How to agree supplier forecast and call-off terms
Agree in writing what is a planning estimate, what authorises a binding purchase, and what stock the supplier may commit to before a call-off. Set approval limits, release details and rules for unused stock before sharing forecasts. Use this checklist when discussing repeat supply with Cambridge China Bridge.
Separate the forecast from permission to spend
Ask the supplier to agree that a forecast is for planning and does not itself authorise material purchases, production or shipment. Identify any firm purchase commitment separately, including any minimum total purchase agreed for the programme. Use the forecast versus firm order checklist for the basic distinction; this guide covers how to operate releases and stock approvals.
Give forecasts a date, revision reference, product specification and demand period. Agree how updates replace earlier estimates and who receives them. Keep forecast files separate from order approvals, and ask the supplier to flag capacity concerns without treating its acknowledgement as permission to start work.
Define what each call-off actually does
Choose whether a call-off creates a purchase commitment, authorises manufacture against an existing commitment, or requests delivery of stock already purchased. State the agreed acceptance step, authorised contacts and response route. Ask for an explicit acceptance or a proposed change so that a release does not sit unanswered.
Record the product and specification revision, quantity, agreed price basis, delivery location, required date and payment trigger on each release. Agree which document takes priority if details conflict. For the surrounding terms, see framework supply agreements. For scheduling beyond the factory, use shipping lead times.
Approve advance stock by stage
Separate permission to reserve capacity from permission to buy materials, make unfinished goods, finish products or ship them. For each stage, agree the permitted quantity and expenditure, approval expiry, evidence required and person who can authorise an increase. Ask the supplier to request approval before exceeding a limit.
Ask which materials can be reused for other customers and which are specific to your product. Record existing stock before approving further purchases, including stock held by subcontractors. Check batch constraints using MOQ and sampling, then agree whether a larger material batch is shared, held by the supplier or expressly approved at your expense.
Set the holding and unused-stock rules
Agree where approved stock will be held, how it is identified, who checks its condition and what stock reports you receive. Separately address payment, ownership, damage responsibility, insurance, storage charges and access to collect it. Ask for written confirmation of these arrangements wherever a separate warehouse holds the goods.
Agree a process for demand reductions, design changes and programme closure. Require an itemised stock statement showing approved purchases, quantities used, remaining goods and supporting costs. Set how reusable materials, supplier returns, resale proceeds and amounts already paid will reduce any proposed settlement. Agree approval for disposal and a final collection or settlement process.
Review exposure before issuing another release
Reconcile the latest forecast, accepted releases, deliveries, usable stock and approved material commitments. Look for duplicated purchases, obsolete revisions and goods that will expire before use. Ask the supplier to explain differences and confirm available capacity before you promise delivery to your customer.
Agree what happens if demand rises beyond approved capacity or falls below committed purchases. Record any acceleration costs, revised dates or stock settlement before approving the change. Keep a shared decision log so purchasing staff and factory planners work from the same approved position.
Frequently asked questions
How do I keep a supplier forecast separate from orders?
Ask the supplier to agree its planning purpose and approval limits. Keep purchase commitments and releases in separate records, and avoid sending instructions to start work through the forecast file.
Does a call-off order authorise production or delivery?
Define this in the arrangement. A call-off may request manufacture, create an agreed purchase commitment or release existing stock for delivery. Specify its purpose and acceptance step.
Who should pay for unused forecast stock?
Agree the allocation before purchases start. Link any proposed settlement to approved commitments and evidenced costs, accounting for reusable stock, returns, resale proceeds and payments already made.
What if the factory buys more materials than approved?
Ask for purchase records and reconcile them against the approval log. Keep the excess separate from approved commitments and agree its treatment explicitly before issuing further stock approvals.