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?
I would look into the supplier quality agreement structure and inspect that for differences. I would identify differences between the no change clauses; these point out what changes will require permission before implementation or are there changes that require only notification. Moreover, communication and notification rules must also sufficient for the project, along with Quality and regulatory requirements relevant for material supply and the suppliers obligations. Once these aspects of the contract are laid out i would select the supplier that better adheres to the necessities of the project im on.
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.
I agree @as934, while having a good reputation and supplies, having information on changes is very important as well. If there is a product which your team has purchased and the vendor knows that one batch came out with a lower standard, that is something that you need to be immediately aware of. I've just done a post on quality assurance/control, this distinction could mess with the quality of your overall product or if you find out in time, throw off your expected deadline.
Know which vendor contracts affect your work. Identify a direct contact for each vendor. The important things to look for in vendor contracts are extensions and adjustments in timelines. A flexible vendor with changes in time and structures within a project is important to incur the project runs into issues.
After pondering this situation, five things come to mind:
1. Pricing and Overall Total Cost
- This is important as the initial cost may seem favorable but looking at terms can unlock hidden fees. After factoring all costs listed in the terms such as shipping fees, bulk discounts, or other payment terms, an initial estimation may not look so favorable after all the costs are listed in the price especially if there is no lock on price for a designated period of time.
2. Delivery Reliability
- Checking lead times and consistency are paramount when it comes to making contracts. Also, if there are no penalties for delays, this could end up being a disaster for our company if we need reliable delivery times.
3. Quality Guarantees
- I need to view quality standards and warranties. If there is a bad batch, I would need to know how the company would make it right to me. Without any terms regarding quality in the contract, I'm at risk of eventually receiving inferior goods.
4. Liability Information
- This is important to read and understand as this gives information on who bears fault when something goes wrong.
5. Flexibility
- A rigid contact could lock our company in a bad situation which is not what we would want. Flexibility allows our company and their company to work things out if something changes over time.
For contracts I would focus more on the business end of things as well as quality. If both companies have equal products, I would look at how strict their codes are and how well they control their products. I would also be swayed by company size as well, as a bigger company is less likely to go under. I would also see who has the most positive stipulations for my business and better pricing and timeline.
I would also keep in mind if we had history with either company. Past good experiences bode well for future agreements.