17 September, 2018
• It is a long time agreement between a Purchasing Organization and a Vendor who is supplying the material over a certain time frame on the basis of pre-defined terms and conditions. • It is a legal document between Vendor and Purchasing Organization • There are two types of Outline Agreements.
1. Contracts. (It is also called release order/call off order) 2. Scheduling Agreements (SA).
T codes Reports / List of Creation - ME31K Contracts for Material. - ME3M Change - ME32K Contracts for Vendor. - ME3L Display - ME33K
• It is used for mass production Industries or where material consumption is very high. • In Contract company/Purchasing organization assures the vendor about the Quantity or Value. • However you have to release Purchase order for every supply. • Contracts are Outline Agreements. • They do not contain details of delivery dates for each item. • Contract contains control data for billing purpose, for creation of budget billing plans and for contract accounts receivable & payables • A contract created by one plant can be referred by purchase organization of another plant. However the referring purchasing organization is the Standard Purchasing Organization for the other plant.
How it works?
• To inform Vendors of which quantities you need for which date, you enter a contract release order for contract. • A release order is a PO that references a contract. • If the Info Record with conditions exists for the Material and Vendor, the system automatically the system automatically suggest the net price according to those conditions when you create the Contract item. • You can create a contract manually. When you do so, you can reference other contracts, purchase requisitions, RFQs & Quotations. • One thing you define in Contract Header is the Validity period
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1. Quantity Contract (MK):
The Total Quantity is assured to vendor and the supply of the material based on the Material Contract individual release order issued against this contract. [Definition: A long-term purchase agreement for purchasing the quantity of the goods is agreed.]
2. Value Contract (WK)
Here the Total Value is assured. [Definition: A long-term purchase agreement for purchasing of goods up to certain total value agreed.]
3. Distributed Contract (DC):
These are centrally agreed contracts that are more available to other R/3 systems for issuing Release orders against them.
• For each item in Quantity Contract, you define the target Quantity and PO Conditions.
o Once the Quantities are over system will display error. o For creation of Value Contract choose the agreement type as ‘WK’
• Hence the ‘Target Value’ will appear instead of ‘Target quantity’ in the screen.
Out-line Agreements (OA) - Contract – IMG Settings
Define Number Ranges (OMH6) Define Document Types (SPRO) Release Procedure for Contracts
- Edit Characteristics (CT04) - Edit Classes (CL02) - Define Release Procedure for Contracts (SPRO)
- Check Release Strategies (OMGSCK)
T codes Reports Creation - ME31L ME3M Change - ME32L ME3L Display - ME33L for delivery schedules - ME38
• It is a long-term purchase agreement with a vendor for supply of materials according to the predetermined conditions. • There is no Purchase Order required. So no release order for Schedule Agreement. • Details of the Delivery dates and quantities for supply of material will be intimated to the Vendor in the form of Schedules. • There is no Assurance of Quantity or Value will be given to the vendor in Schedule Agreements. • Delivery Schedule lines can be created with or with out reference to the Purchase Requisition. • Schedule lines can also be generated automatically using MRP system. Such delivery lines do not constitute separate document, but from the part of the Schedule Agreement. • Procurements using Schedule Agreements there fore help us to reduce the volume of the document in use. • The basic idea of Schedule Agreement is to reduce the office inventory.
We can create the Schedule Agreements with respect to
- Purchase Requisition - Quotation - Out line Agreement
Type of Schedule Agreements:
1. Schedule Agreement - agreement type ‘L’ (Manual) 2. Schedule Agreement – Agreement type ‘LPA’ (Automatic)
Out Line agreements- Schedule Agreements (SA) – IMG settings
Define Number Ranges (OMH6) Define Document Types (SPRO) Release Procedure for Scheduling Agreements
- Edit Characteristics (CT04) - Edit Classes (CL02) - Define Release Procedure for Scheduling Agreements (SPRO) - Check Release Strategies (OMGSCK)
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