This is an agreement between two parties that normally shows a relationship to work closely together. Sometimes there is a PSA (Preferred Service Agreement) contract in place and sometimes not. This list can be reassessed after a year or after an agreed time by both parties.

The supplier is incentivised to keep up a high quality of service to the company, and so the company benefits greatly by having great service from their suppliers. It is beneficial to the supplier as it means continues work and it is beneficial to the company to have a reliable supplier. The supplier also sometimes offers discounted rates to the company.

No, not always. But it is advisable to have a PSA. As the Preferred Supplier Agreement will have terms built into the contract which protects both parties. It also indicates when the agreement will come to an end and when the relationship or agreement will be reassessed. This creates a great opportunity for other suppliers to pitch for the business of the company.