According to the researchers, procurement management professionals frequently come across some of the most interpersonally demanding situations. They often need to deal with organizational fault lines through their interpersonal conflict resolution skills.
Internal Conflict During Purchasing Operation
Given below are some of the conflicts that can arise when dealing with internal customers:
- The goals of the procurement department may be in conflict with the strategic goals of other departments.
- Procurement may be thought to be functioning as a silo with no inter-functional collaboration.
- The procurement department may not be involved in product design and supply chain design activities, which may lead to a conflict of interest. On the other hand, the internal user departments may not be aware that the procurement department should be involved in all major decision points that have outcomes with a bearing on the procurement process.
- The marketing or design departments may complain that they have no role in the supplier selection process and consider it to be subjective in nature.
- During the procurement process, generally, the designing and the engineering departments take a lot of time in the initial stage of requirement gathering. Because of this, the purchasing department might have very less time to conduct the actual purchase, which may lead to internal conflict.
- When manufacturing a new product, design, and engineering departments might require a new supplier to be selected for a component. However, the procurement department may have the opinion that the existing supplier can resolve issues arising out of changes in the engineering design owing to the long-term trusted relationship with the supplier.
A new supplier for minor changes in requirements may not be advisable considering the tremendous effort put into building a long-term supplier base.
- The procurement department might want closer interaction and information-sharing with the suppliers. However, the production department may not be willing to share information owing to the nature of the forecasting exercise and the commitment involved.
- The finance department may be worried about the high overhead costs involved in the purchase of MRO items. The procurement department may insist that the nature of MRO requirements requires high ordering costs.
- The marketing department may require a change in supplier for reducing the cost of a new product. The procurement department may not be willing to lose the supplier as the value and quality delivered by the latter may be considered more important than marginal price issues.
- The supplier may insist that the quality problem is due to issues in the product-manufacturing process and ask for a review of the same. The design department may suggest a change in the supplier.
- The procurement department may complain about rogue purchases made by the user departments subverting the procurement management process. The user departments may complain about the high lead times involved in the procurement cycle.
The internal conflicts cited above are always possible owing to the central role played by the procurement department in the manufacturing value chain. It is important that the executive management recognizes the important role played by the procurement department which can no longer be treated like a service department. The procurement department should be managed as a cost or profit center with sufficient authority in the organizational structure.
To avoid inter-departmental conflicts related to the procurement function, researchers have suggested the formation of ‘cross-functional sourcing teams’ also called ‘procurement committees’, which should be involved in all major supply management decisions.
The cross-functional team should consist of professionals representing all major departments, like design, manufacturing, quality, marketing, and finance. They should be able to appreciate the complex nature of the procurement and supply management processes and be able to provide inputs in the decision-making process, which are appropriate for the overall strategic goals of the organization.
The procurement department should hire professionals who have good experience and background, spanning the other functions of the organization and not restricted only to purchasing expertise.