The Stanmark Company is a large multinational corporation. Its core business is converting basic earth materials into industrial-grade chemicals and alloys. It has more than a dozen mining and manufacturing facilities located in various parts of the world.

Over the last few decades, each facility has done its own purchasing, a practice that was compatible with top management’s general approach of encouraging independence among the various facility and plant managers and their staffs (including the various plant purchasing managers). Since the various facilities are engaged in quite different businesses, as far as daily operations are concerned, various individual purchasing, control, and accounting systems have emerged throughout the corporation.

Recently, because of changing political and economic situations in the world, Stanmark’s top executives concluded that the company would encounter increased difficulty purchasing a number of essential raw materials. This would lead to drastic cost increases and undependable inventory. To handle this situation, Linder, Stanmark’s CEO, created the position of vice-president in charge of a new corporate purchasing division. The division’s objective was to balance plant control of purchasing with the corporate need for significant cost containment and dependable inventory. Over the next two years, this approach was expected to provide the framework for an effective cost reduction and a more functional expense budgeting system.

Linder hired Stewart to be the new vice-president. Stewart, who had been an experienced purchasing executive at another company, was given wide latitude to organise the position’s job responsibilities, solve the cost problem, and deal with each individual manufacturing facility.

Linder also appointed Williams to be Stewart’s executive assistant. Williams, an experienced staff member who had held many positions in the company over the years, knew most of the facility and plant managers personally. Williams was assigned to this position to balance Stewart’s inexperience with Stanmark corporate operations and culture.

Both appointments were announced through the formal channels usually used by Stanmark, including a notice in the company newsletter.

One of Stewart’s first decisions was to immediately begin centralising the company’s purchasing procedures. A key part of this plan would require the purchasing managers at each facility to clear all purchase contracts in excess of £500,000 with the purchasing vice-president’s office. Stewart felt that corporate headquarters should be notified that such contracts were being prepared—at least one week before such contracts were to be signed. This would help corporate purchasing to ensure lowest cost as well as corporate-wide “just-in-time” acquisition of raw materials. Such coordination would benefit the company as a whole without significantly hampering local operations.

Stewart reviewed the plan with Linder. Linder presented the plan to Stanmark’s Board of Directors, who in turn approved it. Stewart then prepared a letter to be sent to the various plant purchasing managers throughout the company, announcing the plan. The letter detailed that each purchasing manager needed to get approval from corporate purchasing for all local purchase contracts exceeding £500,000.

The letter added that the contracts should be scheduled for signing at least a week after negotiations were completed, so that the head office would have enough time for review. Stewart added a brief paragraph explaining the rationale for the new procedures, pointing out that the plan was in the best interests of each plant and of the company as a whole: each facility would have a timely and optimal amount of raw materials and minimal cost.

Before sending the letter, Stewart showed it to Williams and asked for comments. Williams responded that the letter did clearly state the objectives and actions required, but noted that Stewart had not yet met any of the plant managers or their purchasing managers personally. Williams suggested that Stewart might visit and discuss the plan with each of these people individually, and recommended that the letter not be sent to the purchasing managers until all these discussions were completed.

Stewart quickly rejected the idea, stating that time was critical. The next few months were the plants’ peak buying season, and top management was expecting action. Besides, there was higher priority organisational work to do, and a trip to all the plant sites would take three weeks. The letter to the purchasing managers was sent, signed by Stewart.

During the next several weeks, replies from most plant purchasing managers reached Stewart’s office. Although some of the managers wrote at length, typically the replies indicated agreement and a promise of cooperation.

During the following three months, Stewart and Williams received no further notices from any facility that purchasing contracts exceeding £500,000 were pending – or even being negotiated! However, executives in other corporate departments who made frequent trips to the various plants reported that the plants were busy, maintaining the usual level of activity for that time of year. Since this was peak buying season, the reports were puzzling.

Stewart, a new senior executive and your manager, has asked you to discuss (in Stewart’s office) the response, or lack of response, to the letter to the plant and facility purchasing managers that announced Stewart’s new purchasing policy.

You are upset by Stewart’s heavy-handed manner in working with the plant purchasing managers. Stewart is ignoring their many years of experience in dealing with their suppliers. While you do not have evidence to support it, you suspect that the purchasing managers have found some way around the new policy. After all, any move toward centralised purchasing is an enormous change in corporate culture, and some resistance should be expected.

In addition, you feel that Stewart and Linder have moved too quickly to set up a new corporate purchasing division. Old lines of reporting are still in place, and new reporting relationships are being assumed but not tested and consolidated. You expressed your concern about this issue to Linder early on, before Stewart was hired. But Linder felt that it was essential to get moving on the inventory and cost problem, and delegated to you the task of giving appropriate advice and smoothing the way for the new Vice-President.

You suspect that if Stewart continues bulldozing a path through the organisation, the purchasing managers and the plant managers they report to will become more threatened and antagonised. This would unnecessarily increase their resistance to changes that you agree must be made. You accept that centralisation is inevitable and must happen quickly, and you are willing to do what you can to make it happen.

However, you are currently serving as executive assistant to Stewart at the CEO’s personal request. Your carefully nurtured career inside Stanmark can be badly damaged if you become too closely identified with a person who makes a mess of things. All your best intentions and wisest advice on the company’s behalf will be meaningless if Stewart continues to ignore you and makes enemies throughout the company.

Your long-term objective in the meeting is to convince Stewart to listen to and heed your advice. In the short-term, you want Stewart to take a very different approach with the purchasing managers.

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