Question

A Purchase Manager's Troubles
I (Purchase Manager) am faced with a dilemma. I am not between the devil and the deep sea-I am in the deep sea and the devil is waiting on the shore. Well, the purchases in most industries are based on the production programme which in turn is based on the sales forecast. Now firstly, the production has fallen far short of the target and secondly, the sales forecast has failed to materialize into firm orders. The net result is that the financial position of the company has been badly shattered. So much so, even the bills for supplies already made are not being paid in accordance with the terms stipulated in the purchase orders. The suppliers, having made unsuccessful attempts with the Accounts Department, are playing hell with the purchase officers.
Supplier 'A': (Extract from a letter)
"We regret that our above bill has still not been paid even though the supplies were made over a month ago and, as per the agreed terms, full payment was to be made within 2 weeks from the date the supplies are effected." (Neither this letter nor the numerous subsequent reminders are replied to.)
Supplier 'A': (Extract from another letter)
"It is indeed a matter of surprise and regret that the payment against our above bill, now overdue by over 4 months, has still not been released. We have sent countless reminders, which have not been acknowledged. We fail to appreciate such an attitude from a firm of your repute. We are sorry to advise that unless our payment is released immediately, we shall have no other alternative but to discontinue all further supplies and hand over the case to our legal section for realization of our dues together with interest accrued thereon."
Supplier 'B': (Local firm-during a personal visit to the office)
"You tell me to go to your accounts department and they tell me to come to you. Well, I am not concerned with your internal affairs. You placed the order and your man collected the materials from our godown. What you do is your business, but you better get me my payment, or...."
Accounts
"I don't have a note printing press. How can I pay until and unless the machines are sold and money realized?"
Sales
"How could I know that the money market would suddenly become so tight? All these industries had expansion plans, but now they have either been deferred or cancelled. Anyway, I am sure, it is only a temporary phase."
Production
"Either we should close down this factory or the shops should be fed with the materials they need. Today this is not there, tomorrow that is not there, and then I'll be criticized for not achieving the production target. I am not bothered by your suppliers or their bills. I must have the materials to run the factory.
"The problem cannot, I consider, be attributed to any lack on my part, yet I am the one most directly affected. Not only am I the natural target of suppliers' abuses, but also I am the one who will have to confront difficulties in future procurements because no one wants to deal with bad paymasters."
Questions
2(a) What are the factors which are within the control and outside the control of the men and the companies concerned?
(5 marks)
2 (b)What role can each department head play? What can each one do to help the purchase manager play a better role?
(5 marks)

Answer 1

Answer:

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