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Q&A: Sourcing
Why are contracts important in supply chain relationships? Give examples.
Supply Chains – at Internet Speed
Contracts are important in supply chain relationships because contracts coordinate supply chain costs, contracts increase agent effort and contracts induce performance improvements. For example, a company may not know who they are doing business with in a global economy. However, if they hold supplier agreements to a contract, the company can hold the supplier for poor quality materials accountable.
Contracts can coordinate supply chain costs, increase agent effort, and induce performance improvement.
-Buyback contract
-Revenue Sharing (NetFlix)
– Quantity Flexibility
Contracts are important in supply chain relationships because they hold parties responsible for holding their end of the bargain. Contracts also spell out expectations, which parties can be held accountable for.
Contracts are important in supply chains because they express a legal obligation that both parties must agree to. If one disobeys the contract, there is written evidence stating who is liable for their negligence.
Contracts are important in supply chain relationships because they create certainty and trust. Trust worthy relationship will increase eprocurement and reassure buyers of their decisions. The use of econtracts will then all in all increase efficiency by eliminating paper use.
Contract are important in supply chain relationships because they hold the each party accountable for holding up its end of the deal. They also provide the parties with assurance that they’re going to get what they want from the agreement.
Contracts are important in supply chains because they force each party to hold up their end of a business agreement. If a company does not meet their end of the agreement, it could be a major issue for their agreement partner. Buyback contracts protect retailers from being stuck with excess stock of a product that won’t sell.
Contracts are crucial in supply chains because they hold each party to its agreed terms. As any disruption in a supply chain could have disastrous financial consequences, it is imperative that all parties have a common-ground binding agreement that holds each individual entity responsible for the success and execution of the supply chain.
Contracts help to coordinate supply chain costs, contracts increase agent effort and contracts improve performance. As an example, a company may not know who they are doing business with in a global economy but, if they hold supplier agreements to a contract, the company can hold a supplier accountable for negative work experiences or choose to work with them again if they have a positive experience
Contracts are important in supply chain relationships because they hold each party to terms they have agreed upon. They contain expectations and agreements that either party can be held accountable for. If one party breaks the contract, there will be consequences.
Contracts are important in supply chains because they lay out the expectations for each end of the supply chain. This is important because if one end says they are going to do something and they don’t, they need to be held accountable because this can stop production.
Contracts are an extremely important aspect of supply chains. Supply chain contracts spell out exactly what is expected from all parties involved. This means if any party doesn’t hold up their end of the bargain, they will be held accountable and will have to live up to their promise. If they do not, there will be consequences for their disruption.
Most important, contracts record what is being supplied, to who, and at what costs. Also, providing clarity and descriptions of what is expected from each end, price, quality, size, style, etc to avoid disputes later on. Contracts give the supplier and the buyer and understand and agreement to ensure a successful transactions with the least amount of complications.
Contracts are important for accountability, defining expectations, accessing the performance of the supplier/vendor. For example, contracts become even more important in outsourcing situations where the buyer may not be very familiar with the supplier. When a supplier fails to meet the expectations of the contract, the buyer can hold the supplier legally accountable for fixing any issues.
The underlying mechanism in supply chain integration is the development of strong customer and supplier relationships based on mutually agreed upon performance standards. A contract is very important because it is where these relationships and agreements are defined. Some examples are buyback or return contract, quantity flexible contract, revenue sharing contract and cost sharing contract.
Contracts are important because it gives company’s the ability to identify sources of supply and contract with them directly. eContracts significantly reduces cycle times and costs. There are multiple types of contracts, such as contracts for product availabilty, contracts to coordinate supply chain costs, contracts to increase agent effort, and contracts to induce performance improvements.