Certification in Supplier Diversity Practice Exam

What is often established with preferred suppliers to enhance purchasing consistency?

1. Flexible pricing agreements

2. Master price agreements

3. Long-term payment terms

4. Short-term project contracts

The correct answer is: Master price agreements

Master price agreements are crucial for establishing structured and consistent purchasing terms with preferred suppliers. These agreements outline specific prices, terms, and conditions for a range of products or services, creating a comprehensive framework that buyers can rely on over time. By having a master price agreement in place, organizations can streamline procurement processes, reduce administrative burdens, and ensure that they are consistently receiving favorable pricing from their suppliers. This consistency is beneficial for budgeting and forecasting, as it allows organizations to have predictable pricing and terms. Additionally, master price agreements often include provisions for volume discounts and can set the basis for better relationships with suppliers, leading to enhanced trust and collaboration over the long term. Such strategic relationships contribute to improved efficiency and can lead to cost savings, making it an essential aspect of supplier diversity and procurement practices.