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RE:[sap-log-mm] When to use contracts vs. purchase orders

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Posted by ha_tran (Senior SAP Supply Chain Business Analyst)
on Sep 2 at 7:10 PM 		Mark this reply as helpfulMark as helpful
Hi,

The fundamental difference is that while purchase order represents for a particular "business transaction" between your company and the third party supplier, contract/outline agreement is used to register the long-term agreement between your company and the vendor for the supplies of particular materials and/or render of services in accordance with the pre-defined terms and conditions. In most companies where such long-term agreements exist, both contracts and purchase orders are maintained in SAP. In this particular case, purchase order (or "release order" - in standard SAP terminology) is called off as soon as a partial delivery is required.

Cheers,
HT

---------------Original Message---------------
From: MGillespie
Sent: Thursday, September 02, 2010 3:54 PM
Subject: When to use contracts vs. purchase orders

> My company is in the midst of implementing SAP. In our old ERP system, almost of of our purchase were treated as contracts because of the way that system worked. What I would like to know is what are the basic criteria for deciding when you should use an Outline Agreement, a Scheduling Agreement or just a simple Purchase Order?

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ha_tran
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