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Things to look for in a contract while selecting a supplier

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smitshah
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When you have to supplier both having good reputation for the things they manufacture and supply but only thing that can distinguish them is the contract they presented. So which factors would you consider to look for in the contract and what are the way to negotiate this contract.In order to get a better deal?

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Topic starter Posted : 14/04/2018 4:40 pm
as934
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One of the most important things to have included in a vendor contract is the condition that they need to notify your company about any changes that they have made or are going to make to the components that they supply to your company. These changes can range from a change to the overall design, a change in tolerance, a change in material, and a change in quantity per order. It is important for your company to be notified because changes in the manufacturer's design of the component can affect the final product that you are producing and putting on the market.

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Posted : 14/04/2018 5:21 pm
ala26
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Adding on to what as934 said above, a good contract should also include quality criteria, clarification of ownership, defined deliverables and review period, and any changes (as as934 listed above). From previous experience, usually a supplier will have one thing even if it small that will distinguish it from another supplier when choosing between two.

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Posted : 15/04/2018 10:13 am
rv347
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I agree with the above posts. It is critical when selecting a supplier that you create a clear contract stating that they will notify your company of any changes to the product. Otherwise a lot of trouble can be caused for your company and you might have to change the DSD to fit the new specs. Additionally, there will usually be some factor that makes one vendor more attractive, such as your company's experience and history previously working with them.

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Posted : 15/04/2018 10:52 am
ashleyfitzsimmons
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I think another thing that is important to address in a supplier contract is to clearly define responsibilities. For example, if something goes wrong with the product, is it the company or supplier's fault? According to the FDA, the device company is responsible for every component, even if those components are from other suppliers. However, I think this adds an extra importance to the previous discussion of the supplier notifying the device company about any changes. I think the contract should state that if the device company is not notified of changes and as a result, this causes something to go wrong with the product, the supplier should be at fault for not properly informing. If the supplier is making critical components, there should not be push back for this since they are taking on a lot of responsibility.

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Posted : 15/04/2018 12:06 pm
Aasutosh Purohit
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Choosing the right supplier involves much more than scanning a series of price lists. The choice will depend on a wide range of factors such as value for money, quality, reliability and services.

A key criterion in selecting the right supplier is value. Cost should not be the only factor. The total cost of ownership should also be considered, which looks at the supplier’s:

• Customer service

• Delivery commitments

• Reliability and responsiveness

• Resource savings (hard and soft)

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Posted : 15/04/2018 12:49 pm
alexandrabuga
(@alexandrabuga)
Estimable Member Registered

To add to this, clear definitions, and attachments with supporting material for timeline, deliverables, pricing, and business and legal contact information.
Thinking about the important articles to include in a supplier contract, I also thought about how to pick a supplier. I came across an article from Med Device Online "9 Things to Consider Before Choosing a Supplier for Medical Device Applications". To summarize:
1. Innovation
2. Commitment to Quality
3. Advanced Delivery systems
4. Local support and global reach
5. Total value of ownership (TVO) approach
6. Communication
7. Flexibility and special services
8. Market knowledge
9. Financial stability

Overall, I think as those mentioned above it is important to have a clear contract that lays out all the terms, ownership, deliverables, pricing with legal and business contact information. Any changes to the contract should be done under amendments that are signed off on by both parties. In regards to picking a supplier, one should consider the ability to innovate to develop advanced designs and materials, commitment to quality to follow ISO and FDA requirements, advanced delivery system though streamlined work processes, global knowledge but provides local support, added value to customer, clear and open communications, flexible and special services, market knowledge and being financial stable,

meddeviceonline/doc/things-to-consider-before-choosing-a-supplier-for-medical-device-applications-0001

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Posted : 15/04/2018 2:41 pm
jlw23
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I also agree that the contract should clearly say all the needs to be said about eh expectation of the interaction between the vendor and your company. Especially changes that they may make to the design of your procurement. For custom designs that are being outsourced there should be even more stringent controls around notification.

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Posted : 15/04/2018 4:19 pm
jla33
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I agree with the above replies, as medical devices become increasingly complex, the need for reliable, compliant, and cost-efficient supplier partners is of great importance to strategic sourcing and direct procurement executives. At the center of all decision-making is balancing quality and cost when finding and partnering innovative suppliers.
5 things to keep in mind when selecting a supplier:
-Total cost of ownership
-Product quality
-Supplier capabilities
-Consistency
-Risk
While taking these factors into consideration while selecting a supplier, there are some tools that could help in making this decision. For example, on-site visits of a supplier to find potential warning sign. Look at references to determine what are the reliability and capabilities of a supplier. The most successful strategic sourcing teams have developed a comprehensive internal tool to determine the best supplier through variables such as cost, quality, communication, expertise, capabilities and more. All these tools and other ones could to pick components of the highest quality at a reasonable price.

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Posted : 17/04/2019 11:27 am
ec52
 ec52
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Adding to previous posts, one other factor to consider are the regulations about supplier selection and management in 21 CFR 830.50. FDA scrutiny on supplier selection, criteria used, and more importantly how sponsors control their supplier has increased in the last few years. It is one of the first topics discussed during audits. Contracts should be written in a way that clearly defines roles and responsibilities, and robust inspection plan that ensures materials/services provided by vendors meet specifications (that is also part of the contract)!

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Posted : 17/04/2019 2:35 pm
Sk90
 Sk90
(@sanam)
Estimable Member Registered

Contract negotiation should be based on the uncertainty of scope, assignment of risks, need for predictable costs and importance of meeting milestones dates. Contract should be fair ,reasonable , and beneficial to both parties not depends upon the smart party. While negotiating for contract payment terms, contract volume, work dates, price, damages and liabilities, reliability,, partnership approach are the factors that need to be considered. For evaluating the supplier the things like completeness of order , delivery time, quality of items, price, customer service, ability to take special orders, are important. Contract negotiation typically focused on revenues and risks. During contract negotiation effective, clear communication and expectation in order to avoid misunderstanding.

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Posted : 18/04/2019 3:03 pm
carrissap10
(@carrissap10)
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There are many options to consider when selecting a supplier and looking over a contract. First you should make sure that everything you and the supplier discussed verbally is included in the contract. Any new or extra information should be brought up and corrected. Secondly you should consider how long this supplier has been working within the field, and also ask questions to see the level of knowledge that this contractor has. Lastly, you should consider the type or quality the supplier is offering in this contract. Ways to negotiate this contract include, making sure the deal is fair for both parties, making sure the writing is legible, and making sure everyone understands there role. Another key component is the relationship you and the supplier have and communication skills. You must be able to communicate with the supplier so that the contract is correct based on what you want.

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Posted : 19/04/2021 12:08 am
djwhitemsm-edu
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Posted by: @smitshah

When you have to supplier both having good reputation for the things they manufacture and supply but only thing that can distinguish them is the contract they presented. So which factors would you consider to look for in the contract and what are the way to negotiate this contract.In order to get a better deal?

When looking at the business aspect of any project that is being worked on suppliers are necessary for the development of many products. Dealing with suppliers means understanding that legal contracts are involved. When looking for a contract there should always be a fair price being offered for the materials being requested. Also you should look around to gauge what a fair price looks like in preparation for negotiation. Also you should find out if the supplier you are dealing with is reputable so that you can avoid any scams. 

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Posted : 19/04/2021 3:10 pm
mrlee5
(@mrlee5)
Eminent Member Registered

@ashleyfitzsimmons provided a great example. Clearly defined responsibilities will make handling discrepancies that may occur way easier. Aside from this, I think that another plus would be cost efficient and reliable suppliers. @jla33 gave a good list of things to keep in mind when finding the right supplier for your work. Those include risk, consistency, supplier capabilities, and product quality. Each has its own importance, so you should really consider who you make partnerships with as it may shape the outcome of the project.

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Posted : 24/04/2021 3:15 pm
rowel2202
(@rowel2202)
Active Member Registered

Another crucial aspect of a supplier deal, in my opinion, is to specifically identify obligations. Is it the company's or the supplier's fault, for example, if something goes wrong with the product? According to the FDA, the device manufacturer is responsible for all parts, even though they are supplied by third parties. However, I believe this emphasizes the importance of the retailer informing the device provider of any improvements discussed previously. I believe the contract should specify that if the equipment company is not aware of modifications and anything goes wrong with the system as a result, the seller should be held liable for not adequately informing.

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Posted : 25/04/2021 11:05 am
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