Successful procurement implies a steady supply chain. For both parties to be satisfied there needs to be an agreement covering the needs and obligations of both the supplier and the vendor. This can only be done through a properly written contract for supply management.

The supply management contract is essentially a written agreement between two parties with clearly defined obligations, rights, and duties of both parties. It needs to be written accurately and ensure no one party gets damaged or tricked within the deal.

If you want to know what are the key elements of a good supply contract, just keep reading. Here are 9 tips that you have to learn about.

1.      The Research

Before we go to the actual contract writing part, you need to remember one thing.

You should never jump to signing a contract if you haven’t done your research on the other party.

You don’t want to be stuck with an unprofessional and mediocre vendor just because you didn’t look them up before contract signing.

Therefore, the first step is performing detailed research to find out everything you can about the party you’re about to do business with:

• look them up online
• find reviews ad read them
• ask them for references

Make sure you’ve got all the information you need and there’s no doubt you’re dealing with a professional. If you’ve got this covered, you can move on to the actual contract.

2.      The Parties

Every supply chain contract needs to start by identifying all the parties involved in the agreement.

This is done to ensure both parties have all the necessary information about each other and they know exactly who they are closing a deal with.

Therefore, the contract should define:

• the key details about both parties
• their business information

Leave everything in writing regardless of how well you know the other party from your contract.

3.      Pricing and Volume Discount

To make the most out of your supply chain contract, you need to clearly define the pricing strategy and set rules and boundaries.

This will keep both the supplier and the seller protected and prepared for all future agreements.

Make sure you define:

• the pricing pattern for all goods
• the volume discount for larger orders
• deadlines and time frames for each purchase

“When it comes to supply chain contracts, the pricing section needs to be written with special attention. Make sure you’re not being damaged by it, and take an active part in defining the rules” Donald Kelsey, a procurement manager and a writer at Studicus.

4.      Purchase Quantities

Each of the parties needs to come to an agreement on purchase quantities.

This is something you can`t leave out to protect your interests.

Therefore, make sure the supply chain contract defines:

• minimum purchase quantities
• maximum purchase quantities

Define the limits, be specific, and ensure you know your options.

5.      Duration

Naturally, you’re not signing a deal with the other party to forever. You need to put in writing how long this agreement between you will last.

Therefore, specify and include in the contract:

• the duration of the agreement
• the specific time frame
• options in case of premature contract termination

This option isn’t necessary when it comes to one-time purchases.

Also, you can leave out the duration section, if the parties are not sure how long they wish to collaborate. In that case, the contract will be terminated by one of the parties due to a reasonable consideration.

This, however, may leave you empty-handed and affect your overall business flow.

6.      Early Termination

To protect yourself and your business, you should consider adding an early termination section to your supply chain contract.

If you’ve set a clear duration of the contract and the other party decides to terminate it prematurely, then what?

The best way to overcome this issue and protect both of the party is to:

• define specific circumstances under which each of the parties can end the contract prematurely
• set an advance notice deadline

Make sure you know your rights and you protect them with this clause:

• Use it to ensure you have enough time to find another vendor in case your vendor terminates the contract.
• Use it to enable yourself to terminate the contract if the currents change and it’s in your best interest.

Create an agreement on this issue and put it in writing.

7.      Return Policies

Sometimes you may receive products or goods that are not of the quality you expect them to be. Also, the products and goods may be damaged and of poor condition.

This is bound to happen, especially in long-term collaborations. When it does, both parties need to know exactly what to do and how to handle the situation:

• when does the vendor replace the goods
• when does the vendor repair the goods
• who covers unexpected costs and under which circumstances

This is the only protection you need. Just make sure everything is written down and confirmed by the other party and you’ll have nothing to worry about.

8.      Accuracy

There’s another thing you need to pay attention when putting together a supply chain contract.

The contract needs to be written in a professional, formal manner.

This means the following:

• there can be no spelling mistakes
• there can be no grammar mistakes
• the style has to be formal
• the vocabulary has to be technical

If you’re not sure you can handle the entire writing and proofreading process yourself, check out Trust My Paper, Grammarly, or Grab My Essay for help.

9.      Review

Once you put all the key elements of the contract together, you need to review the whole contract once again.

Read it carefully and pay attention to:

• each of the section and how clearly written it is
• any steps you might have overlooked or forgotten
• the amount of protection the contract provides you
• key elements you mustn’t leave out

If you’re certain the contract covers everything it needs to, and you’re satisfied with it, sign it. This will make it legal and official.

Final Thoughts

Supply chain contracts benefit everyone involved in it. They cover all the important elements of the agreement and ensure everyone stays on the same page. In addition, it prevents each of the parties from tricking or deceiving the other.

Make sure you pay special attention to all of the tips provided above. Ensure your supply chain contract is written professionally and you’ll have nothing to worry about.