Long-Term Supply Agreement Negotiation: Balancing Commitment and Flexibility

Three years ago, I signed a three-year supply agreement for corporate drinkware that locked us into fixed pricing and minimum annual volumes. It seemed like a smart move—we secured competitive rates and guaranteed capacity during peak seasons. Then COVID-19 hit, our office occupancy dropped 60%, and we were contractually obligated to purchase 12,000 bottles we didn't need. The penalty clauses for volume shortfalls cost us SGD 18,000 that year.

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