What is Scheduling agreement in SAP MM?

The scheduling agreement has similarities with a quantity contract: it states the target quantity of a 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.

Scheduling agreement in SAP MM

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 orders or 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).

Also See: SAP SD: Scheduling Agreement Vs Contract

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