Systems contracting is a stockless inventory method for ordering and stocking MRO and related items. The use of systems contracting will aid the firm in reducing ordering and inventory costs.
The systems contracting process requires the use of a negotiated agreement between buyers and sellers.
The agreement includes the following terms: the type of material, scope of contract, price, billing policy, stocking policy, and delivery requirements.
Systems contracting is an efficient form of purchasing that is based on reductions in processing and administrative costs.