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The Vendor Managed Inventory Agreement is designed for businesses seeking to optimize their supply chain operations by delegating inventory management responsibilities to their suppliers. This arrangement is particularly relevant in Australian business contexts where companies aim to reduce inventory carrying costs, improve efficiency, and maintain optimal stock levels. The agreement addresses key aspects such as inventory monitoring, replenishment triggers, performance metrics, and technological integration requirements. It incorporates provisions compliant with Australian commercial law, including consumer protection, privacy, and electronic transactions legislation. This document is typically used when parties want to establish a collaborative relationship where the supplier takes primary responsibility for maintaining agreed inventory levels at the customer's location, with clear accountability and performance measures.

1. Parties: Identification of the supplier (VMI provider) and customer, including full legal names, addresses, and registration details

2. Background: Context of the agreement, existing relationship between parties, and purpose of implementing VMI system

3. Definitions: Detailed definitions of key terms used throughout the agreement, including technical and operational terms specific to VMI

4. Term and Renewal: Duration of the agreement, conditions for renewal, and termination notice periods

5. VMI Program Scope: Detailed description of the VMI program, including products covered, locations, and general operational parameters

6. Inventory Management Obligations: Specific responsibilities of supplier in managing inventory levels, including minimum/maximum levels, replenishment triggers, and stock rotation

7. Technology and Systems: Requirements for IT systems, data sharing, integration, and communication protocols

8. Performance Metrics: Key performance indicators, service levels, and measurement methodologies

9. Title and Risk: Transfer of ownership, risk allocation, and responsibilities for loss or damage

10. Pricing and Payment: Pricing mechanisms, payment terms, and invoicing procedures

11. Reporting Requirements: Regular reporting obligations, formats, and timeframes

12. Quality Control: Quality standards, inspection procedures, and rejection processes

13. Confidentiality: Protection of confidential information and data security requirements

14. Liability and Indemnification: Allocation of risks, limitations of liability, and indemnification obligations

15. Dispute Resolution: Procedures for resolving disputes, including escalation processes and jurisdiction

16. General Provisions: Standard boilerplate clauses including notices, assignment, and governing law