Outline Agreement in SAP MM: A Comprehensive Overview
In any business, it`s important to have a clear understanding of the terms and conditions of a contract between parties. This is where an outline agreement comes in. In SAP MM (Materials Management), an outline agreement is a type of purchasing document that lays down the terms and conditions of a long-term procurement arrangement between a vendor and a business.
In this article, we will take a closer look at the outline agreement in SAP MM, its types, and the steps involved in creating and maintaining it.
What is an Outline Agreement in SAP MM?
An outline agreement is a procurement document that outlines the terms and conditions between a vendor and a business for the supply of goods or services over a specified period. It is a long-term contract that allows businesses to procure goods and services without the need for multiple purchase orders.
Types of Outline Agreements in SAP MM
There are three types of outline agreements in SAP MM:
1. Quantity Contract – This agreement outlines the terms and conditions for the supply of a specified quantity of goods or services over a specified period.
2. Value Contract – This agreement outlines the terms and conditions for the supply of goods or services up to a specified value.
3. Scheduling Agreement – This agreement outlines the terms and conditions for the supply of goods or services according to a specified schedule.
Steps Involved in Creating an Outline Agreement in SAP MM
Creating an outline agreement in SAP MM involves the following steps:
1. Create an Outline Agreement – Go to the MM module and select the appropriate outline agreement type, such as quantity, value, or scheduling agreement.
2. Enter General Data – Enter the vendor and company data along with other general data such as the agreement start date, end date, validity period, and currency used for the agreement.
3. Enter Conditions – Enter the terms and conditions for the agreement, such as pricing, payment terms, delivery terms, and other relevant information.
4. Create Item Details – Enter the item details such as the material or service description, quantity, unit of measure, and price.
5. Release the Outline Agreement – Once all the necessary details are entered, release the outline agreement for processing.
Benefits of Outline Agreements in SAP MM
Some of the benefits of using outline agreements in SAP MM include:
1. Increased Efficiency – Outline agreements allow businesses to procure goods and services efficiently without the need to create multiple purchase orders.
2. Better Control – By entering the terms and conditions of the agreement, businesses have better control over the procurement process and can ensure compliance with procurement policies.
3. Cost Savings – By entering into a long-term procurement agreement, businesses can negotiate better pricing and terms, which can result in cost savings.
Conclusion
In conclusion, an outline agreement is an essential component of procurement in SAP MM. It provides a clear understanding of the terms and conditions between a vendor and a business for the supply of goods and services over a specified period. By following the steps outlined in this article, businesses can create and maintain outline agreements to streamline their procurement process and realize cost savings.