Business readiness

Supplier Agreements

What are Supplier Agreements?

A supplier agreement is a legal company contract with your suppliers, defining the rights and obligations of all parties involved.

A supplier agreement governs the procurement of materials, products or services by your company from a third party for a pre-negotiated price and to be supplied in a certain timeframe.

It specifies the type of materials and products sourced, quantity, quality of goods/service, price, payment terms, confidentiality clauses, specifications and procurement terms and conditions.

A supplier agreement can be categorized as an:

  • Exclusive Agreement: One supplier has the exclusivity for the supply of raw materials or products
  • Non-exclusive Agreement: Multiple suppliers are responsible for the supply of raw materials or products

Why are Supplier Agreements important for business today?

Having an up-to-date and comprehensive collection of all supplier agreements enables your company to:

  • Keep track of the performance of your suppliers against their obligations/li>
  • Maintain your own compliance against your obligations under those agreements
  • Evaluate the cost related to procurement by your company

Why is it important for an event tomorrow?

Having an up-to-date and comprehensive collection of all supplier agreements is important for an event tomorrow, as it helps:

  • Keep a record of your company’s preferred suppliers and understand their share in the overall procurement expenditure
  • Understand the share of procurement costs by each product line
  • Benchmark your procurement costs against those of competitors
  • Evaluate your supplier performance over time
  • Assess the impact of any volatility in product or delivery on your business

Pros of Supplier Agreements

  • Budget for procurement expenses upfront
  • Compare the cost of procurement against manufacturing in-house
  • Minimise the time and cost of due diligence for company management and potential investors

Cons of not addressing this topic

  • Greater potential for suppliers’ obligations to go unfulfilled without penalty
  • Greater potential for failure to satisfy your own obligations with your suppliers
  • Limited ability to track procurement costs

Learn more about company contracts

Get your critical business processes in order

We have over 15 years’ experience helping people get their businesses in order - from helping transact billions in M&A deals and procurement, to running technology that enables board meetings and GRC processes to run smoothly.
Start now for free