Processing Contracts and Sourcing Rules in ERP 

Purpose

You can use this business process to process contracts and sourcing rules. In the Materials Management Purchasing component, a contract is a type of purchase agreement. Release orders (releases) are issued for materials or services as required during a certain overall timeframe. Contracts can take the following forms:

·        Quantity contracts

Use quantity contracts if the total quantity to be ordered during the validity period of the contract is known in advance. The contract is regarded as fulfilled when release orders totaling a given quantity have been issued.

·        Value contracts

Use value contracts if the total value of all release orders issued against the contract does not exceed a certain predefined value. The contract is regarded as fulfilled when release orders totaling a given value have been issued. You can also set up corporate buying contracts with your vendors. These are valid for all plants and company codes within a client.

Info records are master data that you use to store information about a vendor and a material at purchasing organization or plant level. You can create purchasing info records for different procurement types (standard, subcontracting, pipeline, or consignment).

The source list is used in the administration of sources of supply. It specifies the allowed (and disallowed) sources of a material for a certain plant within a predefined period – for example a fixed vendor.

A quota arrangement divides the total requirement of a material over a period among certain sources of supply by assigning a quota to each source. You can use source lists and quota arrangements to control which source will be assigned to a demand in the manual or automated source determination processes.

Pricing is used to describe the calculation of prices for external use (by customers or vendors) and costs for internal use, such as cost accounting. In this surrounding conditions represent a set of circumstances that apply when a price is calculated. This master data is stored in the form of condition records.

The system always carries out the message determination process when an RFQ, a purchase order, a contract, an outline agreement, a scheduling agreement release, or a standard delivery schedule is created. It means that the system searches a message record whose key combination matches up with the values from the relevant purchasing document.

Vendor master records contain important data about your vendors. You can also store data in the vendor master record that applies to certain specific organizational level (for example, company code, purchasing organization, plant) within your enterprise.

Process Flow

The following business process runs in SAP R/3 Enterprise:

...

       1.      Process vendor master data

       2.      Process message conditions

       3.      Process contracts in ERP

       4.      Process purchasing info records

       5.      Process source list

       6.      Process quota arrangement

       7.      Process conditions for procurement