Contract definition andFramework agreement

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A binding agreement between two or more
persons that is enforceable by law

Other contract definitions

"Benchmarking" means the measurement and comparison of products, services and processes with
"the best" available, in order to identify and implement the best ways of operating, as part of our
continuous effort to improve.

Commodity/Purchase Family Strategy

This is a strategy that, based on the products´ supply availability and profit contribution potential, has established specific strategic decisions for these. Any singular commodity/purchase family strategy covers an optimal number of products related to natural commodity segments (markets) and purchase families.


Framework agreement
"Framework agreement" means an agreement entered into between a buyer and one or more suppliers, contractors or service providers, and which is intended to determine the terms and conditions of contracts to be awarded over a given period, particularly in terms of prices and envisaged volume, if appropriate. Framework agreements are unilaterally binding. Mutual commitment is not effective till call-off.

Framework contract
"Framework contract" means an agreement as defined above, with the exception that the buyer
has a duty to use the contracted supplier, contractor or service provider whenever a need
arises for the deliveries defined in the said contract. Final commitment is not made till call-off.

Goods and services
"Goods" means deliveries of products, equipment and materials.
"Services" means deliveries of which work constitute a major part, as well as immaterial assistance.

Life Cycle Cost - LCC
The "life cycle cost" of a product (or project, object etc.) means the present value of the cash flow for the product's total costs over its planned or actual life.

Integrated supply chain management
"Integrated supply chain management" implements a co-ordinated total supply chain, including first, second and third tier suppliers. It is the synchronised integration and management of the entire supply chain that transforms the supply chain from a loosely linked group of independent businesses into a single, integrated competitive system with sustainable competitive advantage over competing supply chains.

"Procurement" means the entire process of planning, organising, co-ordinating, controlling and
monitoring the provision of goods and services.

Procurement Unit
"Procurement Unit" means the organisational unit which has been assigned the tasks of planning,
organising, co-ordinating, controlling and monitoring the procurement of goods and services required by the company.


"Strategy" means, in this connection, the process of establishing an approach to achieve an objective. This involves the utilisation of all expertise and resources available in the procurement process and the entire supply chain to ensure the generation of competitive advantage.

Supply Chain
"Supply chain" means the connected series of organisations, resources and activities involved in the creation and delivery of value, both finished products and services, to end consumers.

Total value
The "total value" of a procurement means the procurement's total tender or contract value, inclusive of any options and expected growth.

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