Managing Business To Business Relationships

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CRITICAL INFORMATION I WOULD CONSIDER IN MAKING MY SELECTION AMONG THE COMPONENT SUPPLIERS
· Competitive and "Value Added" capabilities
· Proven track record and references
· Good financial standing
· Leading edge technological capabilities (Hardware & Software)
· Quality Processes (ISO 9000, ISO14001, Malcolm Baldridge or equivalent)
· Electronic Data Interchange (EDI) or E-commerce (such as "Oracle compliant") for product purchases & payments
· Understanding the component business
· Ability to provide multiple services and serve multiple companies
· Compliance with OSHA safety standards for products and services
· Third-party MW/DV BE certification, if registering as a Minority/Women/Vietnam Era Veteran & Persons with Disability BusinessEnterprise.
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? number of customer complaints;
? reporting against key criteria as required by the contract;
? benchmarking of performance with other providers and other comparative performance activities;
? quality of regular stakeholder meetings;
? financial management aspects;
? information technology aspects; and
? other performance measures specifically applicable to the purchase.

COMPONENT SUPPLIER I WANT BUT THAT REFUSES TO SHARE INTEGRATION COST TO SET UP THE EXCHANGE
· Avoid conflicts of interest in all business dealings
· Provide equal opportunity without discrimination
· Maintain complete and accurate records of all business transactions
· Maintain an environment free of harassment
· Negotiate separately with him and ensure that the extra cost is factored in the quotations.
Consideration needs to be given, firstly, to the legal structure of the arrangement between the buyer and seller. The choice of legal structure is important because it will define the legal rights and obligations of the buyer and seller.

An actual purchase will always involve a contractual arrangement (oral or in writing) that is legally enforceable.

A contract is an agreement between, in a purchasing context, the department/agency and the supplier which sets out the legal rights and obligations between them. These agreements are usually created by the parties (that is, the department/agency and the supplier) exchanging promises with each other or by the exchange of a promise for the performance of an act. 6

The following types of arrangements with suppliers are common in a purchasing context and may, where appropriate, precede the formation of a contract in relation to a particular purchase.
I CAN OFFER THE KEY COMPONENT SUPPLIER THE FOLLOWING OPTIONS
? Standing offer arrangements - An agreement with one or more suppliers to provide an undefined volume of goods or services over a set period in accordance with agreed conditions, including price. Standing offer arrangements may be between the supplier and an agency direct or an agency may have access to a standing offer through, for example, a whole of Government arrangement.
? Managed supply and distribution arrangement - Under these arrangements, the supplier usually provides some extra, value-adding service to the buyer in conjunction with and in addition to supplying the subject goods or services.
? Preferred supplier arrangement - This term may also describe a standing offer situation. In addition, however, a preferred supplier arrangement may prioritise suppliers by specifying an order in which particular suppliers are to be used. This type of arrangement should be for a short-term and reviewed regularly to ensure that it does not lead to the exclusion of potential suppliers in the long term.
? Pre-qualified supplier arrangement - Under this arrangement, a department/agency compiles a list of suppliers' names, in response to an invitation from the department/agency or on the supplier's own initiative, for the potential supply or particular types of goods or services. In order to be listed, the suppliers have been assessed by the department/agency as having particular technical, financial or managerial capabilities relevant to the particular supply activity. For more information, refer to the "Prequalifying Suppliers" Guide.
OTHER ARRANGEMENTS THAT CAN BE MADE WITH KEY COMPONENT SUPPLIER TO RESOLVE THE STANDOFF
Arrangements between agencies and suppliers can be structured in ways other than by a contractual arrangement. These other structures will generally not be appropriate for the majority of Government purchases. Examples of other legal structures include the following:
? Joint venture - An association of individuals, businesses or companies engaged in a common undertaking with the purpose of producing a product that is to be shared.
? Companies and corporations - There are many types of corporations. The most common are companies registered under the Corporations Law. A registered company is a legal entity in its own right with a legal standing separate from its members.
If these types of structures are being set up, then officers should seek legal advice before proceeding.

THE KEY COMPONENT SUPPLIER CAN BE OFFERED DIFFERENT CONTRACTS
Besides the legal structure of the relationship between the department/agency and the seller, it is useful to consider how the working relationship between the department/agency and the supplier will be managed. Departments/agencies need to consider the type of relationship they want to have with their suppliers. Consideration needs to be given to more than the goods or services being acquired in a particular purchasing transaction. Particularly for arrangements entered into for items critical to the department/agency, a relationship with the supplier needs to be established that reduces risk exposures through a positive supplier attitude and a high level of performance.

A consideration of the nature of the purchase will assist in determining the most appropriate method for managing department/agency-supplier relationships.

No matter how a relationship is managed, a department/agency or individual officer can never compromise their obligations of probity and accountability. If special characteristics are to be used in managing a relationship with a supplier, carefully consider whether the characteristics are compatible with these obligations. Some different approaches include the following:
? 'Arms length' - Dealing at 'arms length' refers to the most common form of professional business relations in which the parties have no special relation or obligations to each other. For example, parties who are members of the same family have a special relation and generally would not be considered as dealing at 'arms length'. Similarly, dealings between a company and one of its subsidiaries or shareholders may not be viewed as being at 'arms length'. When a department/agency is dealing with an offer from a unit within itself (an 'in-house bid'), the parties may not be considered to be dealing at 'arms length' and special measures will need to be instituted. If an entity has been declared a significant business activity, then it must ensure that it does not take advantage of its public ownership when dealing with an 'in-house bid'.
? Partnering or Alliances - Partnering is a process by which each ...