|Explain in summary the meaning of contract, pipeline,
third-party, sub-contract, consignment.
It just an agreements between the customer and company based on quantity, value etc. Say we have a contract for the house for a period of one year.
When you enter into an agreement with some parties for some reason, it may be called as contract which would be valid for a specified period wherein, conditions to be adhered to, would be listed and should be agreed by both the parties.
Customer contracts are outline customer agreements that display when sales materials or services are sold within a certain time period. E.g.: Quantity contract, Value contract, Service contract.
Long-term agreement against which products or services
are released (ordered, or called off) over a certain time frame.
If you asked about Pipe line Material: Material that flows directly into the production process from a pipeline, a pipe, power transmission lines, or similar. E.g.: oil, tap water, or electricity
In automobile industry, this is very famous. A pipeline
consists of a chain of processing elements arranged so that the output
of each element is the input of the next. If any work is stopped
in between these element, the entire production would come to standstill.
This plays a vital role in major manufacturing industries.
Trading with goods which are not handled by the warehouse but rather delivered directly from the vendor to the customer.
In third-party order processing, your company does not
deliver the items requested by a customer. Instead, you pass the order
along to a third-party vendor who then ships the goods directly to the
customer and bills you. A sales order may consist partly or wholly of third-party
items. Occasionally, you may need to let a vendor deliver items you would
normally deliver yourself.
In the SAP System, the processing, by an external supplier, of materials provided by a customer. The result of this processing is the manufacture by the supplier (subcontractor) of an ordered material or product, or the performance by the supplier of an ordered service.
In manufacturing industries, it is highly impossible
to carry out all operations. Wherever sensitive operations involved,
it will be done in-house and rest they will have couple of vendors to do
that particular operation. For that particular operation of a component,
whatever the vendor incurs, company will pay the money.
Consignment goods are goods which are stored at the customer location but which are owned by your company. The customer is not obliged to pay for these goods until they remove them from consignment stock. Otherwise, the customer can usually return consignment goods which are not required.
In case of sales to OEMs (Original Equipment Manufacturers), this plays a major role. OEMs like Maruti, Suzuki will not place order as and when they require. Instead, they will release an open order which will be valid for two three years. Based on this open order, they just release schedules regularly. What manufacturer should do is to appoint a warehouse agent nearer to the OEMs region and stock the goods ordered by OEMs. As and when it is required by these OEMs, it will be dispatched from these warehouses.
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