This method is used for large and long duration projects. The vendor is given a clear idea of what the consumption is going to be. The vendor puts up his outlet at the site itself and the buyer can draw from this site as much as he wants. The rates are already agreed upon. The decreased costs of the warehouse or stores maintenance is offset by the slightly higher price which the vendor charges for building his installation at the site. In this system, the lead time is zero and paperwork is negligible. The specialised services of the vendor are utilised to set up the facility and he takes responsibility for the same. The drawback of this system is the near monopolistic attitude which the vendor can get.
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