Procurement Contract

Covers the creation and maintenance of long term contracts with vendors, and includes the creation of Purchase Orders against the contract (call-off orders) and the ongoing monitoring of the contract.

Contracts are agreements with a vendor to supply materials or services under negotiated conditions, within a certain period. Contracts are differentiated as follows:

• Quantity contracts: a contract in which a company orders a certain quantity of a product during a specified period
• Value contracts: a contract in which the purchase of goods or services up to a total value is agreed

In source determination, contracts replace the purchasing info records and can be assigned in the source list as the fixed source for MRP. The purchase requisition and purchase order is created after the contract, if they do not yet exist. Target groups are purchasing managers as well as buyers.

This scenario consists of the following steps:

• Creating a basic agreement (quantity contract)
• Creating a purchase requisition
• Assigning requisition and creating purchase order
• Approval of purchase orders
• Contract monitoring
• Goods receipt
• Invoice receipt by line item
• Outgoing payment

• Upon purchase order creation with reference to a contract, the contract data is used and purchasing info records are ignored
• Reduced procurement costs
• Securing of supplies
• Transparency of supplier agreements