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Supplier Managed Inventory Agreement
"Need a Supplier Managed Inventory Agreement for our manufacturing facility in Ontario, where a US-based supplier will manage automotive parts inventory starting March 2025, with integration requirements for our SAP system and specific KPIs for just-in-time delivery."
1. Parties: Identification of the supplier and customer, including full legal names and addresses
2. Background: Context of the agreement, existing relationship between parties, and purpose of the SMI arrangement
3. Definitions: Definitions of key terms including Inventory, Minimum/Maximum Levels, Order Point, Usage Data, Consignment Stock, etc.
4. Scope of Services: Overview of inventory management services, including monitoring, replenishment, and reporting obligations
5. Inventory Management Requirements: Detailed requirements for inventory levels, storage conditions, stock rotation, and management processes
6. Ordering and Replenishment: Procedures for automated ordering, replenishment triggers, and emergency orders
7. Title and Risk: Transfer of title, risk allocation, and responsibility for lost or damaged inventory
8. Pricing and Payment: Pricing mechanism, payment terms, and invoicing procedures
9. Performance Metrics: Key performance indicators, service levels, and measurement methodology
10. Technology and Systems: Requirements for inventory management systems, data sharing, and integration
11. Term and Termination: Duration of agreement, renewal provisions, and termination rights
12. General Terms: Standard legal provisions including confidentiality, force majeure, and dispute resolution
1. Consignment Stock Provisions: Used when inventory remains supplier-owned until use/sale by customer
2. Value-Added Services: Include when supplier provides additional services beyond basic inventory management
3. Cost Reduction Programs: Used when parties agree to specific cost reduction targets or sharing of efficiency gains
4. Insurance Requirements: Detailed insurance obligations when higher-value inventory or specific risks need coverage
5. Export Control Compliance: Required for international arrangements or controlled goods
6. Environmental Compliance: Include for hazardous materials or environmentally sensitive goods
7. Disaster Recovery: Required for critical supply relationships or high-risk environments
8. Training and Support: Include when supplier must provide specific training or support services
1. Schedule A - Product Specifications: Detailed list of products covered by the agreement with specifications
2. Schedule B - Pricing Schedule: Product pricing, payment terms, and any volume-based discounts
3. Schedule C - Service Level Requirements: Detailed performance metrics, targets, and measurement methodology
4. Schedule D - Locations and Facilities: List of customer locations where inventory will be managed
5. Schedule E - Systems and Technology Requirements: Technical specifications for inventory management systems and integration
6. Schedule F - Reporting Requirements: Templates and specifications for required reports and analytics
7. Schedule G - Implementation Plan: Timeline and responsibilities for implementing the SMI program
8. Schedule H - Contact Details and Escalation Procedures: Key personnel and emergency contact procedures
Authors
Manufacturing
Retail
Healthcare and Pharmaceuticals
Automotive
Electronics
Industrial Supply
Chemical and Materials
Food and Beverage
Aerospace and Defense
Construction Materials
Supply Chain
Procurement
Operations
Legal
Finance
Logistics
Warehouse Operations
Information Technology
Commercial
Risk Management
Supply Chain Manager
Procurement Director
Inventory Control Manager
Operations Manager
Commercial Contract Manager
Logistics Manager
Supply Chain Analyst
Warehouse Manager
Chief Operations Officer
Purchasing Manager
Supply Chain Director
Materials Manager
Vendor Relations Manager
Business Development Manager
Finance Director
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