May 2015: SMD’s flexible solution to spares ordering has offered huge benefits to our customers over recent years. These bespoke lists of fixed prices also known as Frame Agreements are for a pre-defined term (typically one year) and give an indication of expected lead times with an option to deliver earlier where possible. Frame agreements give both parties the opportunity to tailor the associated terms and conditions to exactly what the customer requires, beyond our standard terms and conditions of sale. Examples of specific terms and conditions might be: a specific delivery term e.g. DAP UK (Incoterms® 2010) rather than our normal Ex Works, regular weekly deliveries to a specific customer location, or packaging which is suitable for export such as fumigated crates/pallets that conform to ISPM15 regulations.
Price lists with associated target delivery timescales have a number of benefits including certainty for customer budgeting & planning purposes, and elimination of the RFQ (request for quotation) process which reduces the cycle time for delivery of parts to their required location. Customers can also benefit from a closer, longer term customer-supplier relationship, improving visibility, trust and confidence for both parties.
Dorothy Freeman, SMD Spares Sales Manager, who has worked closely with our customers to develop this offering commented “At SMD we see a real value in working together with our customers to ensure that the service we provide enables efficient and effective operations from both our customers’ and our own perspective. It is this understanding that has allowed us to put in place frame agreements for our spares customers. SMD is also currently looking to implement an eCommerce platform as part of our Digital Strategy, which will follow on from our current online customer order and tracking system, available through My Account. We hope this will continue to improve our customers’ overall experience of this SMD service.”
The Procurement Manager from one of our well established customers in Aberdeen has been ordering their SMD spares this way since November 2013 and commented: “The Frame Agreement structure highly benefits us in many ways including time saving advantages for all parties. Having fixed prices and terms in place allows for a smoother transaction. It also assists us with planning schedules where deliveries are pre-agreed, potentially creating for an all-round better working relationship with our suppliers”
Bryan Whyte, Supply Chain Manager from SMD customer iTech also sees the benefits of spares frame agreements: “Putting in place robust supply chain agreements with our core suppliers such as SMD gives us better pricing and shorter lead times and overall makes the day-to-day relationship easier to manage for both parties.
SMD are looking to set up Spares frame agreements with further customers going forward.