Scheduling agreement in SAP MM

The scheduling agreement has similarities with a quantity contract: it states the target quantity of material to be ordered from a vendor over a period of time, and the price. For each material to be procured, you create a scheduling agreement item. For each scheduling agreement item in SAP, you subsequently set up a rolling delivery schedule by creating a number of individual schedule lines.

In vendor scheduling, vendors receive a scheduling agreement release (comprising a header and a rolling delivery schedule made up of individual schedule lines) rather than discrete purchase or release orders. (Note that in addition to standing for a method of ordering materials or services – as here, in the SAP System, the terms “release” and “releasing” may also be
applied to an internal purchasing document approval or clearance process.).

The delivery schedule specifies the quantities to be delivered, the delivery dates, and possibly also delivery time-spots, and may contain data on previous goods receipts. A delivery schedule may contain firm, semi-firm, or planned (forecast) delivery dates.

If you are using scheduling agreements, you can work with or without release documentation. Working with such type of documentation affords the advantage that you can display the valid scheduling agreement releases transmitted to a vendor over a certain period whenever necessary. If you work with scheduling agreements without release documentation, the current schedule is automatically outputted via the message (output) control program.

If you work with scheduling agreements with release documentation, internally you can make as many changes to the individual schedule lines as you wish. As soon as the schedule lines for a certain item have been finalized and the schedule is ready to be transmitted to the vendor, you
generate a scheduling agreement release. This triggers the transmission of the relevant data to the vendor. The information is recorded in the system, allowing you to verify at any time exactly when you sent which data to which vendor.

The key advantages of Scheduling Agreements

Procurement via scheduling agreements has several significant
advantages:

• The streamlines paperwork, shortens processing times –one delivery schedule can replace many purchase ordersor contract release orders.
• To promotes low inventories – you can specify the exact time to deliver, allowing for minimum stock levels and just in-time (JIT) deliveries.
• To shorter vendor lead times – because the delivery schedule extends into the future, the vendor has less need to backlog orders, thus reducing the lead time for a delivery.
• The automatic generation of delivery schedule lines via the MRP system (a precondition for this is that Purchasing must assign a scheduling agreement as a unique source of supply using the quota arrangement and source list mechanisms)

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What is Condition Technique in SAP?

To discuss the Condition technique in sap,

The condition technique is used to define pricing across applications. For example, it is used in the SAP SD (Sales & Distribution) module as well as in the SAP MM module. The goal of the condition technique is to calculate the effective price in a purchase order. Master conditions are simply conditions defined with the condition technique. While this section is not essential to your understanding of master conditions in purchase orders, it does provide useful
background information on the mechanism for determining pricing in Purchasing.

The Basic elements of the condition technique, The condition technique consists of four main elements:

• Condition types
• Condition tables
• Access sequences
• Calculation schema (pricing procedure)

These concepts are important for understanding how the system determines pricing in master conditions.

Condition type is a representation of a pricing element. Condition types exist for discounts, surcharges, and freight costs, for example. You use condition types to enter pricing in purchasing documents. You learned how to specify condition types when entering pricing in quotations and purchase orders, for example.

Condition table defines the combination of fields (the key) that identifies an individual condition record. The system stores the condition data you enter in the form of a condition record. For example, when you enter a vendor’s pricing in a purchasing info record with reference to a material master record, the key of the condition table includes the vendor number and the material number.

The actual pricing information – such as the gross price and any discounts – is stored in a condition record under this key.

Access sequence is a search strategy that the system uses to find condition records for a particular condition type. The access sequence determines the sequence in which the system searches condition records for a valid price.

Price calculation schema (pricing procedure), The calculation schema (also known as a pricing procedure, but the same mechanism can also be used to calculate tax amounts, periodend rebates, or costs, for example) is a group of condition types, defined in a particular sequence. It enables the system to determine that a particular set of condition types, in a specified sequence, apply in given circumstances. For example, the calculation schema determines which condition types apply to the gross price. The calculation schema also determines that the condition types for discounts are calculated in the effective price automatically.

With SAP MM Customizing, you can define price calculation schemas for specific vendors and/or purchasing organizations. The system searches for pricing data in condition records. The criteria it uses in the search depend on the keys in the condition table. The sequence of the search depends on the access sequence specified for the condition type. Which condition types are used in the search are defined in the calculation schema.

For example, suppose that you have just created an info record that specifies a 10% discount from the gross price. This condition is then stored in a condition record under the vendor and material number. When the material is ordered from the vendor in a PO, the system searches for the discount using the access sequence. The calculation schema ensures that the 10% discount is deducted from the gross price instead of the net price during the price calculation process.

The different ways of maintaining master conditions, you can maintain conditions in the following ways:

Prices, As this method you can list or maintain the conditions that determine the net price in a single info record or contract. You can enter the going market price for a material.

Discounts and surcharges, As this method, you can enter discounts or surcharges that apply to all info records or contracts meeting your pricing criteria.

Other condition types,If your company has defined its own condition types, access sequences, and condition tables, you can define master conditions that use these pricing elements.

Price changes, You can change pricing by a fixed amount globally.

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Material Ledger Closing in SAP Quick review

Movements for a material that is valuated with the material ledger are always carried out using the valuation price. If the price control indicator in the material master record is S, movements for the material are carried out with the standard price. If the price control indicator in the material master record is V, movements for the material are carried
out with the periodic unit price.

When postings such as invoice receipts occur, the prices can differ from the valuation price. These differences are collected and totaled by the material ledger and taken into account during material ledger closing.

The Before Material Ledger Closing:
The differences between the valuation price that occur when postings are made are collected the following categories:

GR/IR (goods receipt/invoice receipt):
Differences between actual values and the valuation price that may occur due to invoice receipts are collected here. Differences can occur between a goods receipt and an invoice receipt, because the invoice price is unknown at the time of goods receipt. The values from invoice receipts are posted to a GR/IR clearing account and the offsetting entry is made in the vendor account.

Value Variances:
Differences between actual values and the valuation price that can occur due the to the following are collected as,

1. The Goods receipts for the production order
2. Transfer postings
3. Goods issues
4. The Initial entries of inventory data with a specified amount
5. Deliveries free of charge
6. Inward movements from consignment inventory to the company’s own stock
7. Purchase order-related goods receipts

Values from goods receipts are posted to a GR/IR clearing account; the offsetting entry takes place in the material inventory account. If the the order price differs from the valuation price in the goods receipt, the system posts an offsetting entry to the material stock account and the price difference account (transaction key PRD). Such differences are totaled in the material ledger and indicated as to be closed.

With goods receipts that are not based on a purchase order item, price difference are posted directly to the price difference accounts.

Posting to a Prior Period:
Variances are collected here when a posting is made to the previous period using a valuation price other than the one in the current period.

At Material Ledger Closing:
At material ledger closing, the system takes the differences arising in the above categories into account, depending on the price control of the material. If you carry out material ledger closing for a single material (without saving), you can display which postings the material ledger would make and with what amounts if you were to save the material ledger closing at
this time.

Materials with S price control (standard price):
The system calculates for each material, the balance on the GR/IR clearing account and posts this amount to a price difference account (transaction key PRY). Differences that were collected in the Value variances category were posted to various price difference accounts before material ledger closing. These postings are not changed. 

Differences that were collected in the Posting to a prior period category were posted to the revaluation account before material ledger closing. These postings are not changed. The new periodic unit price is calculated for statistical information.

Materials with V price control (periodic unit price):
The system calculates the balance on the GR/IR clearing account and posts this amount to the material stock account in proportion to the current inventory quantity. The portion of the balances with which the material inventory cannot be debited are posted to a price difference account (transaction key PRY).

Differences that were collected in the Value variances category were posted to various price difference accounts before material ledger closing. These postings are offset in total against a separate price difference account at material ledger closing (transaction key PRY).

The system calculates the balance and posts this amount to the material stock account in proportion to the current inventory quantity. The portion of the balances with which the material inventory cannot be debited are posted to a price difference account (transaction key PRY).

Differences that were collected in the Posting to a prior period category were posted to the revaluation account before material ledger closing. The system calculates the balance on this account and posts this amount to the material stock account in proportion to the current inventory quantity.

The portion of the balances with which the material inventory cannot be debited are posted to a price difference account (transaction key PRY). The postings to the material stock account result in a new periodic unit price for the material, found by dividing the inventory value by the inventory quantity.

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SAP Vendor Evaluation System

What is SAP Vendor Evaluation System and how Integrated?

The vendor Evaluation component has been completely integrated into SAP MM Purchasing. The information such as delivery dates, prices, and quantities can be taken from purchase orders. The SAP Vendor Evaluation uses the various data from Quality Management, and this will be shows the result of incoming inspections or other way the quality audits of the system. It also accesses basic data in Materials
Management, which as goods receipt data from Inventory Management, and data from the Logistics Information System (LIS).

What is Vendor Evaluation?

The Vendor Evaluation in sap System which supports you in the optimization of your procurement processes in the case of both materials and services.

Procurement of Materials

The system helps you select sources of supply and facilitates the continual monitoring of existing supply relationships. It provides you with accurate information on prices, and terms of payment and delivery. By evaluating vendors, you can improve your enterprise’s competitiveness. You can quickly determine
and resolve any procurement problems that may arise on the basis of detailed information and in collaboration with the relevant vendors

Procurement of Services

You can check the reliability of the vendors from which you procure services on a plant by plant basis. You can determine whether the vendors perform the services within the specified timeframes and appraise the quality of the work carried out.

Scores and Criteria

The SAP Standard System offers you a scoring range from 1 to 100 points, which is used to measure the performance of your vendors on the basis of five main criteria. You can determine and compare the performance of your vendors by reference to their overall scores. The main criteria available in the standard system are:

1), Price
2), Quality
3),Delivery
4), General service/support

These four main criteria serve as a basis for the evaluation of vendors from whom you procure materials.

1), External service

This main criterion serves as a basis for the evaluation of vendors you employ as external service providers.

You can also define other or further main criteria, as required. You can assign different weights to the individual criteria. The vendor’s overall score is computed taking into account the weighted scores awarded for each of the main criteria. The Vendor Evaluation System ensures that evaluation of vendors
is objective, since all vendors are assessed according to uniform criteria and the scores are computed automatically.

In this way, subjective impressions and judgments can be largely avoided. To create a detailed evaluation, each main criterion can be divided into several subcriteria. The standard system provides you with certain subcriteria which suffice as a basis for evaluation, but you can also define your own additional subcriteria.

The scores for the subcriteria are calculated in three different ways.

Automatic, The scores are calculated by the system on the basis of existing data.

Semi-automatic, You enter individual scores for important materials, or for the quality and timeliness of a service performed, yourself. The system then calculates the higherlevel score from these.

Manual,You enter a blanket score for a subcriterion per vendor and you can decide yourself which of these methods you want to use.

Analyses

The results of sap vendor evaluation are displayed in the form of analyses. For example, you can generate ranking lists of the best vendors according to overall score or ranking lists for
specific materials. Changes to evaluations are recorded in logs, and you have the option of printing out evaluation sheets.

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SAP Tutorials

What is Master Conditions in SAP?

Master conditions in SAP are conditions that determine the effective price in the purchase order. They serve as a central repository of pricing for purchase orders. They are automatically included in the price calculation in the purchase order if the PO references a contract or an info record, or if it meets certain criteria defined in the extended conditions.

There are three types of master conditions in SAP,

Conditions in contracts – Conditions in a contract apply to all release orders issued against the contract.

Conditions in info records – Conditions in the info record apply to orders that specify the material and vendor contained in the info record.

Extended conditions – These are a flexible way of setting vendor pricing. Extended conditions are master conditions that are included in the price calculation in a purchase order only if the PO meets certain criteria. One way to use extended conditions would be to define a 10% discount on all orders placed with a specific vendor that are created by a certain purchasing organization. In this case, the vendor number and purchasing organization are the two criteria a PO must meet before the price in the PO can be calculated.

Extended conditions are more flexible than master conditions in info records or contracts because you can define which criteria they must meet before they are applied to a purchase order.
     
The documentation on outline agreements and purchasing info records shows how the conditions specified in outline agreements and purchasing info records, respectively,
influence the calculation of the effective price in the purchase order.

The next post will learn how to specify conditions that apply to the pricing of all orders for any material with a vendor, not only for a specific material or material group as is the case with outline agreements and info records.


What is Condition Technique in SAP?

To discuss the Condition technique in sap, The condition technique is used to define pricing across applications. For example, it is used in the SAP SD (Sales & Distribution) module as well as in the SAP MM module. The goal of the condition technique is to calculate the effective price in a purchase order. Master conditions are simply conditions defined with the condition technique. While this section is not essential to your understanding of master conditions in purchase orders, it does provide useful background information on the mechanism for determining pricing in Purchasing.

The Basic elements of the condition technique,The condition technique consists of four main elements:

• Condition types
• Condition tables
• Access sequences
• Calculation schema (pricing procedure)

These concepts are important for understanding how the system determines pricing in master conditions.

Condition type is a representation of a pricing element. Condition types exist for discounts, surcharges, and freight costs, for example. You use condition types to enter pricing in purchasing documents. You learned how to specify condition types when entering pricing in quotations and purchase orders, for example.

Condition table defines the combination of fields (the key) that identifies an individual condition record. The system stores the condition data you enter in the form of a condition record. For example, when you enter a vendor’s pricing in a purchasing info record with reference to a material master record, the key of the condition table includes the vendor number and the material number.

The actual pricing information – such as the gross price and any discounts – is stored in a condition record under this key.

Access sequence is a search strategy that the system uses to find condition records for a particular condition type. The access sequence determines the sequence in which the system searches condition records for a valid price.

Price calculation schema (pricing procedure), The calculation schema (also known as a pricing procedure, but the same mechanism can also be used to calculate tax amounts, periodend rebates, or costs, for example) is a group of condition types, defined in a particular sequence. It enables the system to determine that a particular set of condition types, in a specified sequence, apply in given circumstances. For example, the  calculation schema  determines Which condition
types apply to the gross price. The calculation schema also determines that the condition types for discounts are calculated in the effective price automatically.

With SAP MM Customizing, you can define price calculation schemas for specific vendors and/or purchasing organizations. The system searches for pricing data in condition records. The criteria it uses in the search depend on the keys in the condition table. The sequence of the search depends on the access sequence specified for the condition type. Which condition types are used in the search are defined in the calculation schema.

For example, suppose that you have just created an info record that specifies a 10% discount from the gross price. This

condition is then stored in a condition record under the vendor and material number. When the material is ordered from the vendor in a PO, the system searches for the discount using the access sequence. The calculation schema ensures that the 10% discount is deducted from the gross price instead of the net price during the price calculation process.
     
The different ways of maintaining master conditions, you can maintain conditions in the following ways:

Prices, As this method you can list or maintain the conditions that determine the net price in a single info record or contract. You can enter the going market price for a material.

Discounts and surcharges, As this method, you can enter discounts or surcharges that apply to all info records or contracts meeting your pricing criteria.

Other condition types, If your company has defined its own condition types, access sequences, and condition tables, you can define master conditions that use these pricing elements.

Price changes, You can change pricing by a fixed amount globally.

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sap online training

Master conditions in SAP are conditions that determine the effective price in the purchase order. They serve as a central repository of pricing for purchase orders. They are automatically included in the price calculation in the purchase order if the PO references a contract or an info record, or if it meets certain criteria defined in the extended conditions.
There are three types of master conditions in SAP:
Conditions in contracts – Conditions in a contract apply to all release orders issued against the contract.
Conditions in info records – Conditions in the info record apply to orders that specify the material and vendor contained in the info record.
Extended conditions – These are a flexible way of setting vendor pricing. Extended conditions are master conditions that are included in the price calculation in a purchase order only if the PO meets certain criteria. One way to use extended conditions would be to define a 10% discount on all orders placed with a specific vendor that are created by a certain purchasing organization. In this case, the vendor number and purchasing organization are the two criteria a PO must meet before the price in the PO can be calculated.

Extended conditions are more flexible than master conditions in info records or contracts because you can define which criteria they must meet before they are applied to a purchase order. The documentation on outline agreements and purchasing info records shows how the conditions specified in outline agreements and purchasing info records, respectively, influence the calculation of the effective price in the purchase order.
The next post will learn how to specify conditions that apply to the pricing of all orders for any material with a vendor, not only for a specific material or material group as is the case
with outline agreements and info records.
More details
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,

What is Contract in SAP?

A contract is a longer-term agreement with a vendor (one of the two forms of “outline agreement” in the SAP system) to supply a material or provide a service for a certain period of
time. A number of different terms may be used for this concept in purchasing literature, including “blanket order”, “blanket contract”, “systems contract” and “period contract”.
The contract in sap does not contain specific delivery dates or the individual delivery quantities. These are specified subsequently in release orders issued against the contract.

Contract types

When creating a contract, you can choose between the following contract types:

Value : The contract is regarded as fulfilled when release orders totaling a given value have been issued. Use this contract type in sap when the total value of all release orders should not exceed a certain amount.

Quantity: The contract is regarded as fulfilled when release orders totaling a given quantity
have been issued. Use this contract type when the total quantity to order over the duration of the contract is known.

Ways of creating contracts,

You can create a contract in one of the following ways:

1) Manually, You enter all the contract data manually.
2) By using the referencing technique, You can create a contract by referencing purchase requisitions RFQs/quotations other contracts

You can also mix the two methods: you can create a contract by referencing an existing one, and then change or enter some items manually.

The SD Master Contract Structure and How its Configured?

A Master contract consists of other contracts that are grouped as lower level contracts. Thus, that the master contract has the general data that is relevant for all the levels of contracts over the specific period of time. The main contracts are grouped in order to ensure that all the data in the lower level contracts remain consistent and that terms granted in the master
contract are copied into all lower level contracts.

Contracts are agreements between the two parties like Customer and Vendor to supply materials/services for a specific price between a fixed period of time. Most possible
types of contracts exists based on the types of contracts. For example, there are different contracts like maintenance contracts, service contracts, quantity contracts, value contracts
all of which we will be discussing over the course of this article.

The bottom line however remains the same – A contract is an agreement between the Customer and vendor to supply goods/materials/services of specific quantity/value for a specific price over a specified period. Let’s discuss the different types of contracts

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Master conditions in SAP

Master conditions in SAP are conditions that determine the effective price in the purchase order. They serve as a central repository of pricing for purchase orders. They are automatically included in the price calculation in the purchase order if the PO references a contract or an info record, or if it meets certain criteria defined in the extended conditions.

There are three types of master conditions in SAP:

Conditions in contracts – Conditions in a contract apply to all release orders issued against the contract.

Conditions in info records – Conditions in the info record apply to orders that specify the material and vendor contained in the info record.

Extended conditions – These are a flexible way of setting vendor pricing. Extended conditions are master conditions that are included in the price calculation in a purchase order only if the PO meets certain criteria. One way to use extended conditions would be to define a 10% discount on all orders placed with a specific vendor that are created by a certain purchasing organization. In this case, the vendor number and purchasing organization are the two criteria a PO must meet before the price in the PO can be calculated.

Extended conditions are more flexible than master conditions in info records or contracts because you can define which criteria they must meet before they are applied to a purchase order. The documentation on outline agreements and purchasing info records shows how the conditions specified in outline agreements and purchasing info records, respectively, influence the calculation of the effective price in the purchase order.

The next post will learn how to specify conditions that apply to the pricing of all orders for any material with a vendor, not only for a specific material or material group as is the case
with outline agreements and info records.

More Details: Sap training courses, Sap online training, Sap Online Tutorials, Sap training in Chennai, Sap training in Bangalore