What is outline agreements in SAP?

This post explains general background information on the “outline agreements” (which, outside the SAP System, may also be referred to as blanket, master, framework or umbrella agreements) that are used in the SAP MM Purchasing component. In basic Outline Agreement can be classified with 2 different types. Contract and Scheduling agreements.

Contract is nothing but where you can have contract with the vendor,and this might be predetermined quantity. For example whenever you need the material the you need to make PO reference to this contract and asking for the delivery of the material.

Scheduling agreement is nothing but long term purchase agreement, where you can keep issuing the delivery schedules whenever there is change in requirement or predetermined time intervals. We can classify the delivery schedule on hour or daily or weekly or monthly basis.

An outline agreement is a longer-term arrangement with the vendor regarding the supply of materials or the performance of services according to predetermined terms and conditions. In MM Purchasing, such agreements are subdivided into “contracts”and “scheduling agreements.” Outline agreements may be subject to a release (approval or clearance) procedure.

To Create Contract following the below steps:

Path to create Contract:
Logistics => Materials Management => Purchasing => Outline Agreement => Contract => Create
Transcation Code: ME31K

The Structure of an outline agreement

As in the case of other purchasing documents, an outline agreement consists of the following elements:

Document header:

• It contains information specific to the entire agreement.
• For example: the vendor information and header conditions are in the document header.

Items:

• Items that contain the information specific to the material or service. For example:
• statistics on ordering activities for the item
• quantity or price of the item
• pricing conditions, such as quantity discounts and surcharges

Texts in outline agreements

You can create your own texts from scratch in an agreement or change a text that has been suggested by the system. There are two kinds of agreement text: header text and item text. The texts are further subdivided into text types, for example, shipping and delivery instructions. The text type determines the print sequence on the document printout.

Outline agreement is nothing but long term purchasing agreement with vendor in containing certain terms and conditions regarding the raw material that is supplied by the vendor. Outline agreement which is valid up to certain period of time with some predefined quantity or value.

Also See: How to View Existing Purchasing Documents By Vendor?