Scheduling agreements are similar to quantity contracts in that they state the target quantity of a material to be ordered from a vendor over a period of time, as well as the price.

You create a line item for each material to be procured. For each scheduling agreement item, you subsequently set up a rolling delivery schedule by creating a number of individual schedule lines.

In vendor scheduling, vendors receive a scheduling agreement release (comprising a header and a rolling delivery schedule made up of individual schedule lines) rather than discrete purchase or release orders. The delivery schedule specifies the quantities to be delivered, delivery dates, and possibly also delivery time slots, and may contain data on previous goods receipts. A delivery schedule may contain firm, semi-firm, or planned (forecast) delivery dates.

Procurement via scheduling agreements has several significant advantages:

• It streamlines paperwork and shortens processing times. One delivery schedule can replace many purchase orders or contract release orders.
• It promotes low inventories. You can specify the exact delivery times, allowing for minimum stock levels and just-in-time (JIT) deliveries.
• It shortens vendor lead times. Because the delivery schedule extends into the future, the vendor has less need to backlog orders, thus reducing the lead time for a delivery.
• It enables automatic generation of delivery schedule lines via the MRP system. (A precondition for this is that Purchasing must assign a scheduling agreement as a unique source of supply using the quota arrangement and source list mechanisms.)