Global Procurement

Topics: Purchasing, Procurement, Goods Pages: 8 (2095 words) Published: September 22, 2013

Technix BV is a medium-sized enterprise, trading house (van Weele 2010). The company involves in trading of good quality technical parts to building and offshore industries (van Weele 2010). Technix gets its products from manufacturers which located worldwide (van Weele 2010). Instead of Technix arrange the delivery, the manufacturers on behalf of Technix arranged the delivery of goods to Technix’s customers (van Weele 2010). Technix has established since 1993 with largely known of good reputation as a trustworthy business partner (van Weele 2010). Since then, Technix had businesses with many customers and most of them are in long term business relationship with Technix (van Weele 2010).

NedWorks BV is one of the Technix’s clients and had a long term business relationship with Technix (van Weele 2010). NedWorks had business relationship with Technix for more than ten years (van Weele 2010). NedWorks BV is a well-known dredging organisation, operating worldwide (van Weele 2010). NedWorks mainly procured cutters, adapters and cutter teeth from Technix for NedWorks’ dredging machines (van Weele 2010).

NedWorks purchased the parts from Technix to perform the dredging works (van Weele 2010). Cutter was used to take in the soil/rock and break into pieces and shove by pipelines (van Weele 2010). The adapters were soldered to the arms/wings of the cutter (van Weele 2010). These work as a setting for interchangeable teeth (van Weele 2010).

In the past, there were not much big issues between Technix and NedWorks (van Weele 2010). However, there are two major incidents on the usability of the parts sent by Technix (van Weele 2010). Both incidents have concluded that the adapters and cutter teeth were of inferior quality which did not meet the requirement from NedWorks (van Weele 2010).

One was happened in 1998 when the cutter was used and broke in Portsmouth (van Weele 2010). It was the first batch of delivery from Technix (van Weele 2010). The inferior cutter teeth had cause the cutter to break (van Weele 2010). For this case, American Machine Company (AMC) and Technix compensated all the cost of the adapters and cutter teeth (van Weele 2010). Subsequently, American Machine Company (AMC) and Technix advised to NedWorks the cause of the break was due to wrong handling of the products and NedWorks has accepted the reason (van Weele 2010).

Another incident was happened in 2003, a dredging project in Bahrain in the Persian Gulf (van Weele 2010). The rocky bed in Persian Gulf was known to be very hard (van Weele 2010). Therefore, the adapters supplied by Technix were unable to overcome the tough rock bed and broke incessantly (van Weele 2010). This incident was resolved internally between Technix and NedWorks (van Weele 2010). Technix deliver new sets of adapters and cutter teeth at their own cost (van Weele 2010). On the other hand, NedWorks did not demand for indirect damages or consequential damages against Technix (van Weele 2010).

A new purchasing manager joined NedWorks in 2005 (van Weele 2010). When the same problem arises in the project in Rio de Janeiro, the new purchasing manager demands a damage claim from Technix (van Weele 2010). Further to this issue will be discussed in assignment one, two and three.

Assignment 1

As an external consultant of this situation, would deduce that NedWorks’ purchasing manager would not have a strong case. This is because, the purchasing manager did not comply the terms and conditions stated in the contract of general conditions of purchase and yet demanding a damages claim.

Firstly, when NedWorks dredging staff found out that the adapters and the cutter teeth wore out at extreme speed during operation in Rio de Janeiro, NedWorks should immediately inform Technix about the quality and claim for replacement (van Weele 2010). In article 13.1 guarantee of the general conditions of purchase, it states that the products delivered by Technix has to ensure all...
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