Application
This unit describes the performance outcomes, skills and knowledge required to negotiate and formalise agreements with suppliers for the supply of merchandise. It requires the ability to evaluate suppliers, both new and existing, to determine their suitability and establish agreed terms of supply.
This unit applies to senior personnel working in a diverse range of sectors and business contexts. They operate with independence and are responsible for making a range of operational business decisions.
No occupational licensing, certification or specific legislative requirements apply to this unit at the time of publication.
Elements and Performance Criteria
ELEMENTS | PERFORMANCE CRITERIA |
Elements describe the essential outcomes. | Performance criteria describe the performance needed to demonstrate achievement of the element. |
1. Evaluate suppliers. | 1.1. Access and review relevant merchandise planning documents to determine supply needs and seek any required clarification. 1.2. Develop supplier selection criteria based on organisational supply needs and expectations. 1.3. Access and review supplier evaluation data to assess existing suppliers and determine ability to meet ongoing supply needs. 1.4. Identify and assess potential new suppliers against supplier selection criteria and determine ability to meet supply needs. 1.5. Assess ethical and sustainability performance of suppliers. 1.6. Shortlist preferred suppliers that meet supplier selection criteria and supply needs. |
2. Conduct supplier negotiations. | 2.1. Prepare for supplier negotiations and determine negotiables, non-negotiables and desired outcomes. 2.2. Communicate purchase and supply specifications to suppliers and ensure mutual understanding. 2.3. Negotiate supplier pricing, trading terms and delivery with preferred suppliers and select suppliers based on supply requirements. 2.4. Negotiate and agree on promotional activity with supplier. 2.5. Develop supplier performance indicators and evaluation criteria and gain supplier agreement. 2.6. Ensure consistent and agreed understanding of negotiation outcomes. 2.7. Ensure negotiations are conducted in a professional manner in the relevant cultural context. |
3. Formalise supplier agreements. | 3.1. Draft supplier contracts in line with organisational policies and procedures and legal requirements. 3.2. Seek advice from relevant personnel to confirm the legality and validity of draft contracts. 3.3. Finalise supplier contracts and obtain approval as required. 3.4. Distribute contracts to suppliers and resolve discrepancies or disagreements to ensure satisfaction of all parties. 3.5. Obtain signed copies of supplier contracts and store according to organisational policies and procedures. |
4. Monitor supplier performance. | 4.1. Review supplier performance against performance indicators and confirm contractual obligations are being met. 4.2. Take prompt corrective action in consultation with supplier where potential or actual problems occur. 4.3. Make any required amendments to contracts. 4.4. Evaluate supplier performance against performance indicators and document in supplier performance report. 4.5. Continuously review alternative options for supply to enhance product supply and improve ethics and sustainability in supply chain. |
Evidence of Performance
Evidence of the ability to complete tasks outlined in elements and performance criteria of this unit in the context of the job role, and:
develop supplier selection criteria for the supply of merchandise and use these criteria to document an evaluation of three different suppliers
conduct negotiations with one supplier to agree on supply arrangements:
supply specifications
cost
logistics
performance indicators
document the above agreements in a supplier contract and ensure:
compliance with legal and trading requirements
alignment with organisational policies and procedures related to supplier engagement
evaluate the performance of one supplier against performance indicators and prepare a supplier performance report.
Evidence of Knowledge
Demonstrated knowledge required to complete the tasks outlined in the elements and performance criteria of this unit:
key aspects of supplier evaluation criteria
key aspects of legal and ethical compliance requirements as related to the supply of merchandise:
Trade Practices Act
ethical sourcing
environmental sustainability
contract law:
terms and obligations of contract
methods of contractual agreement
exclusion clauses
dispute resolution
termination of contracts
other legal requirements that impact negotiations and agreements in the relevant industry sector including consumer protection
supply chain and logistic considerations as related to supply arrangements:
customers
duties
taxes
freight
third-party arrangements
processes
factory locations and access
critical path and its role in supply arrangements:
launch and promotional dates
sample due dates
supplier holidays
freight timing
order due date
strategies and techniques for use in supplier negotiations
key aspects of supplier negotiations:
supply specifications
cost
logistics
performance indicators
supplier contract formats and inclusions
promotional-based supply arrangements in the retail industry
performance indicators for supplier evaluation:
level of service and responsiveness
reputation
financials
product quality
speed
delivery in-full and on-time
accuracy
ethical practices
techniques for measuring supplier performance against performance indicators.
Assessment Conditions
Skills must be demonstrated in a retail environment. This can be:
an industry workplace
a simulated industry environment.
Assessment must ensure access to:
relevant documentation:
organisational policies and procedures related to supplier engagement
sources of supplier information
supplier contract templates
suppliers
suppliers
suppliers
Assessors must satisfy the Standards for Registered Training Organisations’ requirements for assessors, and:
have worked in the retail industry for at least three years where they have applied the skills and knowledge within this unit of competency.
Foundation Skills
Foundation skills essential to performance in this unit, but not explicit in the performance criteria, are listed here, along with a brief context statement. | |
SKILLS | DESCRIPTION |
Reading skills to: | interpret |
Problem-solving skills to: | anticipate and respond to challenges in the negotiation process. |
Technology skills to: | document and communicate information using digital technologies and systems. |
Sectors
Retail
Competency Field
Merchandise Management