Discuss about the Purchasing Strategy for Supply Chain Management.
As the VP of operations the battery shortage system will affect the inventory level of Butler. Subsequently, this shortage will affect manufacturing of the company’s products. This is because SDX has not supplied HD-5 batteries for two months without giving us notice. According to the contract between Butler and SDX, it clearly states that the supplier(SDX)following specific actions for breach of the obligations of the seller to deliver the battery without delay. The resolution action or compensation in the event of failure to fully comply Seller absolute inability of the supplier to deliver as specified in the contract (Chopra & Meindl, 2007).
The company (Butler Systems) will Seek damages for partial fulfilment of the obligation, the company (SDX) has not given a two month notice before terming the contract null and void. SDX also intends to double the price which is contravening the pricing agreement on the contract. The agreement stipulates that the price will be fixed for the term of agreement. But that involves a delivery that under conditions other than those due and payable, all in accordance with the contract.
We shall also seek for compensation for late delivery as the contract states that the supplier will make timely delivery failure to which they will pay for lateness and expediting charges (Cohen & McKendrick, 2005). Scope of compensation for breach of contract, the company (Butler) will seek compensation from SDX for the loss that it may incur incase the battery shortage is not resolved fast by the company agreeing to supply the batteries.
The purchase agreement is breached by SDX As in any other type of contract breach of this it generates consequences for the defaulting party in the supply contract breach of one of the parties to the benefits to which it empowers the other if has acquiesced to meet to terminate the contract.
Between SDX and the company Butler a contract to supply raw materials (battery) for the manufacture of EPS, contract stipulates that SDX who is in charge of providing the battery for one year without failing. If either party decides to terminate the contract, it is stipulated that they must give a notice of two months prior (Lysons & Farrington, 2005).
The contract also specifies that Butler is entitled to an indemnification if there is breach of contract that results in losses, costs and expenses. As at the moment, the company has not yet incurred the losses but soon it will. Therefore, it is advisable to write a letter to SDX reminding them what the contract says incase the company breaches the supplying terms.In the case raised the company Sol, as stipulated in Article 973 of the Commercial Code may terminate the contract for breach Juan. If such failure causes serious damage, or harm to the affected contracting, this may request compensation for damages, ie, failure generates payment of damages caused to the other party that was affected by this.
The rules relating to breach of the supply contract are enshrined in the Commercial Code which reads as follows:The failure of a party concerning any of the services, will confer the right to the other to terminate the contract if such failure may have caused serious damage or has some importance, capable alone of undermining the confidence of the part in the accuracy of the other to make successive supplies (Lysons & Farrington, 2005). Therefore, Butler is also entitled to terminate the contract.In no event making the supply may terminate it without giving notice to the party supplying as provided in the preceding article.
The provisions of this Article does not deprive the contracting harmed by another breach of their right to seek compensation for damages to fair pricing. Finally, what happens when it has not been stipulated for a term supply contract and one party wants to terminate it? It may terminate the contract by either party, but as long as notice is made (Procurement of works, 2000). But in this case, the contract has a termination clause on how termination may be made by either party.
What is the buying organizations role in selecting and qualifying potential suppliers
The role of the company is to provide a Selection Process Selection and Evaluation of Suppliers We must take into account five basic steps. 1. Search for suppliers 2. Determine selection criteria 3. Getting information from suppliers 4. Evaluation of potential suppliers 5. Vendor Selection Evaluation Every organization should establish effective and efficient processes to identify potential sources of materials purchased for develop existing suppliers or business partners and to evaluate their ability to supply products and / or services required.
The supplier evaluation is a procedure to establish which providers are best positioned to meet the requirements related to product characteristics, delivery time, warranty and others requiring assessment.. Select and evaluate suppliers and potential suppliers based on their ability to meet purchase requirements (Rowan, 2012) .This procedure applies to all national and international suppliers of products sold. Also, the company has a role in identifying suppliers to procurement processes and monitoring to subsequently take corrective action.Operations Manager, responsible for implementation of this procedure in the organization and management.
Head of Purchasing Department, responsible for bringing the business relationship between the buying company with its suppliers according to the procedure established between the parties. The company should also provide a system of vendor selection that includes the most important and decisive ways in establishing some negotiation with a supplier established criteria (Rowan, 2012). While systems selection and evaluation of suppliers should be established.Another role is to Strengthen the activities in the selection procedure and evaluation, to meet management carried out by the Internal and External Auditors. Following the selection procedure whenever you want to incorporate a new supplier, in the case of several proposals, prepare a list of Potential Suppliers, showing the criteria used as a basis for discriminating against such companies (Supply chain management process standards, 2009). Develop a procedure for reevaluation of suppliers, in order to follow up suppliers that have already been evaluated and record any irregularity or change.
Chopra, S. & Meindl, P. (2007). Supply chain management. Upper Saddle River, N.J.: Pearson Prentice Hall.
Cohen, N. & McKendrick, E. (2005). Comparative remedies for breach of contract. Oxford: Hart.
Lysons, K. & Farrington, B. (2005). Purchasing and supply chain management. London: Financial Times/Prentice Hall.
Procurement of works. (2000). Washington, DC.
Rowan, S. (2012). Remedies for breach of contract. Oxford: Oxford University Press.
Supply chain management process standards. (2009). Lombard, Illinois.