What Is Outline and Scheduling Agreement

Please give the difference between Purchase Order, Outline Agreement
and Scheduling Agreement.

PO is normal where you issue the PO to a vendor and expect the delivery.
The PO is termed completed when the vendor has delivered the PO quantity
or when you have preclosed the PO when the vendor has delivered partial
quantity and he has agreed not to send anymore with ref to the PO.

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 matl,
you need to make PO ref the contract asking for the delivery of the matl.
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.


Firm zone is the time frame in which you cannot change your orders (schedule lines) that you have ordered from a vendor in any way (Date change nor quantity change). Trade off zone is time frame within which you can make changes to your procurement proposals, these changes are acceptable from vendor's side. These time frames are agreed with the Vendor and then inserted for each scheduling agreement in 'Additional data'. For your example if you take firm zone 30 days and trade-off zone 60 days, the check starts from current day on which MRP runs. For exampe current day is 1st Oct, all the procurement proposals with delivery date within 30 days that is till 1st September are firm orders, which MRP will not change in any case (You can find such orders with * in front of them in MD04 list). Beyond 1st september they are in trade off zone, in which MRP can modify them. MRP types have no correlation with these zones.

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