The different types of supplier delivery models:
(i) Continuous Replenishment Model: In the continuous replenishment model, suppliers make deliveries off a predetermined schedule, often in short periods, based on a company's inventory and real-time demand. When companies employ continuous replenishment, they encourage reduced inventory levels because they're ordering in small batches, rather than large batches which are costlier and reduce supplier's flexibility.
(ii) Just in Time Delivery Model: Under a just-in-time delivery model, companies receive supplies on a need basis. In doing so, they reduce inventory levels and costs because just in time delivers only what is needed to increase efficiency and decrease excess waste. With the help of inventory management software, you can better predict inventory demand with forecasting tools to have the right amount of goods.
(iii) On-Demand Delivery Model: In an on-demand delivery model, suppliers deliver goods when demanded by the Customer. In this model, one can choose a supplier who has plenty of products and can be flexible when order times change rapidly. If a company demands it, the supplier must be ready and on time with prompt delivery.
(iv) Create a Contract: Once you've negotiated the terms, it's time to prepare a contract. Oral agreements or invoices may lead to errors. While they may have some enforceability, it may be expensive and time-consuming to prove if you ever need to take legal action. Writing up a written contract that includes all parties involved, establishing payment terms, and other important details, such as timely delivery. A standard contract should cover what's expected and what happens when one party fails to live up to the agreement.
A vendor contract should cover the following:
(a) Details of the work the supplier agrees to provide.
(b) The quality of the supplied goods or provided services.
( c) Length of the contract term Payment terms.
(d) Indemnity, in the event of loss arising from negligence.
A contract is only legally enforceable after the customer and supplier both sign it demonstrating an agreement to live up to the contract's terms and conditions. Besides legal reasons, it's also important to establish a relationship built upon mutual expectations. Typically, the customer includes a statement within the agreement that describes the quality and quantity of goods. Payments made to the supplier are based on the successful fulfilment of this statement.
