This section provides an overview of the situations giving rise to contractual defaults and the methods of resolving contractual disputes.
Although it is impossible to cover all potential situations where a specific contract should be applied, the rules of thumb developed so far should provide a reasonable set of guidelines. As a final point, it is interesting to note that it is a growing trend where many organisations are choosing to do business with suppliers on an informal basis without a contract. This type of arrangement requires the development of excellent supplier relationships and trust between the parties. We shall come back to this in Unit 6 when we cover the general management responsibilities of Procurement function. It is highly unlikely, however, that contracts between buyers and sellers will ever disappear.
Before we end Unit 4, let us look at a critical role that procurement management plays in integrating and managing an organisation’s indirect spend by developing effective transportation and logistics strategy, resulting in a major impact on the cost structure and performance of organisations today.
|Self-tests 4.3 and 4.4|
|Questions to self-tests 4.3_4.4
||Suggested answers to self-tests 4.3_4.4