Annual maintanance contract

Rate contracts can be arranged at various levels by a large firm - in specific geography markets or at a national level or at a global level (if suppliers exist at differing scales) and in specific sub-categories, or in a range of sub-categories, or for a category, or for a related categories. The rate contract can also be established for a year or for multiple-years. The level of the rate contract agreed depends on:

The level of standardization of the input
The predictability of procurement spend
The nature of the supplier market
The pricing power of the procurer as against the supplier.
Process of setup[edit] The process of setting up a rate contract in a category follows a set of standard steps:-

Procurement spend analysis: Identification of cumulative spend, identification of key suppliers and their share of business, identification of average price of procurement, spend growth projections
Market analysis: Study of the nature of the market, exhaustive identification of suppliers and their capabilities, study of supplier cost structures. One of the primary objectives of this step is the identification and introduction of new suppliers
Supplier Interactions: Selection of a fit-list of suppliers, invitation to suppliers for discussions, supplier discussions and interactions, RFQ to selected suppliers
Receipt of Quotes from suppliers
Selection of a fit list of suppliers
Agreement on the points of the rate contract and finalization of the rate contract

No Comments Yet.

Leave a comment