Diff b/w PO , Schduling agreement and Contract

[Former Member]

Hi Sap Gurus,

Please tell me the diff b/w PO and Scheduling agreements and Contract.Why i can't use PO only instead of other two. Suppose i am creating Contract for 1 year but i can create PO with del date for 1 year and monitor the delivery dates

Please any body explain in detail with examples. Thanks in advance

Regards,

Ravi

[Former Member · Accepted solution]

Dear Ravi,

Basic purpose of all these three document is same however it is used based on the scenarios.

1. Purchase Order: A purchase order is a formal request or instruction from a purchasing organization to a vendor or a plant to supply or provide a certain quantity of goods or services at or by a certain point in time.This cannot be generated through automatic requirement i.e. through MRP

2 Contract : A contract is a type of outline purchase agreement against which release orders (releases) can be issued for agreed materials or services as and when required during a certain overall time-frame.An enterprise with a central purchasing department (usually a reference purchasing organization) buying materials for several plants can agree a high-level contract which may apply to the entire corporate group and which can be utilized by other purchasing organizations within the enterprise. The use of such centrally agreed contracts usually results in more favorable conditions of purchase.

These can be taken in planning burt contract release orders are to be made

3.Scheduling agreement:A scheduling agreement is a form of outline purchase agreement under which materials are procured on predetermined dates within a certain time period.

We can release JIT or Forecast schedules through scheduling agreement & also can be generated automatically through MRP .

Advantage of Scheduling agreement:

1) Reduce processing time -(PO /Contracts Rel order replaced)

2) Schedule line is a part of agreement hence less paper work

3) low warehouse stock & better Inventory management(As JIT possible)

4) Since long term commitment better Negotiation possible commercially.

I hope this will give you brief outline of three definitions & if useful reward points,

Vivek Maitra

[Former Member]

You r right.

You can use po

But in some cases if we go for contract with vendor we may get material at rt time as well we mwy get discount.

Means we know that what ever may be the market availability we will get material.

In SA , we will get material as per schedule date means at right time right date

It u still have problem revert back or close the thread.

[Former Member]

In scheduling agreement you can maintain delivery schedule.

Scheduling agreement is related to MRP but PO and contract is not linked.