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Quantity contract

Definition
A quantity contract is an agreement that your customer will order a certain quantity of a product
from you during a specified period. The contract contains basic quantity and price information
but no schedule of specific delivery dates and quantities.(If the customer provides delivery
information, you can create a scheduling agreement instead).
The customer fulfills a contract by placing sales orders against it. These sales orders are known
as release orders (or call-offs).
You can specify in the contract which other partners in addition to the sold-to party are
authorized to release against the contract. For further information, see Authorized Partners for
Release Orders.
When you create a release order, you refer to the relevant contract, and the system
automatically updates the released quantities in the contract. Otherwise, processing a release
order is just like processing a standard sales order.


Creating Quantity Contracts
To create a quantity agreement, proceed as follows:
1. In the initial screen, choose Logistics Sales and distribution Sales.
2. Choose Contract Create.
3. In the Contract type field, choose Quantity contract, and enter the required
organizational data.
The values for sales organization, for distribution channel and the division are usually
proposed from user-defined parameters. Entries for the sales office and the sales group
are optional.
4. Choose Enter.
5. Enter the following data:
Customer number of the sold-to party in the Sold-to party field.
Customer purchase order number for this document
Validity period in the Valid from and Valid to fields
Material numbers
Target quantities for the materials
The target quantity is the projected total quantity for the material in the contract.
6. Choose Enter.
If you want to enter further data for the header or items, select the corresponding menu
entry. If you wish to change data for an item, select the item before you choose the
menu entry.
7. Enter all the necessary data.
8. Save your document.

See also:
Creating Release Orders for Quantity Contracts

Value Contracts
Definition
A value contract is a legal agreement with a customer that contains the materials and services
that the customer receives within a specified time period, and for a value up to a specified target
value. A value contract can contain certain materials or a group of materials (product hierarchy,
assortment module).
Use
The value contract contains rules that specify the kind of release orders that are allowed. You
can define restrictions on customers and materials. In addition to the sold-to party, you can
specify the other partners who are authorized to release against the contract by assigning the
partner function AA to them. You can also define additional ship-to parties for release orders
using the partner function AW. For further information, see Authorized Partners for Release
Orders.
In the value contract you can refer to lists of materials that have already been defined. This list
could be a product hierarchy or a assortment module (for more information, see Assortment
Module for Value Contracts). However you also create a value contract for only one material (for
example, a configurable material).
To fulfill both these requirements, two types of value contracts are offered in the standard
system:
Value contract type WK 1
You can specify a product hierarchy or a assortment module for value contracts with
contract type WK 1. The system will always propose this type of contract, if you want to
create a contract for several materials or a certain group of materials. All the materials in
the relevant assortment, or belonging to the specified product hierarchy are then
relevant for release.
Value contract type WK 2 (material-related)
You can create contracts for one material (usually configurable) with this type of value
contract. A software company is an example of where this kind of contract is often used.
There, a contract for the value of $500,000 is made with the customer for one specific
software product.
You can also agree on the length of the contract for this type. The contract duration can
be agreed at item level and can be different from the contract duration specified at
header level.
You can store special price agreements for the value contract. These price agreements can
then be used at any level. For example, a value contract can contain prices for individual
materials, or discounts that are valid for every released material.
Release Orders
The customer fulfills a contract by issuing orders against the contract. The contract does not
contain any exact dates for deliveries, so you need to create a sales order to release against a
value contract.
When a release order is created for the contract, the system automatically updates the released
values in the contract. The release order value is calculated from the total of the open order and
delivery values, plus the value that has already been billed to the value contract.
The system also updates the released value for subsequent changes (for example, overdelivery
of contract release, price changes in the billing document, partial deliveries, returns, rejection of
order items, cancellation or reversal of orders, deliveries or billing documents).
You can create a release order in any currency. The system automatically converts this
currency into the one agreed upon in the value contract on the pricing date for the contract
release order.
Billing
You can bill the value contract either directly, or per release order. If you want to bill the value
contract directly, you have to create a billing plan for the value contract. This enables you to bill
the value contract for several dates, and for partial values. If you change the value of an item in
the value contract, the system automatically adjusts the open billing dates so that the complete
value is billed.
Document Flow
You can use the document flow to display all the subsequent documents that arise from a value
contract (for example, sales orders, deliveries, billing documents).
Completing value contracts
A value contract is complete when you enter a reason for rejection. You can define how the
system reacts when you have reached the target value in Customizing for value contracts (item
category).(You define the following reactions: a warning, an error message or no reaction.)
Constraints
A value contract that has not been completely released is not automatically billed. When you
work with the billing plan which has dates that have already been billed and you then reduce the
target value in the value contract, the system does not check whether too much has been billed.
In this case, you have to create a credit memo for the difference.
Quantity and value contract items cannot be processed together in one document.

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