Contract Archives - RFQPro: RFP and RFQ Templates for Buyers and Suppliers

Vendor Agreements

Mark Bell — Mon, 04 Feb 2013 02:27:06 +0000

Vendor Managed Inventory

When it comes to the contract portion or contract piece for consignment inventory or vendor managed inventory you will want your form to include details on how the inventory will be managed both by the Consignee and the Vendor. Items like storage, replenishment, returns are just a few areas you need to cover.

Before we get too deep into details lets clarify or define the parties typically involved in a consignment transaction. Consignee is the business, person, agent, organization which merchandise is consigned or Consignee is the receiver of the goods not yet owned. Consignor is the Vendor or company which owns the inventory until it is used or sold by the consignee. Now that we have that straight, lets move into some areas you should address in your vendor consignment agreement.

Inventory Management

Consignee shall store and manage products produced or supplied by Vendor (the “Products”). All products shall be delivered to Consignee on a consignment basis. Consignee and Vendor shall mutually agree on which Products will be consigned to Consignee under this Agreement before the Products are delivered to Consignee’s Facilities. For purposes of this Agreement, all Products which have been delivered to and received at the Facilities shall be referred to as “Managed Inventory”.

Another piece which will need to be negotiated or identified is where you will store or house the inventory

Space Allocation

Consignee shall store the Managed Inventory at the ________________ (location). Consignee reserves the right to store the Managed Inventory at other Consignee facilities or at a third party warehouse location, provided that it advises Vendor of where the Managed Inventory is located and that it bears all costs associated with relocating the Managed Inventory to the other Consignee facilities.

The next part of the contract will address the inventory levels, costs, returning consignment and obsolescence.

Inventory Level Maintenance

Vendor shall use commercially reasonable efforts to maintain Managed Inventory at each Facility at a level at least equal to Consignee’s sell through rate or usage rate during the preceding two weeks. Once per week, Vendor shall advise the Consignee Product Manager in charge of Vendor’s account of the quantity and type of Managed Inventory that should be consigned to each Facility. The Product Manager shall then issue an order to Vendor for the quantity and type of Product to be consigned (a “Stock Order”). Vendor understands and agrees that a Stock Order (even if the order document is entitled or referred to as a “Purchase Order”) is only a request for delivery of consigned Products to Consignee and is not and shall not be deemed to be a commitment to purchase the Products, except as required under this Agreement. Inventory maintenance can also identify who is responsible for checking bins, refilling bins after warehouse has received goods (checked quantity to packing slip) and managing faster or slower moving bins.

True Consignment

To the extent that Vendor delivers the Products to Consignee or places them under Consignee’s control, this is a true consignment agreement. Vendor shall retain title to the Managed Inventory shipped hereunder until the Managed Inventory is purchased by Consignee at the time of use by the Consignee or sale to its customers.

Buyback of Existing Inventory

Following the Effective Date of this Agreement, Consignee shall provide Vendor with a list of Products, if any, held by Consignee in its inventory on the Effective Date (“Pre-Existing Inventory”). Vendor agrees to repurchase within ten (10) days of such list, any Pre-Existing Inventory that Consignee has previously purchased from Vendor. Vendor agrees to repurchase the Pre-Existing Inventory at the price Consignee paid to Vendor. Any Products in Pre-Existing Inventory for which Consignee has not paid Vendor shall automatically become Managed Inventory for purposes of this Agreement, In the event that Consignee decides to consolidate Managed Inventory into on Facility, Vendor agrees to pay for costs associated with picking, packing and shipping Managed Inventory to the desired Facility.

These are just a few areas you should consider documenting for you vendor managed inventory arrangement. If you are interested in the full or our complete version of our sample vendor agreement, it is available in the Premium, Vendor and Mega Packs.

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Vendor Inventory

Mark Bell — Wed, 30 Jan 2013 20:57:27 +0000

There are many types of arrangements aka vendor contracts you can enter into with your suppliers. If you are looking at employing a partnership philosophy, one to consider is Consignment Buying. What is consignment buying or vendor owned inventory? A definition of vendor owned inventory or vendor managed inventory (VMI) is when a supplier (the company you purchase from) maintains an inventory bank in the buyer’s facility which is under the buyer’s control. The buyer assumes responsibility for perpetual activity or accounting for withdrawals or usage of stock from the consignment inventory, payment for quantities used and notification to the supplier of the need to replenish inventory. Verification of quantities remaining in inventory is jointly done at periodic intervals.

This strategy has advantages for both the supplier and buyer. The buyer benefits by having reduced inventory investment which can free up funds for capital or other investments and the supplier is assured supply or captive volume. This type of partnership arrangement is often used in the distribution industry.

Some of the other benefits the buyer gains is it removes or eliminates the risk of obsolescence. Obsolescence is often overlooked and it is when the inventory no longer meets your requirements and therefore is returned or sold as surplus. Under a consignment arrangement, the Vendor still owns it therefore they assume the risk.

There is a cost associated with tying your vendor into a consignment arrangement. You can be assured that you will be paying more for your inventory vs a spot buy for the same goods but as a business owner you have to weigh the pros and cons and make your decision based on your existing financial and staffing requirements. For some, the opportunity of using your capital elsewhere, eliminating dealing with obsolete stock, managing the inventory surpasses the extra cost incurred or paid for vendor inventory.

What should a consignment contract look like? What should be included? Stay tuned or subscribe to our feed as the next post will answer these questions and provide further insight on sample consignment or vendor managed inventory agreements.

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Vendor Contracts

Mark Bell — Mon, 26 Jul 2010 14:10:40 +0000

Purchasing managers work with a wide variety of vendor contracts as part of their daily responsibilities, and each one plays a different role in keeping operations running smoothly. These can range from service agreements and consulting contracts to supply contracts, inventory arrangements, blanket orders, equipment or capital purchases, and standing order contracts. While they may look similar at first glance, every contract type has its own purpose, structure, and level of detail. Depending on what you are trying to achieve—whether it’s securing ongoing services, locking in pricing, managing stock levels, or ensuring equipment availability—will help you decide on which type of contract you will ultimately choose.

Service Contract – This vendor agreement might be used for a contract employee providing a specialized service to your organization. The focus of the service agreement would likely be the hours of work, hourly rate and actual service areas this individual would be responsible for.

Consultant Contract – would imply you are hiring an expert to provide direction on a specific requirement your organization needs direction or support with. Everything from hourly rates to required credentials to the period or term of the arrangement would be identified in this agreement.

Supply Contracts – These are typically used for the supply of bulk consumables or products your business would require on an ongoing basis to ensure continual production. If you are in the resource industry, this might be chemicals, fuels, explosives, lubricants and so on. In manufacturing, it might be natural gas, coal or whatever powers your facility.

Vendor contracts can be complex and getting a template to help you create something professional can save you many hours of time. Most of the above vendor contracts should address standard clauses like Force Majeure, Termination, Scope, Period, Indemnity, Assignment, Acceptance and so on. Why start from scratch, eliminate frustration and focus your efforts on the specifics.

Some examples we provide include: RFQ9-Chemicals Contract, RFQ51-Lubricants Supply, RFQ53-Reagent Supply, RFQ54-Explosives Supply are just a few of our supply contracts which might be of interest and are available in the Premium and Mega Pack offers.

RFQ4-Service Contract and RFQ21-Engineering Contract will address some of the other Vendor Contracts we have listed above. For a complete list of contracts in our pack please visit this link.

RFQPro offers a wide range of vendor contracts, each designed to address a specific area of operational responsibility. Any one of these agreements on its own delivers enough value to justify the cost of the entire package.

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How to write Vendor Contracts

Mark Bell — Sun, 17 Jan 2010 00:48:27 +0000

Vendor Contracts:

With over 25 plus years in the purchasing profession we have seen Vendor Contracts take on many forms. In the early days some were pretty scary and we would be challenged to even call them a contract. They were more like a glorified hand written fax! Our profession has evolved and writing a vendor contract can mean a one pager or it can be a 300 plus page vendor agreement. Here is to hoping you get more 1 page ones.

With the litigious environment companies are faced with today, it doesn’t matter whom you’re doing business with, it is prudent to draw up a vendor contract to clarify the duties or scope of work which will be carried out by each party involved. Spend the extra effort and make it clear.

How do you make it clear? Have a second party proof read it for you to make sure it flows and makes sense to a first time reader. To ensure there are no misunderstandings, include an example showing any cost breakdowns and final results. This works great if you are purchasing a commodity where the price is based on several pricing mechanism. An example, market cost or base price of item + bridging or freight + packaging + taxes = $Price Paid by Company for next three months. In this instance, there can be no misunderstandings by any party which will examine the agreement at any future date.

The main elements of a vendor contract are the cost, services and products to be provided, what will happen if something doesn’t go as planned (contingencies), and the applicable dates for final delivery. The objective is to be thorough, eliminate unknowns, liabilities and ensure every scenario is covered in your contract. You do not want to get burned nor do you want a vendor to suffer punitively in the process. A company which is fair to its vendors gets a solid reputation and everyone wants to deal with owners which treat suppliers fairly. If you properly solicit quotations for your requirements this process will ensure you never pay more than what the present market allows.

Okay, so a main point in developing a quality vendor contract is to spend a bulk of your efforts on the scope or explaining the responsibilities of the vendor to ensure there are no misunderstandings. Include examples, proof read document. What else or what other areas need to be addressed? Here are a few:

Step 1

Identify the two parties that are associated with the contract. The “Vendor” aka “Supplier” will obviously be the person who is providing you with the goods and services and you are the “Buyer.” Aka “Owner”, “Purchaser”

Step 2

Identify and detail the services or products that are to be provided in the vendor contract. Be specific when illustrating what will be delivered. Include quantities, part or drawing numbers or any relevant information.

Step 3

Outline the delivery terms. What date will the project begin and end if it is a service, or when is the physical product or order to be delivered. Also, outline how frequently the product will be delivered if this will be a recurring order.

Step 4

Include the price for the product or service and payment terms. Again, you need detailed information about the total price including any expenses, how the buyer will pay (purchase order, check, money order, or credit card), to where and to whom, and when the payment is due (such as 30 days from invoice date). Describe any late fees that will be assessed if the buyer fails to pay on time.

Step 5

Write in any requirements regarding privacy or non-disclosure for the business transaction. Some companies like to control the release of information which relates to their organization.

Step 6

Quote all regulatory bodies which the vendor must comply with. Workers compensation, government rules and safety polices.

Step 7

Be clear about how disagreements will be handled regarding the contract. Most parties prefer to settle claims via arbitration to avoid an expensive and lengthy legal process. This of course is based on the value of the agreement. Do not spend $10,000 to recover $1,000.

Step 8

Include a special clause at the end of your vendor contract to clarify that if one part of the agreement is deemed unlawful or invalid, the rest of the contract stays in tact. This is called a “severability clause.”

Step 9

Outline how and when the contract can be terminated. For example, if one party is not living up to his or her side of the bargain, the other party reserves the right to cancel the agreement. Include details about who is required to pay what in the event of a breach.

Every contract is different but the above provides you with some idea as to what to include. It makes sense to flush out previous agreements used by your company or parts of contracts supplied by your vendors and other templates in the marketplace. Use clauses that apply to your business and create a new vendor contract that best fits your present requirements. Once you have completed the task of writing your vendor contract always seek legal counsel for final approvals prior to issuing.

Looking for a jump start on putting together a template. Consider the RFQPro Contract Pack available in the left hand margin which includes standing order agreements, supply contracts, commodity, consulting, equipment and many others.

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Free Contract Templates

Mark Bell — Mon, 11 May 2009 22:33:35 +0000

Free Contract Templates

Not many websites offer free contract templates, RFQPro.com does. If you subscribe, included in our welcome pack is RFQ4 – Service Contract template for consulting services. This contract template can be used for labor services arrangements and more.

If you are in need of other types of contracts like supply contracts, RFQPro.com can help.

RFQ51 – Lubricants Contract is a pricing / supply agreement template which can be tweaked and used for most of your consumables contracts or for commodity based needs. This digital download delivers in both Microsoft Word and PDF format.

Download and preview a portion of this 9 page contract here >>>

RFQ51 – RFQ54 contract templates are now available in the Premium Template and Contract Packs and must be purchased from the RFQ Contract Pack or Premium Pack link in the left margin or on the Special Offers page.

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Hosting Agreement – Sample Template

Mark Bell — Thu, 28 Aug 2008 17:54:12 +0000

Hosting Agreement Template:

If you are searching for a sample hosting agreement template or looking at putting together a hosting contract, this form should get you off and running.

Here is a portion or sample of the agreement (pages 1-4 of 8)>>>RFQ3 – Sample Hosting Agreement Partial

To download our complete package and receive this full 8 page contract in an editable format (Microsoft Word) click here

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Service Contract Template (5 important points to cover)

Mark Bell — Sat, 02 Aug 2008 04:57:54 +0000

Service Contract Template

Our latest addition to the template library would be used in the event you need to hire a temporary contract employee or any fee for service type personnel. This is a contract template for service, covers 5 important points and its free!

Sometimes you need to hire a temporary employee or bring back an employee in a consultancy capacity and you want to cover the bases with a simple contract to manage their responsibilities and the commercial components of your agreement.

This free service contract template will help you get the ball rolling and complete this task quicker and easier than starting from scratch and will identify the five important points you should always cover in a services contract.

Our free template covers the parties, compensation, scope, duration, safety and more. Whenever generating a contract for service it is important to capture:

The name, address of the individual and or company.
Second the duration or time period you require the services of the employee.
Third the scope or work they will be performing for your company.
Fourth the amount they will be paid.
The benefits if any and the additional conditions like safety or workers coverage.

This four page employee services contract is simple, clean and will work for most of these temporary or basic requirement. Ensure you replace the RFQPro.com text with your own company name, address details.

Download service contract template PDF here >>> RFQ4 – Service Contract

Want this in an editable format like Microsoft Word? Please Click Here

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