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This Supplier Managed Inventory Agreement is designed for use in Hong Kong business relationships where a supplier takes responsibility for managing and maintaining inventory levels on behalf of a customer. The document is particularly relevant when businesses seek to optimize their supply chain operations and reduce inventory management costs while ensuring consistent stock availability. It includes detailed provisions covering inventory monitoring, ordering thresholds, replenishment procedures, reporting requirements, and service levels, all aligned with Hong Kong's legal framework and business practices. The agreement is commonly used in manufacturing, retail, and distribution sectors where efficient inventory management is crucial for business operations. It addresses key aspects such as risk allocation, title transfer, payment terms, and technology requirements while ensuring compliance with Hong Kong's commercial laws and regulations.

1. Parties: Identification of the supplier and customer, including full legal names and addresses

2. Background: Context of the agreement, existing relationship between parties, and purpose of the SMI arrangement

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and rules of interpretation

4. Appointment and Scope: Formal appointment of supplier and scope of inventory management services

5. Supplier Obligations: Key responsibilities of the supplier in managing inventory, including monitoring, replenishment, and reporting

6. Customer Obligations: Customer's responsibilities, including access to facilities, provision of forecasts, and cooperation requirements

7. Inventory Management Process: Detailed process for inventory monitoring, ordering, delivery, and stock maintenance

8. Title and Risk: When title passes to the customer and allocation of risk for the inventory

9. Price and Payment: Pricing structure, payment terms, and invoicing process

10. Service Levels: Performance metrics, KPIs, and measurement methodology

11. Reports and Reviews: Reporting requirements and periodic review meetings

12. Technology and Systems: Requirements for inventory management systems and technology

13. Confidentiality: Protection of confidential information and data

14. Term and Termination: Duration of agreement, renewal provisions, and termination rights

15. Liability and Indemnities: Allocation of liabilities and indemnification obligations

16. Force Majeure: Handling of events outside parties' reasonable control

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