ongoing bad or poor service.
There may come a time when you have to let go of an underperforming
supplier or vendor. The price may be much lower with this suppler compared
with a more expensive supplier but often there are some reasons as to why
they are so low.
If they are not responsive to phone calls, suggested meetings, written complaints, digital pictures,
quality reports or examples on where they are not performing, perhaps the only outcome is to remove
them as a supplier.
The relationship with your supplier is a business partnership where both parties are working to make
sure that the partnership is a success. It must be a win-win supplier and vendor relationship.
Monitoring by Customers a Good Process
If your business is in retail or you are a distributor of goods, not a consumer, a good approach is to
monitor a supplier’s performance by regular feedback or following up of your customers. This approach
can be most effective in gaining an accurate perception of the real quality of a supplier’s performance
under actual service delivery conditions. However, it can be costly and time-consuming to apply.
Independent 3rd Party Monitoring
Independent third party monitoring can be performed directly, by giving the responsibility over to an
external monitoring body, or indirectly through an accreditation process. In an accreditation process,
service standards are set, reviewed and monitored normally through an independent body. This
approach is often used by the community welfare sector.
Accreditation programs can be expensive for the business or third party to implement but is an effective
way to ensure accuracy in a supplier’s performance. Potential costs incurred would need to be weighed
against the potential benefits of accreditation to determine if this method of monitoring is the most
appropriate for a contract.
The large mining companies in Australia have a supplier accreditation process where a supplier is
required to provide a wide range of documentation or accreditation to be considered for a supply
contract. The accreditation is revisited every two years to ensure its currency.
TLIR5014 LEARNER GUIDE 18 | P a g e Version 2.5
Section 3 – Negotiate Arrangements with Suppliers
Without adequately defining your supplier objectives and preparing for the negotiation, your chances of
achieving your objectives in a negotiation are minimal. One of the things to stress is if you “fail to plan
you will plan to fail”. This is an old cliché, but one with a strong correlation to negotiation results.
Putting it another way, those who plan better do better.
Manage Your Time in Negotiation
A staggering two-thirds (62% percent) of the people questioned about preparing for a negotiation spent
one hour or less preparing for a negotiation. Sixty-eight per cent admitted that better preparation for
their last deal would have produced a better outcome. This information was supplied by Supply Chain
Management UK.
Negotiation is a performance; it is during the planning phase that the stage is set and expectations
managed. Effective negotiators envisage a far wider range of potential variables, openings and
outcomes than the average negotiator.
They also spend more time considering areas of common interest between the parties. Average
negotiators discuss item A then B, followed by C and D. If the business is in any other order, they are
thrown off balance. Effective negotiators are able to discuss items in any order, enabling flexibility in
their approach. When preparing for negotiations remember to:
Consider the impact on the business.
Consider how attractive this business is to the other
party.
Select the location for the negotiation.
Plan the opening, testing and moving phases of the
negotiation
State assumptions.
List questions to test the assumptions.
Be creative – the longer and more creative the list
of variables, the more flexible your strategy will be.
Prepare Open Questions
Of those surveyed, only 1 per cent would typically prepare 20 ‘open’ questions for a negotiation, with
44 per cent relying on only 0-5 planned questions. Closed questions can be answered with “yes/no” or a
short phrase, whereas open questions demand more information – for example, “Will you innovate for
us?” versus “How will you innovate for us?”
If we ask open questions, it is difficult for the other party to evade and therefore puts the asker in a
position of control. Many people believe that talking gives you control. In fact, it is the person asking the
open questions and listening to the responses who will be in control.
If you talk too much and are under-prepared, the other party will put you on the spot with a well-chosen
question. If you have planned properly, you will know what information you require and what
assumptions you have made concerning you, your business and the other party. Proper use of questions
allows you to check out all of this preparation before you move into the next phase of the negotiation.
TLIR5014 LEARNER GUIDE 19 | P a g e Version 2.5
Design a Strategy Route Map
A negotiation has clear phases and these must be planned. Avoid entering one without having drawn up
a careful map of the direction and destination of the meeting and any subsequent events. The route
may not be completely sequential – you may have to backtrack – but at least you will be prepared.
Skilled negotiators will be in a better position to manage time more effectively, which will result in
delivery of a better deal.
A quarter thought that the other party was more prepared than the buyer, with 48 per cent saying that
both parties were equally prepared. Our research, which was based on the responses of 90 delegates on
our courses, would suggest that a lack of preparation and planning is putting the buyer’s questions in a
weaker negotiation position before they even go in to do the deal.
Consider Style & Personality
Personality type, negotiating styles and interests are all key factors in
building rapport and managing behaviour during a negotiation. It is
important these areas are considered in the planning stage. The
research found 43 percent ‘sometimes’ consider these aspects, and 4
per cent ‘never’ consider it.
It is important to be unpredictable within a negotiation to prevent
the other party reading you too well. Maybe they are skilled and they
will also be unpredictable. You need to prepare and plan for a
plethora of tactics, approaches and questions because not all
techniques will work all of the time on every one. So, when you’re
planning, consider the responses the other party is likely to give.
Over half the people interviewed in the survey said that ‘mostly to always’ they consider the other
party’s response. This will put them in control and help them deal with the unexpected that can
sometimes arise during a negotiation.
Define Your Targets
Another part of the strategy should be setting well-defined targets for each issue or variable. The
research showed that negotiators often lose sight of their objectives. Keep these in mind and set well-
defined goals from the outset. If we don’t know where we are going, how will we know when we’ve
arrived?
Setting objectives from ‘ideal’ and ‘realistic’ to ‘walk away’ is paramount.
It will help to control the extent to which you move from your ideal settlement point and to understand
the cost implications of any movement.
Skilled negotiators know the specific objectives for each variable: what must they get? What might they
achieve in an ideal world? And what is realistic? Make sure that the ideal is a stretching objective and
that you have clear targets for each variable.
The longer and more creative your give and take list of variables, the more flexibility you will have in
your negotiation. One recent study found 79 per cent either ‘always’ or ‘sometimes’ dedicated
preparation time to getting their objectives clear.
TLIR5014 LEARNER GUIDE 20 | P a g e Version 2.5
List
Your Tactics
There are more than 75 tactics that are used during negotiations. Some will work on certain personality
types, but not on others. Skilled negotiators are unpredictable in their use of different approaches. If
you continue to use a pattern of the same tactics in each negotiation, the other party will prepare to
counter them next time. It is important, therefore, to list and carefully plan the tactics you will use in
each negotiation.
Rehearse Your Opening Statement
A clear, well-defined and well-rehearsed opening statement is crucial. The first thing you say should
condition the other party and manage their expectations.
Skilled negotiators rehearse their opening statement several
times before entering the negotiating room. Rehearse and
then ask yourself: “If I heard this statement would it
encourage me to walk towards or away from my ideal
objective?” This will help you check you’re managing the
expectations of the other party positively towards your ideal.
The study showed that just 2.5 percent of people surveyed
‘always’ rehearsed their opening statement, with a huge 54
per cent ‘rarely’ or ‘never’ rehearsing. Without doubt, what
you do or don’t do in preparation and planning will
determine the outcome of all negotiations. The more you
plan and prepare, the more efficient you will be as a
negotiator.
TLIR5014 LEARNER GUIDE 21 | P a g e Version 2.5
Section 4 Resolve Disagreements or Conflict with Suppliers
In some businesses, a small conflict had ruined a relationship for life
between the parties while in others the cost can be very large and
very expensive to have conflict. In large construction projects,
conflict between contractors can cost millions of dollars to settle or
resolve, often through the legal process and possible settlement
damages. This is a cost to both parties, the supplier and the receiver.
J. David Alewine of Fluor Corporation in his opening address at a
USA conference covering conflict with suppliers and contractors
advised the delegates that there are a number of areas where
conflict can happen. He then talked about his experiences in Fluor, a
multi-national construction company.
Every business or organisation, whether operated for profit or a not for profit business, must purchase
goods or services to meet the needs of its customers, clients, and stakeholders.
As a result of the dynamics that occur in this process, the potential for buyer-supplier conflict is
extremely high and is in fact a very common occurrence. Proper identification, assessment, and
management of buyer-supplier conflict can lower the cost of conflict and improve the efficiency and
effectiveness of the relationship or partnership.
The dollar costs associated with buyer and supplier conflict includes lost productivity, strained
relationships, poor resource utilization, and unfulfilled potential of the joint business undertaken by the
parties.
The model of buyer-supplier conflict presented to delegates at the conference consists of seven (7)
distinct types of conflict.
They are;
issue-specific
relational
task specific
process to be followed
structural
systemic and
environmental
The source for each event, the duration, ease of resolution, and impact on the alliance characterize each
conflict type. Identifying and understanding a particular type of conflict is a prerequisite to resolving or
managing it. Because each conflict type is different it must be addressed in a manner best suited to its
resolution.
Move from ‘Arm’s length’ deals to Alliance Relationships
‘Arm’s length’ transactions are characterized by a minimal amount of interaction between the buyer and
supplier. These transactions are generally rights based agreements, which are strictly governed by a
document setting forth the rights of all the parties. Occasionally, one party has more power than the
other and is in a position to dictate the terms of the agreement.
TLIR5014 LEARNER GUIDE 22 | P a g e Version 2.5
The buyer and supplier both have a short-term perspective of the transaction. Both parties are primarily
interested in meeting business obligations at the lowest possible cost and with the least amount of
interference from the other party. In this type of transaction, only essential information is shared
between the parties. The limited amount of communication that does exist between the parties is often
used to determine if the other party is in compliance with the purchase order contractual obligations.
Trust in the Relationship
Trust is generally low in arm’s length transactions and there is
little interest or incentive by the supplier to invest in specific
assets that could serve the needs of both parties. There is little
interdependence between the buyer and supplier except that
which results from any power imbalance.
Competition among suppliers is seen as the best way to
achieve lower prices, which is also the primary aim of buyers in
these transactions. Frequent multiple bidding by buyers is the
norm in the quest for the lowest price.
Conflict resolution in arm’s length transactions is a combination of rights and power based strategies.
The rights stem from the purchase agreement itself, which clearly states the responsibilities and
obligations of each party. If there is a breach of the agreement, the other party seeks compliance by
coercion, which often takes the form of threats related to future business and adjudication of disputes.
There is little incentive in rights based agreements for collaboration. If one supplier fails to perform,
another will usually be waiting for the opportunity.
Fail to Supply
If one supplier fails to perform, another will usually be waiting for the opportunity of additional
business. In alliance relationships there is more information sharing and communication. The parties are
not as independent as before as each sees the other as important and necessary if it is to meet its own
strategic and competitive goals.
A longer-term perspective replaces the short term outlook and
power becomes less of a factor in dictating the terms of the
agreement. All of these factors serve to build the trust and
confidence necessary for the development of a cooperative
buyer-supplier alliance.
Alliance relationships are characterized by open communication,
information sharing, and joint risk taking. Buyers and suppliers
are dependent on one another to meet individual and collective
goals. Dependence is the result of having made an investment in
the working relationship. The buyer and supplier are moving toward a longer-term perspective of their
relationship and a strategic perspective regarding the goods being exchanged.
Both parties understand that identifying, assessing, and managing conflicts are long-term interests
shared by each party. Success is a product of information sharing, shared expectations, and trust. The
key to resolving conflict in an alliance is collaboration according to Patterson (1999).
TLIR5014 LEARNER GUIDE 23 | P a g e Version 2.5
Model of Buyer Supplier Conflict
When people work together, conflict is often unavoidable
because of differences in work goals and personal styles. Conflict
must be understood as an opportunity to improve relationships
with the supply community and our internal customers.
Moreover it provides the impetus for an examination of policies,
procedures and work processes throughout the supply chain.
We must develop organizations and supply chains that are
conflict friendly in that they recognize conflict, its affects and
how it can be managed.
The goal is to understand conflict and its basis in order to better
resolve and manage it to the benefit of the entire supply chain.
Follow these guidelines for handling conflict in the workplace.
1. Talk with the other person
o Ask the other person to name a time when it would be convenient to meet.
o Arrange to meet in a place where you won’t be interrupted.
2. Focus on behaviour and events, not on personalities
o Say “When this happens …” instead of “When you do …”
o Describe a specific instance or event instead of generalizing.
3. Listen Carefully
o Listen to what the other person is saying instead of getting ready to react.
o Avoid interrupting the other person.
o After the other person finishes speaking, rephrase what was said to make sure
you understand it.
4. Ask questions to clarify your understanding.
o Identify points of agreement and disagreement
o Summarize the areas of agreement and disagreement.
o Ask the other person if he or she agrees with your assessment.
o Modify your assessment until both of you agree on the areas of conflict.
5. Prioritise the areas of conflict
o Discuss which areas of conflict are most important to each of you to resolve.
6. Develop a plan to work on each conflict
o Start with the most important conflict.
o Focus on the future.
o Set up future meeting times to continue your discussions.
7. Follow through on your plan
o Stick with the discussions until you’ve worked through each area of conflict.
o Maintain a collaborative, “let’s-work-out-a-solution” attitude.
8. Build on your success
o Look for opportunities to point out progress.
o Compliment the other person’s insights and achievements.
Congratulate each other when you make progress, even if it’s just a small step. Your hard work will pay
off when scheduled discussions eventually give way to ongoing, friendly communication.
TLIR5014 LEARNER GUIDE 24 | P a g e Version 2.5
Government Legislation
All purchasing officers or managers must comply with federal,
state and local government legislation when selecting and
negotiation with suppliers. If the item being purchased is an
electrical item, then knowledge of the Electricity Act may be of
assistance. If buying food stuffs then knowledge of the Foods
legislation is a must. I
In all buying processes the buyer must be aware of work health
and safety legislation (WHS 2011) to include fatigue, load
restraint, chain of responsibility and relevant legislation for
their industry.
Competition and Consumer Act
The main federal law covering consumers is the Competition and Consumer Act 2010 (CCA) ensures that
all trading is fair for your business and your customers.
The CCA covers most aspects of the marketplace: dealings with suppliers, wholesalers, retailers,
competitors and customers. It deals with unfair market practices, industry codes of practice, mergers
and acquisitions of companies, product safety, collective bargaining, product labelling, price monitoring,
and the regulation of industries such as telecommunications, gas, electricity and airports.
The Australian Competition and Consumer Commission (ACCC) administer the CCA. It promotes good
business practices for a fair and efficient marketplace. For further information about federal
competition, fair trading and consumer protection laws visit the ACCC website. Each State and Territory
has similar or supporting legislation covering consumer protection.
Fair Trading Laws in Your State or Territory
Consumer protection is governed by state and territory laws (in the form of a Fair Trading Act in most
cases). Familiarise yourself with the laws in your region.
See your state or territory fair trading offices for advice on business rights and obligations under fair
trading laws. If you’re unsure how fair trading laws apply to your situation or job role, think about
seeking independent legal advice.
Laws Affecting International Contracts
If your contract is with a hirer based in another country or some of the work will be done in another
country, you may be required to comply with the laws of that country. Some international contracts
specify which country’s laws will apply in deciding future disputes.
It is a good idea to consider including a clause like this so you don’t waste time and money deciding
which court in which country will hear the dispute. You should bear in mind that should a dispute arise
in relation to a contract that applies the law of another country, any claim you make in that country is
likely to be very expensive for you.
Australia may also be a party to a free trade agreement with the country, which may impact on the
TLIR5014 LEARNER GUIDE 25 | P a g e Version 2.5
contract. The law of other countries maybe different from Australian law in areas such as import
procedures, taxation, employment practices, currency dealings, property rights, the protection of
intellectual property and agency/distributorship arrangements.
It is strongly recommended that the buyer gets advice from a lawyer in the relevant country of purchase
or Austrade. The Australian Government’s trade and investment development agency, has a number of
overseas offices that can help you find a legal representative.
Code of Practice
Codes of Practice set out industry standards of conduct. They are guidelines for fair dealing between
you and your customers, and let your customers know what your business agrees to do when dealing
with them.
Codes of Practice can relate to a single business, or represent a whole industry. You can decide to
establish your own Code of Practice, or to adopt an industry specific Code of Practice (in some cases this
is mandatory).
Usually, Codes of Practice are established through consultation with industry representatives and the
community. They can be mandatory or voluntary:
Mandatory codes provide a minimum standard of protection to the consumers. They are prescribed as
regulations under fair trading laws and can be enforced. Voluntary codes are a form of industry self-
regulation. They can be sponsored by an industry association or can be in partnership with a
government agency (membership of an industry association is often a condition of the code). Voluntary
industry codes are usually flexible and can be altered quickly in response to changing industry/consumer
needs.
TLIR5014 LEARNER GUIDE 26 | P a g e Version 2.5
Section 5 – Review Performance of Suppliers
This information is a process where the Japanese auto
manufacturers check the performance of their
suppliers in America. More and more businesses are
counting on their suppliers to lower costs, improve
quality, and develop innovations faster than their
competitors’ suppliers can meet.
The 100 biggest U.S. manufacturers spent 48 cents out
of every dollar of sales in 2002 to buy materials,
compared with 43 cents in 1996, according to
Purchasing magazine’s estimates.
Most suppliers in the auto manufacturing industry
believe that Toyota and Honda are their best and
toughest customers to deal with. The two companies
set high standards and expect their partners to rise to
meet them. However, the carmakers help suppliers
fulfil those expectations. Clearly, Toyota and Honda
want to maximize profits, but not at the expense of their suppliers.
Toyota would help suppliers achieve cost reduction targets by making their manufacturing processes
leaner, and because of Toyota’s tough love, they would become more competitive and more profitable
in the future.
Honda, for instance, uses a report card to monitor its core suppliers, some of which may be even
second- or third-tier vendors. Unlike most Fortune 1,000 companies, which send reports to suppliers
annually or biannually, Honda sends reports to its suppliers’ top management every month.
A typical report has six (6) sections:
Quality and non-conformance delivery
Delivery on time and date
Quantity delivered meets purchase order or delivery document
Performance history – are they consistent
Incident report – damage when delivered or wrong product
Comments about communications between parties.
The incident report section has a subcategory for quality and another for delivery.
The Auto Industry Comments
Honda uses the comments section to communicate how the supplier is doing. We’ve seen comments
like “Keep up the good work” and “Please continue the effort; it is greatly appreciated.” Honda also uses
this section to highlight problems. For instance, Honda will write, “Label errors recorded on [part
description and number]. Countermeasures presented weren’t adequate.”
So how do Toyota and Honda do it? The authors, who have studied the American and Japanese
automobile industries for more than 20 years, found that Toyota and Honda have built great supplier
relationships by following six steps.
TLIR5014 LEARNER GUIDE 27 | P a g e Version 2.5
1. They understand how their suppliers work.
2. They turn supplier rivalry into opportunity
3. Third, they monitor vendors closely
4. Fourth, they develop those vendors’ capabilities
5. They share information intensively but selectively.
6. They help their vendors continually improve their processes.
Some U.S. auto corporations created supply chains that superficially resembled those of their Japanese
competitors, but they didn’t alter the nature of their relationships with suppliers. As a result, relations
between U.S. auto manufacturers and their suppliers have sunk to the lowest levels in decades.
In the U.S. automobile industry, for instance, Ford uses online reverse auctions to get the lowest prices
for components. General Motors writes contracts that allow it to shift to a less expensive supplier at a
moment’s notice. Chrysler tried to build a keiretsu model but the process unraveled after Daimler took
over the company in 1998.
Not surprisingly, the Big Three US auto manufacturers have been more or less at war with their
suppliers. Having witnessed the American automakers’ abject failure to create keiretsu models, most
Western companies doubt they can replicate the model outside the culture and society of Japan. While
U.S. automakers take two to three years to design new cars, Toyota and Honda have consistently been
able to do so in just 12 to 18 months.
Honda expects its core suppliers to meet all their targets on metrics like quality and delivery. If a vendor
misses a target, the company reacts immediately. In early 1998, a tier-one supplier didn’t meet an on-
time-delivery target. Within hours of missing its deadline, the vendor came under intense scrutiny from
Honda. It had to explain to the manufacturer how it would try to find the causes, how long that might
take, and the possible measures it would employ to rectify the situation. Until it did that, the supplier
had to promise to add extra shifts at its own cost to expedite order delivery.
Both Toyota and Honda teach suppliers to take every problem seriously and to use problem-solving
methodologies that uncover root causes. If suppliers aren’t able to identify the causes, the
manufacturers immediately send teams to help them. The manufacturers’ engineers will facilitate the
troubleshooting process, but the suppliers’ engineers must execute the changes.
In contrast with most American
companies, Toyota and Honda expect
their suppliers’ senior managers to get
involved whenever issues arise. That
expectation often causes problems. For
example, in 1997, when a North American
supplier ran into a design-related quality
issue, the vice president of the Toyota
Technical Center immediately invited his
counterpart for a visit to discuss the
matter. When the executive arrived, it
became clear that he didn’t understand
the problem or its causes. “I don’t get into
that kind of detail,” he stated. He was
apologetic about the problem, however,
and firmly assured his counterpart that he
would take care of it.
TLIR5014 LEARNER GUIDE 28 | P a g e Version 2.5
Congratulations!
You have now finished the unit ‘Manage suppliers’
We provide professional writing services to help you score straight A’s by submitting custom written assignments that mirror your guidelines.
Get result-oriented writing and never worry about grades anymore. We follow the highest quality standards to make sure that you get perfect assignments.
Our writers have experience in dealing with papers of every educational level. You can surely rely on the expertise of our qualified professionals.
Your deadline is our threshold for success and we take it very seriously. We make sure you receive your papers before your predefined time.
Someone from our customer support team is always here to respond to your questions. So, hit us up if you have got any ambiguity or concern.
Sit back and relax while we help you out with writing your papers. We have an ultimate policy for keeping your personal and order-related details a secret.
We assure you that your document will be thoroughly checked for plagiarism and grammatical errors as we use highly authentic and licit sources.
Still reluctant about placing an order? Our 100% Moneyback Guarantee backs you up on rare occasions where you aren’t satisfied with the writing.
You don’t have to wait for an update for hours; you can track the progress of your order any time you want. We share the status after each step.
Although you can leverage our expertise for any writing task, we have a knack for creating flawless papers for the following document types.
Although you can leverage our expertise for any writing task, we have a knack for creating flawless papers for the following document types.
From brainstorming your paper's outline to perfecting its grammar, we perform every step carefully to make your paper worthy of A grade.
Hire your preferred writer anytime. Simply specify if you want your preferred expert to write your paper and we’ll make that happen.
Get an elaborate and authentic grammar check report with your work to have the grammar goodness sealed in your document.
You can purchase this feature if you want our writers to sum up your paper in the form of a concise and well-articulated summary.
You don’t have to worry about plagiarism anymore. Get a plagiarism report to certify the uniqueness of your work.
Join us for the best experience while seeking writing assistance in your college life. A good grade is all you need to boost up your academic excellence and we are all about it.
We create perfect papers according to the guidelines.
We seamlessly edit out errors from your papers.
We thoroughly read your final draft to identify errors.
Work with ultimate peace of mind because we ensure that your academic work is our responsibility and your grades are a top concern for us!
Dedication. Quality. Commitment. Punctuality
Here is what we have achieved so far. These numbers are evidence that we go the extra mile to make your college journey successful.
We have the most intuitive and minimalistic process so that you can easily place an order. Just follow a few steps to unlock success.
We understand your guidelines first before delivering any writing service. You can discuss your writing needs and we will have them evaluated by our dedicated team.
We write your papers in a standardized way. We complete your work in such a way that it turns out to be a perfect description of your guidelines.
We promise you excellent grades and academic excellence that you always longed for. Our writers stay in touch with you via email.