Eskom Procurement Book 2015

SUPPLIER RELATIONSHIP MANAGEMENT

can affect the ability of individuals, groups and organisations to work together [12]. It is important to settle these disputes because they negatively affect the relationship between organisations, with possible dire consequences. The following strategies are helpful in settling disputes between buyers and suppliers.

5.5.1 FIND THE ROOT CAUSE OF THE PROBLEM

This is the first step in solving the problem. The resolution of a dispute between business partners requires an understanding of the root causes. What seems like a surface issue often goes much deeper than either party knows or is willing to admit. A sincere examination of the reasons behind the problem is necessary as it will reveal if the problem is due to personal incompatibilities, hurt feelings, or a desire for more input into daily operations. An accurate diagnosis of the problem often paves the way for an effective solution to any dispute.

5.5.2 DISCUSS THE PROBLEM WITH SUPPLIERS

Negotiating with the supplier is important if the buying organisation intends to avoid any further disputes. Solving the problem in any other way may consume time, be costly, complicated, stressful, embarrassing and damaging. Therefore, by discussing the problem with the supplier, the organisation is able to avoid associated complexities.

5.5.3 USE PRE-EXISTING EXIT STRATEGIES

When going into a business partnership, it is important to ensure that an exit strategy is included in the contract.

5.5.4 INVOLVE A MEDIATOR

When negotiation and/or an attempt to exit the relationship fail, a mediator may be invited to intervene. A mediator is a third party who does not have a stake in the relationship. The role of the mediator is to listen, sympathise, empathise and persuade. Sometimes, an expert mediator can even propose or encourage a possible solution so, in order for this process to be effective, the mediator should be trustworthy and respectable. However, the mediator does not have the power to make a decision.

5.5.5 ARBITRATION

Decision-making authority is removed from the disputing parties and is transferred to an arbitration panel. The panel listens to both sides of the dispute and then makes a decision based on law.

5.5.6 COURT ACTION

The dispute is brought to a legitimate court of law and is presided over by a judge, who has the power to make a decision after hearing the evidence from both sides.

108 CHAPTER 5