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Using a Supply Contract

October 8 2012

Using a supply contract occurs multiple times in every project that is executed in the business world. This is since no one company will have all of the raw materials on hand to construct and complete their business ventures when they are in search of a revenue stream.

To use a supply contract that will have consistent results will be the best avenue to take. For this reason, many organizations use a project management template for this purpose. This allows for the format and order of the data to be in the same place for each contract independent of what supplier you decide to use. This makes it easier to create and for the third party vendor to understand what they are responsible for supplying.

Some of the information that could be in the supply contract will be what the supplier is supposed to be providing for your project. If required, training and support for this material will also be stated so there is no ambiguity on what is expected. There will also be a list of the responsibilities for both your organization and that of the third party vendor.

Also includes in a supply contract can be the performance criteria and any review process of what is being supplied. This can be as simple as a quality control test being conducted by your organization and what range the results should be in. In many instances when the raw material is a material, a certificate of analyses form the manufacturer should also be included.

What is included in every supply contract is the agreed to pricing for the material and the invoice schedule. This will be clearly stated so both parties know what the costs are and when it is going to be paid for and by what means. In many instances this is with a PO so there will be a billing process conducted at a later date.

The supply contract should also contain the terms of the contract and the conditions of it that have to be met for the contract to be valid.