Unit of competency details

SIRRMRM007 - Negotiate and establish supply arrangements (Release 1)


Usage recommendation:
Release Status:
ReleaseRelease date
1 1 (this release) 16/Aug/2017

Companion volumes:


SchemeCodeClassification value
ASCED Module/Unit of Competency Field of Education Identifier 089901 Purchasing, Warehousing And Distribution  

Classification history

SchemeCodeClassification valueStart dateEnd date
ASCED Module/Unit of Competency Field of Education Identifier 089901 Purchasing, Warehousing And Distribution  12/Oct/2017 
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Unit Of competency

Modification History

Not applicable.


This unit describes the performance outcomes, skills and knowledge required to negotiate and formalise agreements with suppliers for the supply of merchandise. It requires the ability to evaluate suppliers, both new and existing, to determine their suitability and establish agreed terms of supply.

This unit applies to senior personnel working in a diverse range of sectors and business contexts. They operate with independence and are responsible for making a range of operational business decisions.

No occupational licensing, certification or specific legislative requirements apply to this unit at the time of publication.

Pre-requisite Unit


Competency Field

Merchandise Management

Unit Sector


Elements and Performance Criteria



Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Evaluate suppliers.

1.1. Access and review relevant merchandise planning documents to determine supply needs and seek any required clarification.

1.2. Develop supplier selection criteria based on organisational supply needs and expectations.

1.3. Access and review supplier evaluation data to assess existing suppliers and determine ability to meet ongoing supply needs.

1.4. Identify and assess potential new suppliers against supplier selection criteria and determine ability to meet supply needs.

1.5. Assess ethical and sustainability performance of suppliers.

1.6. Shortlist preferred suppliers that meet supplier selection criteria and supply needs.

2. Conduct supplier negotiations.

2.1. Prepare for supplier negotiations and determine negotiables, non-negotiables and desired outcomes.

2.2. Communicate purchase and supply specifications to suppliers and ensure mutual understanding.

2.3. Negotiate supplier pricing, trading terms and delivery with preferred suppliers and select suppliers based on supply requirements.

2.4. Negotiate and agree on promotional activity with supplier.

2.5. Develop supplier performance indicators and evaluation criteria and gain supplier agreement.

2.6. Ensure consistent and agreed understanding of negotiation outcomes.

2.7. Ensure negotiations are conducted in a professional manner in the relevant cultural context.

3. Formalise supplier agreements.

3.1. Draft supplier contracts in line with organisational policies and procedures and legal requirements.

3.2. Seek advice from relevant personnel to confirm the legality and validity of draft contracts.

3.3. Finalise supplier contracts and obtain approval as required.

3.4. Distribute contracts to suppliers and resolve discrepancies or disagreements to ensure satisfaction of all parties.

3.5. Obtain signed copies of supplier contracts and store according to organisational policies and procedures.

4. Monitor supplier performance.

4.1. Review supplier performance against performance indicators and confirm contractual obligations are being met.

4.2. Take prompt corrective action in consultation with supplier where potential or actual problems occur.

4.3. Make any required amendments to contracts.

4.4. Evaluate supplier performance against performance indicators and document in supplier performance report.

4.5. Continuously review alternative options for supply to enhance product supply and improve ethics and sustainability in supply chain.

Foundation Skills

Foundation skills essential to performance in this unit, but not explicit in the performance criteria, are listed here, along with a brief context statement.



Reading skills to:

  • interpret supplier agreements, conditions and contracts.

Problem-solving skills to:

  • anticipate and respond to challenges in the negotiation process.

Technology skills to:

  • document and communicate information using digital technologies and systems.

Unit Mapping Information

No equivalent unit.


Companion Volume Implemenation Guide - https://vetnet.gov.au/Pages/TrainingDocs.aspx?q=ca051b1b-5101-4ec2-ac1c-49699303188d


Assessment requirements

Modification History

Not applicable.

Performance Evidence

Evidence of the ability to complete tasks outlined in elements and performance criteria of this unit in the context of the job role, and:

  • develop supplier selection criteria for the supply of merchandise and use these criteria to document an evaluation of three different suppliers
  • conduct negotiations with one supplier to agree on supply arrangements:
  • supply specifications
  • cost
  • logistics
  • performance indicators
  • document the above agreements in a supplier contract and ensure:
  • compliance with legal and trading requirements
  • alignment with organisational policies and procedures related to supplier engagement
  • evaluate the performance of one supplier against performance indicators and prepare a supplier performance report.

Knowledge Evidence

Demonstrated knowledge required to complete the tasks outlined in the elements and performance criteria of this unit:

  • key aspects of supplier evaluation criteria
  • key aspects of legal and ethical compliance requirements as related to the supply of merchandise:
  • Trade Practices Act
  • ethical sourcing
  • environmental sustainability
  • contract law:
  • terms and obligations of contract
  • methods of contractual agreement
  • exclusion clauses
  • dispute resolution
  • termination of contracts
  • other legal requirements that impact negotiations and agreements in the relevant industry sector including consumer protection
  • supply chain and logistic considerations as related to supply arrangements:
  • customers
  • duties
  • taxes
  • freight
  • third-party arrangements
  • processes
  • factory locations and access
  • critical path and its role in supply arrangements:
  • launch and promotional dates
  • sample due dates
  • supplier holidays
  • freight timing
  • order due date
  • strategies and techniques for use in supplier negotiations
  • key aspects of supplier negotiations:
  • supply specifications
  • cost
  • logistics
  • performance indicators
  • supplier contract formats and inclusions
  • promotional-based supply arrangements in the retail industry
  • performance indicators for supplier evaluation:
  • level of service and responsiveness
  • reputation
  • financials
  • product quality
  • speed
  • delivery in-full and on-time
  • accuracy
  • ethical practices
  • techniques for measuring supplier performance against performance indicators.

Assessment Conditions

Skills must be demonstrated in a retail environment. This can be:

  • an industry workplace
  • a simulated industry environment.

Assessment must ensure access to:

  • relevant documentation:
  • organisational policies and procedures related to supplier engagement
  • sources of supplier information
  • supplier contract templates
  • suppliers with whom the individual can interact. These can be:
  • suppliers in an industry workplace, or
  • suppliers who participate in role plays or simulated activities set up for the purpose of assessment, in a simulated industry environment.

Assessors must satisfy the Standards for Registered Training Organisations’ requirements for assessors, and:

  • have worked in the retail industry for at least three years where they have applied the skills and knowledge within this unit of competency.


Companion Volume Implemenation Guide - https://vetnet.gov.au/Pages/TrainingDocs.aspx?q=ca051b1b-5101-4ec2-ac1c-49699303188d