Supplier agreements

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Supplier agreements are manually created and maintained in DC1 Distribution on a local level. Local agreements are negotiated on a local level by local companies. They generate their own requirements and totally manage their own purchasing process for all items. In DC1 Distribution, the Supplier agreement functionality allows you to create local agreements on two different levels: General agreements on header level, and Item agreements on detail level. See Header level agreement and Detail level agreement below.

When your supplier makes special offers

You can enter a supplier agreement for an item or a group of items that is valid only for a certain time period, or for a specific quantity, or both. When defining the terms of the agreement, you would have to consider what your supplier is offering.

For example:

  • You can define an agreement for a supplier that offers a discount off the price list price of a particular item.
  • You can define a time based agreement in which your supplier offers a fixed price for a particular item/item group for a fixed period.
  • You can define an agreement that is quantity dependent; you would receive different discounts off the purchase price according to the item quantity that you purchase.
  • Your supplier might have agreed to give you a certain amount of goods free-of-charge.

Note: The price list price means the basic purchase price, which refers to Purchase price 1 defined in the Item file/Purchase prices panel.

Header level agreement

An agreement created on header level, a so-called General agreement, may only consist of a few terms and conditions and be the basic agreement signed with your supplier. The stipulations agreed upon in this type of agreement are valid for all items purchased from the supplier and no item-related key is assigned to the agreement. The basic terms can be for example:

  • Terms of delivery
  • Terms of payment
  • Total order value discount

If these terms are specified in the Supplier agreement file, then they will override the definitions made in the Supplier file.

Other specifications made on header level are:

  • Agreement base
  • Validity dates
  • Trading terms
  • Order value discounts
  • Target values

You can specify the terms and conditions to be valid for all purchases and all items in a general agreement. If exceptions or specific terms are to be valid for certain items, these are defined within an item-related agreement. This type of agreement can only be created if a general agreement exists. In this case, you must assign an item-related key to the general agreement.

Detail level agreement

Agreements created on detail level, so-called Item-related agreements, are entered when your supplier has offered specific terms and conditions for certain items or item groups. This type of agreement is connected to a general agreement in the Supplier agreement file. In this case a supplier agreement key must be assigned to the general agreement as a selection criteria.

If several item-related agreements exist for a supplier, the sequence number of the key in the Supplier agreement keys table decides which agreement is valid first.

On this level, you also define the pricing method to be used when calculating the purchase price. There are three options:

  • Pricing method
  • Discount method
  • Quantity dependent method

The agreement can also be used to enter default values for:

  • Free of charge
  • Incl VAT %
  • VAT based
  • VAT included

If these entries are specified in a supplier agreement, then they override the definitions made in the Item file/Purchase prices panel.

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