A long-term supply agreement governs purchases over an extended period and may include volume, capacity, pricing, investment and continuity commitments. It is used when both parties need planning confidence.
| Area | What the record should show |
|---|---|
| Control | Define forecasts, firm windows, price reviews, capacity reservation, tooling, improvement, change control, exit and transition support. |
| Evidence | Track commitments, actual volume, performance, price adjustments, investments, renewals and termination rights. |
| Tradeoff | Long duration can improve stability while locking in a weak specification or pricing mechanism. Build review points into the agreement. |
When it matters
Define forecasts, firm windows, price reviews, capacity reservation, tooling, improvement, change control, exit and transition support.
Review before approval
Track commitments, actual volume, performance, price adjustments, investments, renewals and termination rights.
Long duration can improve stability while locking in a weak specification or pricing mechanism. Build review points into the agreement.
