contracts

[Former Member]

hi friends,

can any one explain me, what is the difference b/n contracts and scheduling agreements.and pls give the details of types of contracts?

[Former Member]

Hi Haribabu,

Welcome to SDN...

<b>The difference between contracts and scheduling agreements:</b>

A schedule agreement contains details of a delivery schedule but a contract just contains quantity and price information and no details of specific delivery dates

Centrally agreed contracts and Scheduling agreements are not mutually exclusive.Thus you can enter in to a contract with a vendor centrally [ on behalf of many manufacturing units] and schedule the delivery for each of these manufacturing units.

The advantage of Centrally agreed contracts is:1] Due to sheer volume,you can attract the best of the vendors 2] Bulk volume quanity discount 3] Favourable terms like credit facility,faster deleivery,free shipment etc.4] If you are in a repetitive manufacturing scenerio,you can even plan zero lead time [ just in time]

The disadvanategs:1] you have to commit to a minimum offtake quantity 2] Some of the manufacturing units may be adversely affected due to delayed lead time,due to their geographical remoteness.This is why some companies deploy a mix of central and local procurement.In a decentralised procurement,you can take advantage of local factors.Besides,you need not to commit to a minimum offtake.3] Flexibility of entertaining new alternatives,new vendors add flavour to your innovative ideas.

The service levels are the most important determinents in going for a centralized /decentralized procurement.In a technology_imminent procurement,for example,the quality,support,upgradation-all play a crucial role.For example you wish to procure spares and services for a CNC machine.periodical service,upgradation,preventive maintanance are all vital here.In such scenerio,better opt for centralized contract;for you will have a better control and attract the best of the vendors.

Scheduling agreements is applicable where you wish to stagger your procurement over a period.Due to the staggered procurement,the lock in money and time in the inventory is minimal -this reduces your inventory carrying cost.The disadvantage is,if your supplier has a tag of an unpredicatble lead time,the delay in supplies will adversely affect your working capaital cycle there by leading to the loss of revenue and goodwill.

Thanks,

Vinay

[Former Member]

Hi,

A customer scheduling agreement is an outline agreement with the customer containing delivery quantities and dates. These are then entered as schedule lines in a delivery schedule. You can either create schedule lines when you create the scheduling agreement or you can create them later.

You fulfill a scheduling agreement by creating the deliveries in the schedule as they become due. You process deliveries for a scheduling agreement in exactly the same way as you process a normal delivery. After you have carried out the delivery, the system updates the Delivered quantity field in the scheduling agreement item with the delivery quantity. The following graphic shows the document flow for scheduling agreements.

Customer contracts are outline customer agreements that display when sales materials or services are sold within a certain time period.

The standard version of the SAP R/3 System contains the following categories of contracts:

Master Contracts

The master contract is a document in which you can group contracts together as lower level contracts. Thus, all the data that refers to other documents remains consistent. The master contract contains the general terms which apply for all lower level contracts.

Quantity Contracts

A quantity contract is an agreement that your customer will order a certain quantity of a product from you during a specified period. The contract contains basic quantity and price information, but does not specify delivery dates or quantities.

Value Contracts

A value contract is a contractual agreement with a customer that contains the materials and/or services that they may receive within a time period and up to a target value. A value contract can contain certain materials or a group of materials (product hierarchy, assortment module).

Service Contracts

A service contract is an agreement that contains the conditions for offering a certain service to the customer. You can manage rental and maintenance contracts in the standard version of the SAP R/3 System. A service contract contains validity dates, cancellation conditions, price agreements, and information on possible follow-up actions.

Hope it helps. Please reward if useful.

Thanks & Regards

Sadhu Kishore

[Former Member]

HI Hari,

Contract is a agreement between sold-to-party and you. It is of 2 types Value and quantity contract. every contract has a validity period. first you create a contract and then with ref to contract you will create a sales order using VA01 and these sales orders are called as Release orders. The reamining process goes on as normal sales cycle i.e., delivery, picking , pGi and BIlling. all the release orders released within the validity period of contract are updated in Contract and can be seen in the Document flow. If the value of contract increased system will issue a warning.

Contract using : VA41

Doc Types:

CQ Quantity Contract

GK Master Contract

MV Rental Contract

WK1 Value Contract- Gen.

WK2 Matl-rel. Value Cont

WV Service and Maint.

ZAWV Avaya - Ser and Mnt.

ZCQ Contract for RR

ZGK Contract for RR

ZRWV Ser and Mat. - Avaya

ZWV Service and Maint.

SCheduling Agreement is also a type of contract with Sol-to-party. But the difference is that in Scheduling agreement you will specify what is the material, quanty and when it is required. based on when it is required system will update the schedule lines and with ref to Schedule agreement you can directly create a delivery and No release order is required as in the contract only you know what material and what quantity and when to supply.

You create Schedule agreement using Tcode: VA31

Doc types:

LK Sched.Agreement ExAg

DS Scheduling Agreement

LZ Sched. Agr. w/ Rel.

LZM SchedAgrt w/Dly Ord.

LZS SA:Self-bill w/Inv.

REWARD IF IT HELPS

regards

Srini