Question

What are the advantages of magnifinethe resources on a long term prospated

Answer 1

Long term prospered (LTA) is an effective and mostly productive way of planning and procuring goods.

1. LTA allows to lock in the price of procurable materials from a supplier which helps the buyer to portion out the available funds for its remaining cost.

2. It eliminates unpleasant surprises of rise in buying prices. Prices are predetermined where supplier is at risk of increase in their cost price.

3.  Both the parties under agreement feel secure for a longer guaranteed period.

4. LTA eliminates un-necessary costs of re-tendering / sourcing and re-negotiating.

5. LTA reduces lot of other burdens of buyers like logistics process and administrative exercises.

5. Both the parties feel secure as long as they have mutual interests under agreement. It eliminates feeling of insecurity with new buyers at every time.

6. Provides opportunities to build better relationships due to increased interaction for a longer period that also increase trust and good faith which helps further to make other future strategic partnerships.

7. Buyer gains time to concentrate on the improvement of  supplier's performance and hence increase efficiency.

8. It allows both parties to look for areas of consolidation across existing products and services, as well as the potential addition of potential new product and service offerings.

9. It also save buyer's cost  of storage and handling the material.