November 24, 2014
The Butler Systems case focuses on a manufacturer of “environmental control systems and power conditioning equipment” named Butler. (Benton, 2014, pg467) Butler uses a “HD-5 battery” for its “emergency power supply system” which has currently been supplied by “SDX Chemicals”. (Benton, 2014, pg467) The inventory for the HD-5 battery began getting low causing concern for the vice-president of Butler. Discussions between Butler and SDX led to an understanding that “the contract price would be doubled and that the current contract with Butler is null and void” leading to a need to evaluate the battery shortage problem. (Benton, 2014, pg468)
The relationship between Butler and SDX Chemicals has been efficient and has lasted well over five years. Doubling the costs of the HD-5 battery is cause for alarm because it will be a substantial financial undertaking to invest in returning to a normal inventory. As a vice-president of operations evaluating the battery shortage the first thing to examine would be the truthfulness of SDX’s claims of a battery shortage. Wanting to keep a relationship with SDX would be the only reason not to examine other suppliers of the HD-5 battery.
There seems to be discrepancies between the contract and the explanations of SDX and an SDX salesman. The contract explicitly defines the terms as needing written notice sixty days before changes in price can occur and intention not to renew the contract. There is also a failure of SDX to meet the 100 percent service rate from the contract.
Examination of the legal aspect can be one avenue of exploration. It would not be the best tactic for keeping a successful relationship with SDX Chemicals. Discussions between Butler and SDX should be commenced in regards to the signed contract between the two parties.
Assuming that SDX is the best possible choice for...