Outline Agreement

Outline Agreement

Vendor selection is an important process in procurement cycle. Vendors can be selected by quotation process. Once vendors are short-listed by organization, it enters into agreement with a certain vendor to supply certain items with certain conditions and typically when agreement is reached a formal contract is signed with the vendor. So, outline agreement is a long term purchasing agreement with vendor. The key points about outline agreement are as follows:

• Outline agreement is a long term purchasing agreement with vendor containing terms and conditions regarding the material that is supplied by vendor.
• Outline agreement are valid up to certain period of time and cover a certain predefined quantity or value.

Outline agreement is of following two types.

• Contract
• Scheduling Agreement

Contract

Contract is a long term outline agreement between vendor and ordering party over predefined material or services over certain framework of time. There are two types of contract:

Quantity Contract: In this type of contract overall value is specified in terms of total quantity of material to be supplied by vendor.

Value Contract: In this type of contract overall value is specified in terms of total amount to be paid for that material to the vendor.

Contract can be created by following the below steps:

Path to create Contract:

Logistics => Materials Management => Purchasing => Outline Agreement => Contract => Create

TCode: ME31K

On SAP Menu screen select Create execute icon by following the above path.

Provide name of vendor, type of contract, purchasing organization, purchasing group and plant along with agreement date.

Fill in all necessary details like agreement validity start date, end date, pay terms(i.e terms of payment).

Provide material number along with target quantity if quantity contract or net price if value contract and material group. Click on save. A new Contract will be created.

Scheduling Agreement

Scheduling agreement is a long term outline agreement between vendor and ordering party over a predefined material or service which are procured on predetermined dates over a framework of time. Scheduling agreement can be created by following two steps:

• Creating scheduling agreement
• Maintain scheduling lines for the agreement

Creating scheduling agreement

Scheduling agreement can be created by following the below steps.

Path to create Scheduling Agreement:

Logistics => Materials Management => Purchasing => Outline Agreement => Scheduling Agreement => Create => Vendor Known

TCode: ME31L

On SAP Menu screen select Create execute icon by following the above step.

Provide name of vendor, agreement type(LP for scheduling agreement), purchasing organization, purchasing group, plant along with agreement date.

Fill in all necessary details like agreement validity start date, end date, pay-terms(i.e terms of payment).

Provide material number along with target quantity, net price, currency and material group. Click on save. A new Scheduling Agreement will be created.

Maintain scheduling lines for the agreement

Schedule lines can be maintained for scheduling agreement by following the below steps.

Path to maintain Schedule Lines:

Logistics => Materials Management => Purchasing => Outline Agreement => Scheduling Agreement => Delivery Schedule => Maintain

On SAP Menu screen select Maintain execute icon by following the above step.

Provide the scheduling agreement number.

Select line item. Go to Item tab. Select delivery Schedule.

Provide delivery schedule date, target quantity. Click on save. Schedule lines are now maintained for the scheduling agreement.

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