New Insight: Mastering Supply Chain Management with Forecast Clauses

In an ever-evolving business landscape, understanding and implementing forecast clauses in B2B agreements is crucial for businesses aiming to streamline their supply chain and strengthen supplier relationships. LexisNexis has released new practical guidance on forecast clauses, providing valuable insights for commercial contracts.

What is a Forecast Clause?

A forecast clause requires customers to provide regular estimates of their future needs to suppliers, aiding in effective inventory management and planning. These clauses are essential for supply of goods agreements, distribution agreements, and manufacturing agreements.

Types of Forecast Clauses:

1. Pro-Customer:

• Customers provide monthly estimates of their needs.
• Forecasts are non-binding, with no obligation to purchase.
• Suppliers strive to meet forecasted needs and notify customers of any potential supply issues.

2. Pro-Supplier:

• Customers provide their best estimates and any revisions promptly.
• Forecasts are non-binding, and suppliers do not guarantee order fulfilment based on these forecasts.

3. Alternate Rolling Forecast:

• Customers offer a rolling forecast for the next six months or the remainder of the contract term.

Implementing the appropriate forecast clause can help businesses ensure smooth operations, minimize supply chain disruptions, and foster stronger business relationships.

To know more about Forecast Clause and how this impacts you, contact us today +971 50 985 1360 or email us on [email protected]