The procurement profession has generally done a good job of creating formal processes to attempt to maintain order in what could otherwise be a completely disorderly supply chain process. Now, J. David Alewine, director, contracts management for Fluor Nuclear Power Group in Greenville, S.C. suggests that procurement professionals should consider formalizing one more process: conflict resolution.

“Our profession is in the early stages of recognizing that, because conflict has and always will be inherent between buyers and suppliers, there should be a formal way to address it,” he says. “Failing to address that level of conflict can cost buyers time and resources. Addressing it informally rarely gets to the root causes.”

Just as there are formal processes for negotiating issues of price, contract terms and conditions, and other aspects of customer-supplier relationships, Alewine believes it is useful to create a formal process for negotiating the conflicts that inevitably occur between buyers and suppliers, rather than to continue to handle each conflict informally as it occurs.

Alewine has been in the purchasing profession for 25 years and became interested in organizational conflict, especially between buyers and suppliers, in the late 1990s, when he found a conflict resolution graduate program at Columbia College in South Carolina. Since then, he has studied conflict resolution in business and is now in the process of applying the concepts to the procurement profession.

“The first and most important key to resolving conflict is to recognize that conflict will exist and to become more comfortable with it,” he states. “It is common, and it is unavoidable.”

The next step is to identify and learn the skills needed to resolve conflict when it arises. “Just as negotiation skills have become a core competency requirement in our profession, I think conflict resolution also will be,” he says.

There are numerous types of conflict that can occur in business. However, there are two that tend to be very common in the procurement profession, according to Alewine. The first of these is issue-specific conflict. “This is not a situation where someone does something to try to cause a conflict on purpose,” he emphasizes. “Usually, it just happens.” Examples are shipments that might end up being late, shipments that are short or product quality problems. While such conflict can occur often, Alewine notes that it does lend itself to correction somewhat more easily than other types of conflict.

The process he utilizes for addressing such conflicts involves ownership and responsibility from both parties. It begins with his responsibility: “I will get in touch with someone in the supplier organization who has responsibility for the problem,” he says. The second step is the supplier's responsibility, which involves having the person with whom Alewine is interacting acknowledge the problem. The third step involves mutual responsibility. “We work together to resolve it,” he states. Finally, both parties work together to come up with a plan to reduce future problems.

Admittedly, the process is still in the informal stages. However, Alewine hopes to formalize the process, using a formal Conflict Resolution Strategy. “Just as companies have formal programs to deal with labor-management grievances, procurement departments should have structured conflict resolution strategies to deal with supplier-related conflicts,” he explains.

The document should define conflict, where and how it can originate, and what should be done to address it or eliminate it. The language can be added to a contract, for example, explaining that, if a conflict arises, both parties will follow the formal conflict resolution strategy. An example: What is the formal process to follow when you receive a short shipment? The strategy can also cover processes for addressing conflicts that arise more than once, so they can be resolved and prevented from happening again.

The second most common form of buyer-supplier conflict is relational (interpersonal). “We all work with people where there is some personality incompatibility,” says Alewine. “This can be the result of different interpretations or different interests and outlooks.”

Being able to effectively address relational conflict between buyer and supplier is particularly important for at least two reasons. First, as companies have reduced their supply bases, and as buyer and supplier organizations have reduced staff, there are fewer people working with fewer people and less opportunity to “hand over” a contact with whom you have a relational conflict to someone else. Secondly, as buyers are working with fewer suppliers, these supplier relationships are becoming more important, so it is critical to be able to resolve relational conflicts that could otherwise sabotage what have become strategic relationships on which the customer's business depends.

To address relational conflict, Alewine emphasizes prevention as much as resolution. That is, buyers should always be on the lookout for opportunities to strengthen and improve relationships when conflict does not exist, which will help reduce the frequency and severity of conflict in the future.

At a more formal level, he envisions a written process or strategy for relational conflict. “Buyers should be able to go to their manager or someone designated and trained in conflict resolution for assistance,” he says.