Difference B/w Framework & Outline Agreement

[Former Member]

Hi Gurus

I am new to SAP MM, can anyone please tell me the difference b/w framework orders and outline orders/ agreement.

General examples of this regard will be very helpful.

Regards

Imran

[Former Member]

Hello Hussain

Kindly mention the link between the framework order with preventive maintenance.

I read in many threads that Blanket Purchase orders and framework orders are same but your description defines it separately.

Please clarify this and it will solve my problem

Regards

Imran

[Former Member]

Dear,

As you read, the Frame work (MM) order and Blanket Purchase order are same.

In general the Blanket POs are used for consumable materials such as Xerorx papers with a short text (does not need to have Master Record) with Item Category ' B' i.e.limit, where in the PO validity period as well as the limits are to be mentioned for the simplicity of procurement.The doc type is 'FO' (Framework Order).

The GR or Service Entry for the PO are not necessary in case of Blanket POs as well as one need not to mention the account assignment category during creation of PO it can be 'U'-unknown & can be changed at the time of IR.

Regards,

Syed Hussain.

[Former Member]

Is that mean the only difference b/w Framework order and Outline Agreement is:

We cannot make the GR of Framework orders because both have validity periods with quantity and value feature.

Regards

Imran

[Former Member]

Hi,

Normally you don't require a GR for those items of low value..

So you assign it to a cost center and do the IR through periodic or partial invoicing plan(MRIS).

Reg,

Deepak.

[pankaj_singh9]

Hi,

Yes the main difference is that GR is not required for Framework order whereas for Scheduling Agreement, GR is must.

And Scheduling Agreement is a Time-dependent Purchasing Document Type whereas any PO, it is time-independent purchasing document.

Scheduling Agreement is used for Materials to be procured whereas Framework Orders can not be used for procurement of materials. This can only be used for procurement of Services.

[Former Member]

Dear,

A Frame work order is :

Purchasing document used for the procurement of materials or external services. Instead of stipulating a specific delivery date, this type of purchase order has an extended validity period. Goods or services can be supplied or performed against it over this period without the need for any further written instruction to be issued by the buying entity.

Framework orders are defined with document type FO. They are used in accelerated procurement processes in connection with preventive maintenance (servicing) plans or invoicing plans, and for blanket purchase orders (purchase orders with specified limits).

A framework order covers multiple procurement transactions over a longer period in cases where the administrative costs of processing discrete POs would be disproportionately high.

An Outline agreement is :

Outline agreement also referred as Contract in SAP.

Outline Agreement can be of 2 types:- Contract and SA.

Contract is where you have a contract with the vendor,may be a for a predetermined quantity or predefined value. So everytime you need the material, you need to make PO ref the contract asking for the delivery of the material. In such instance when PO is ref with contract its called contract release orders or call off orders.

Scheduling agreement is a long term purchase agreement, where you will keep issuing the delivery schedules whenever there is a change in requirement or at predetermined time intervals. The delivery schedule can be on hour/daily/weekly/monthly basis. But it will contain different zones viz. firm/tradeoff/Forecast. Firm zone schedules are confirmed requirement and need to be taken by ordered party. Tradeoff zone requirement is to purchase the raw materails and ordering party is liable to pay raw material cost, in case of requirement cancellation. Forecast zone requirement is to help the vendor to plan his requirements.

SA is also an agreement with the vendor for the supply of matl, may be a quanity or value. The delivery dates will be maintained in ME38 ref the SA which are called delivery schedules.So you can maintain the delivery schedule and communicate the vendor on Forecase basis or JIT basis. And when you need some more matl then will only create SA deliveries using ME38. SA could be of 2 types:- without release documentation-system will transmit the delivery info to the vendor once you save the document.

With release documentation- after creating the delivery schedules you need to create SA release using ME84.

The main difference between contract and SA is volume of docs generated would be higher in contract since everytime you need to make a PO ref the contract and its time consuming, whereas SA can be integrated with MRP such that it automatically creates delivery schedules during MRP run provided if there is a requirement to the matl.

Regards,

Syed Hussain.

[Former Member]

outline agrement are contracts with validity and broadly are of two types. value contract--value of contract is fixed. any item can be procured with in that limit.

second is qty contract- each item to be procured has fixed qty. upto that qty that item can be ordered after realease of delivery orders.

framework order is used for low value items where gr is not required.also has validity.

regards

[Former Member]

Hi,

Frame work orders are those ment for long time procurement involved in procuring office supplies and low value items.These are used when you dont need a GR and settle it periodically or partially.

Outline agreements are those the commitment of certain vendors over a period of time..And moreover its the document referred while you create a PO over the period of validity..

Reg,

Deepak.