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Supply Chain Management, SCM, SCRC Supply Chain Resource Cooperative, Poole College of Management, North Carolina State University

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SCRC Article Library: Agreements

Agreements

Published on: Jan, 13, 2011

An agreement should clearly state what you are buying and its cost. Delivery terms and responsibility, Installation related issues, if applicable, an acceptance provision detailing how and when the buyer will accept the products, warranty issues, and your remedial actions should be clearly spelled out in the agreement. Arbitration and conflict resolution mechanisms should also be included in the contract because even the best written agreements are subject to misinterpretation. A well-developed agreement can provide adequate protection against economic opportunism between parties and lead to a positive relationship. Effective long-term agreements generally have specific, measurable objectives stated in them, including pricing mechanisms, delivery and quality standards and improvements, cost savings sharing, evergreen clauses, and termination of the relationship.

Sources: Monczka, R., Trent, R., & Handfield, R. (1998). Purchasing and Supply Chain Management. Cincinnati, OH: South Western College Publishing.

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