These obligations are normally defined under contracts as a letter of agreement (LOU) or in some other form of sales contract. Contract negotiations are a one-way street and misdirection can harm all parties involved. During negotiations, a supplier will always put pressure on the maximum it believes it will achieve. It is up to you, as a procurement professional, to counter something that you think is more reasonable. This may mean abandoning part of the rebate in return for a lower volume commitment. The key here is to see what works best for your organization. The volume commitment initiative can be particularly penalizing for existing customers. For example, consider an organization that buys $1.5 million from industrial suppliers from a supplier, which represents 90 per cent of its total expenditures in this category. They are contacted by the supplier and are invited to enter into a contractual contract with an annual commitment of incremental expenses. To achieve new sales, suppliers are urging their sales teams to present highly competitive contracts with very high volume commitments. Editor`s Note: This article was written by Michael Croasdale, a member of the 2015 Earth Class of 30 Under 30 Rising Supply Chain Stars. Michael was chosen for his passion, creativity and contributions to the supply chain.
Selected products and services must be treated on an exceptional basis and may not be available under standard conditions. For companies looking for consistent and reliable pricing, the Veritas Volume Purchase Agreement (VPA) offers purchase forecasts through early discounts for a given period. A customer`s initial investment determines the discount the customer continues to receive for a period of 2 or 3 years. . For the most part, suppliers offer different category discounts based on related expense commitments. From a competitive point of view, there is nothing wrong with the methodology. In fact, it makes sense: the more a buyer spends, the better the discount he gets. The contract structure maintains competitiveness to compensate for the increase in spending. Strong supplier relationships are important; It is better to have a long-term supplier relationship than to create something for short-term economies that will be unstable and harmful after only one year. Source More than 500,000 free commercial industrial suppliers This Amendment No.
2 on the volume purchase contract (this «amendment») dates from November 29, 2005 and is manufactured by and between Komag USA (Malaysia) Sdn., a Malaysian company with unlimited liability («Komag»), Komag, Incorporated, a Delaware Corporation («Komag Inc.») and Western Digital Technologies, Inc., a Delaware company.