The organization that I chose is Walmart, it is an American multinational retail corporation which usually operate chains of hypermarkets and grocery stores. The various contract types which Walmart negotiates with its suppliers are relevant in terms of what each type of contract stands for regarding to what the company is looking to obtaining regard to the suppliers and services. A contract is defined as deliberate, voluntary and a legal binding agreement between two or more competent parties. Therefore any contract type is a legal binding document which gives parties a relationship where one is a buyer and the other one the seller for whatever goods involved(Ross, 2014). The Federal AcquisitionRegulations mainly governs over types any of contract which includes government contracts, fixed-price contracts or the firm-fixed prices together with the Economic Price Adjustment Contract. These contract provides distinct compensation structure and different contract performances that can be used for their needs. The reason for selecting these two is because they allow the company to allocate cost and performance risk between them and their contractors or suppliers. Also with a fixed-price contract the supplier should ensure that delivery of products are set at pre-set fixed price which was written in the contract. This allows the contractor to obtain maximum risk of the total costs in the gained profit or loss.
Cost management tools
Walmart will be using Strategic Cost Management Program. The tool provides the organization with the ability of identifying and performing an analysis of the cost drives so as to keep the costs low and also to increase their total cost(Dubofsky, 2013). The main benefit for using this tool is that it allows them in creation of budgeting parameters and also in building a structure which they can use for purchases that they make with the various vendors. This helps the organization in in establishing a competitive advantage in the market. This is achieved by the way of implementing the steps which are needed to have a well-developed strategic management program. These steps may include taking considerations of the current strategy which the company had and apply a plan for increasing the internal communication and also focus correcting the performance gaps within the firm(Kent, 2018). Also the management team in the organization should ensure that the program is driven in a way that will be of benefit to them so as to have changes which will make the organization to be stronger and competitive in a market with high demand of supplies by its customers.
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References
Dubofsky, D. (2013). The Pricing of Forward and Futures Contracts. Financial Derivatives , 351-369. doi:10.1002/9781118266403.ch25
Kent, R. (2018). Tools for cost management. Cost Management in Plastics Processing , 327-351. doi:10.1016/b978-0-08-102269-6.50008-2
Ross, S. M. (2014). Pricing Contracts. An Elementary Introduction to Mathematical Finance , 73-91. doi:10.1017/cbo9780511921483.006
