Outline agreements are long-term arrangements with vendors to supply goods under specific conditions, providing better negotiation terms and streamlining procurement processes.
Outline agreements are long-term arrangements between a company and vendors to provide goods or services under specific terms and conditions over a period of time. They help establish better pricing and terms based on committed volumes or values.
Contracts are agreements where you commit to purchasing a specific quantity or value from a vendor over a defined period, obtaining better terms in return.
Commitment based on total quantity to be purchased (e.g., 50,000 pounds of coffee at $9/pound instead of regular $10/pound)
Commitment based on total value to be purchased (e.g., $500,000 worth of various goods with specific negotiated prices for each item)
Scheduling agreements are similar to contracts but include specific delivery schedules, eliminating the need to create purchase orders for each delivery.
Ideal for:
Feature | Quantity Contract | Value Contract |
---|---|---|
Basis of Agreement | Total quantity to be purchased | Total value to be purchased |
Commitment Example | 50,000 pounds of coffee | $500,000 worth of various items |
Pricing | Fixed price per unit based on quantity commitment | Different prices for different items based on value commitment |
Tracking in SAP | Tracks released quantity against target quantity | Tracks released value against target value |
Best for | Single item with high volume requirements | Multiple items from the same vendor |
To create a quantity contract in SAP:
To create a value contract in SAP:
There are two ways to create purchase orders referencing a contract:
Scheduling agreements are similar to contracts but include specific delivery schedules, eliminating the need to create purchase orders for each delivery.
To create a scheduling agreement in SAP:
With scheduling agreements, you don't need to create purchase orders for each delivery. Instead:
Scheduling agreements are particularly useful in the following scenarios:
Negotiate terms with vendor using Buyer's Negotiation Sheet
Create contract or scheduling agreement in SAP
Create POs with reference to contract or set delivery schedule
Receive goods against PO or scheduling agreement
Process vendor invoice with reference to PO or agreement
Before creating outline agreements, the purchasing manager prepares for negotiations:
Create the appropriate type of outline agreement in SAP:
Different ways to use the agreement depending on type:
Receive goods against the purchase order or scheduling agreement:
Process vendor invoices with reference to the purchase order or agreement:
Track the usage and performance of outline agreements:
Transaction Code | Description | Used For |
---|---|---|
ME31K | Create Contract | Creating quantity or value contracts |
ME32K | Change Contract | Modifying existing contracts |
ME33K | Display Contract | Viewing contract details and release documentation |
ME31L | Create Scheduling Agreement | Creating scheduling agreements |
ME32L | Change Scheduling Agreement | Modifying existing scheduling agreements |
ME33L | Display Scheduling Agreement | Viewing scheduling agreement details |
ME21N | Create Purchase Order | Creating POs with reference to contracts |
ME49 | Buyer's Negotiation Sheet | Generating purchasing history for negotiation |
MIGO | Goods Receipt | Receiving goods against POs or scheduling agreements |
MIRO | Enter Invoice | Processing vendor invoices |
To find existing contracts in SAP:
To monitor contract utilization:
SAP provides warnings to help users utilize outline agreements:
Better Pricing
Improved Terms
Time Savings
Volume Benefits
Reliable Supply
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