Procurement Process. SOW & Supply Chain Management Contracts
The business entities often need to procure external, people-based business services for efficient operations. The qualified procurement SOW implies and ensures that the business gets the best possible return on investment and achieves the desired business targets.
A SOW is a document that describes project related activities, costs, timelines for a supplier who is expected to provide an outcome-based service to their client.
1. Design/Detail Statement of Work (SOW) tells the supplier how to carry out the work. The SOW defines buyer’s requirements which control the processes of the supplier. This might include measurements, materials, and quality control requirements.
Since the buyer requires the contractor to adhere to specific performance, the buyer bears all the risks if the contractor strictly follows all the requirements and instructions.
2. Time & Materials or Level of Effort or Unit Rate Statement of Work (SOW), where the deliverable is an hour of work and the material required to perform the service.
3. Performance Based Statement of Work specifies the purpose of the work or the precise equipment to be supplied and does not instruct how the work is to be conducted.
SOW Format
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Scope
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Applicable Documents and project deliverables
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Requirements (timelines, location)
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Payment terms
It is critical to include the detailed scope of services in SOW to eliminate the risk of misunderstandings and issues.
The benefits of proper SOW management are:
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Cost savings
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Supplier and project performance
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Detailed reports
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Organizational compliance
When due diligence on SOW is not processed thoroughly, issues arising out of the contract can have very unpleasant and unexpected outcomes, negatively impacting the operations of your business.
We address complex supply chain issues across numerous industries by assisting our clients to implement their supply chain strategies, such as optimizing, managing and structuring supply chains.
SOWs are quite often used along with a Request for Proposal (RFP), when the organizations use this document to request pricing, requirements, cost of services information).
We work with our clients to draft terms and conditions for their business with customers, suppliers, and service providers, and can negotiate agreements mitigating risks to ensure future stability to your supply chains. We can also enforce contractual terms under the agreement if the supplier fails to provide the delivery.