Purchasing Management and Operations Case Study

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Captiva Conglomerate Case

There are several facts at play. First, there are two systems being supplied. Both are overdue, one by four months and the other by ten months. The manager who uses the system is not able to adequately elaborate in the English language what the problem is, just a generic statement of "It's a disaster" and "My people can't use it." Apparently, the problem relates to something about the usability of the system, that is too complex for the average user. There pricing issues and problems with the budget -- these issues are not elaborated on very well either. So there is a general sense of dissatisfaction, details about this are sketchy, and the sense is that there is no means by which the company can address these issues. It does not sound like anybody has actually talked to the supplier.

Major Problem

The major problem is that the people within the company are dissatisfied with the work of the software contractor. While their complaints lack specificity, they seem to revolve around missed deadlines, the project going over budget, and intended users struggling to learn the software. Ultimately, the major problem is communication. The statement of work was put together by multiple people. Given how poor the communication at this meeting is, it would not surprise if the specs provided to the contractor were of poor quality. That said, there has been no indication of communication between the company and the contractor. There needs to be, if these issues are to be raised and addressed.

III. Possible Solutions

There are many courses of action, but only one reasonable solution. The company could sue, as Al has suggested, but litigation as a first option is never a smart plan. Furthermore, the sense that there is no case to be made is probably right, and if so this would be a destructive option.

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The next option is the status quo, which is clearly not working for anybody. The third option is to communicate with the vendor. Captiva needs to have a single point of contact, and approach the vendor with a specific list of issues to be addressed. This will allow the vendor to understand what the issues are -- "it's a disaster" is not good enough -- and provide an opportunity for Captiva to get what it wants out of the deal.

There are no reasonable advantages to the first two options. Litigation is destructive to the relationship that Captiva has to the vendor, and will probably fail. Success may take too long, anyway, making a successful litigation a Pyrrhic victory. The status quo option has even less chance of success. While it is true that negotiation might not result in success, it would create the sort of open channels of communication that will allow the vendor to understand the issues, and provide an opportunity for Captiva to have its needs met.

IV Choice and Rationale

The only choice that makes any sense is to improve communication. From the outset, communication at Captiva internally has been poor (different people writing different parts of the SOW, for example), and communication with the vendor has been poor since work commenced. The vendor at this point is probably unware of the problems Captiva has with their work. Captiva needs to do more to make this work, starting by opening the channels of communication with the vendor, having a single point of contact for that communication, and bolstering the internal communication so that everybody at….....

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