Sistem

Pengadaan
Pertemuan 6: Supply Contract

Oleh: Prita Meilanitasari ST., MT., PhD

Supply contract
Definisi, Strategic component, Contract for make to stock/make to order supply chain, Contract with asymmetric information,
Contract for nonstrategic components

Sources: Chapter 7 Purchasing in Arnold J – Introduction to Material Management

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Rencana Pembelajaran
Week- Bahasan Week- Bahasan

1 Konsep dasar sistem pengadaan 9 konsep supply scheduling

Konsep dasar sistem pengadaan

2 :tugas, kewajiban, pengelolaan, dan prosedur 10 konsep vendor managed inventory
pengadaan

3 konsep pemilihan supplier, pengukuran 11

konsep Collaboration, Consollidation, and Strategic
performance dari suplier, dan hubungan pembeli
Alliances
4 dan supplier dan pengukuran performansi supplier 12

5 proses dan tipe-tipe purchasing. 13 IT untuk pengadaan dan pengelolaan material

6 Quiz 1 14 Presentasi/ Tugas

7 konsep dan proses supply kontrak. 15 Quiz 2

8 UTS 16 UAS
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Supply Contract or Supply Agreement

An agreement by which a seller promises to supply all of

the specified goods or services that a buyer needs over a
certain time and at a fixed price, and the buyer agrees to
purchase such goods or services exclusively from the seller
during that time.

The supply contract protects the rights of both parties.

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Contract types
Fixed-price contracts
ideal in situations where there is a
clearly defined scope of work.
creates a formal statement of work that
outlines the total project cost, including
all labor and materials, along with
billing milestones based on a detailed
seller project schedule
know the exact cost of the project from
the start
buyer
Cost-plus contracts
all rates and percentages, as well as all
allowable expenses and incurred costs.
The contract often also includes a
maximum amount sellers can spend.
Any spending over that amount
requires the buyer's approval.
charge the buyers for the actual cost of
any materials, equipment, labor, and
overhead involved in running the
project.
Approve the project
Time and materials contracts
sellers charge for the cost of any
materials they end up using plus an
hourly or daily wage. All rates,
including any markup charges on
materials and wages, are included in
the terms of the contract. Once the
contract is finalized and accepted, these
rates stay in place for the duration of
the contract.
charge buyers based on time and
materials
control over how sellers spend their
time and the types of work they do
Contract types

Pay Back or Revenue sharing Buy Back Contract

Contract
retailer pays a supplier a wholesale price
for each unit purchased plus a percentage
of the revenue the retailer generates
Example:
Allow a retailer to return unsold inventory
up to a specified amount at an agreed upon
price.
Example:

Contract for rent industry, music industry, Franchise industry, retailers, real-estate
sport industry, etc industry, etc

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Example of MTS (Make to Stock) Order Contract
Manufacturer produces ski-jackets prior to receiving distributor orders Season starts in September and
ends by December. Production starts 12 months before the selling season Distributor places orders with
the manufacturer six months later. At that time, production is complete; distributor receives firms
orders from retailers.
• The distributor sales ski-jackets to retailers for $125 per unit.
• The distributor pays the manufacturer $80 per unit.
• For the manufacturer, we have the following information:
• Fixed production cost = $100,000.
• The variable production cost per unit = $55
• Salvage value for any ski-jacket not purchased by the distributors= $20.
• Marginal loss = $35 (Since marginal loss is greater than marginal profit, the distributor should produce
less than average demand, i.e., less than 13, 000 units)
How much should the manufacturer produce?
• Manufacturer optimal policy = 12,000 units
• Average profit = $160,400.Distributor average profit = $510,300.
• Manufacturer assumes all the risk limiting its production quantity
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Contract with asymmetric information
Asymmetric information, also known as "information failure," occurs when one
party to an economic transaction possesses greater material knowledge than the other
party. Asymmetric information exists in certain deals with a seller and a buyer
whereby one party is able to take advantage of another.

Example:
Selling a house, car, secondhand, etc.

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Advantages and Disadvantages of Asymmetric Information
Advantages Disadvantages

Healthy market economy • Adverse selection or fraud

• Moral
Example: Example:
a stockbroker's knowledge is more valuable to a non- an insurance company encounters the probability of
investment professional, or a digital media content extreme loss due to a risk that was not divulged at the
specialist more expert than franchise owner who use time of a policy's sale.
their services.

Example Insurance company Contracts:

https://thismatter.com/money/insurance/insurance-contracts.htm

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Contracts for Non-StrategicComponents
• Variety of suppliers
• Market conditions dictate price
• Buyers need to be able to choose suppliers and change them as needed
• Long-term contracts have been the tradition

Recent trend towards more flexible contracts

• Offers buyers option of buying later at a different price than current
• Offers effective hedging strategies against shortages

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Long-Term Contracts

• Also called forward or fixed commitment contracts

• Contracts specify a fixed amount of supply to be delivered at some point
in the future
• Supplier and buyer agree on both price and quantity
• Buyer bears no financial risk

Buyer takes huge inventory risks due to:

• uncertainty in demand
• inability to adjust order quantities

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Flexible or Option Contracts

• Buyer pre-pays a relatively small fraction of the product price up-front

• Supplier commits to reserve capacity up to a certain level.
• Initial payment is the reservation price or premium.
• If buyer does not exercise option, the initial payment is lost.

Buyer can purchase any amount of supply up to the option level by:
• paying an additional price (execution price or exercise price)
• agreed to at the time the contract is signed
• Total price (reservation plus execution price) typically higher than the
unit price in a long-term contract.

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Flexible or Option Contracts

• Provide buyer with flexibility to adjust order quantities depending on

realized demand
• Reduces buyer’s inventory risks.
• Shifts risks from buyer to supplier
• Supplier is now exposed to customer demand uncertainty.

Flexibility contracts
• Related strategy to share risks between suppliers and buyers
• A fixed amount of supply is determined when the contract is signed
• Amount to be delivered (and paid for) can differ by no more than a given
percentage determined upon signing the contract.

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Spot Purchase

• Buyers look for additional supply in the open market.

• May use independent e-markets or private e-markets to
select suppliers.

Focus:
• Using the market place to find new suppliers
• Forcing competition to reduce product price.

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Portfolio Contracts
• Portfolio approach to supply contracts

Buyer signs multiple contracts at the same time

• optimize expected profit
• reduce risk.

Contracts
• differ in price and level of flexibility
• hedge against inventory, shortage and spot price risk.
• Meaningful for commodity products
• a large pool of suppliers
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• each with a different type of contract.
“
Do Not be Afraid to say No.

Thank You

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