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Purchasing Contract Processing

Purchasing Contract Processing in SAP Business ByDesign
SAP Business ByDesign purchasing contract processing allows you to create, modify, and approve purchasing contracts. A buyer can create a purchasing contract from a supplier quote during the contract negotiation process, or manually, without a preceding document.


Purchasing contracts are created for products that are frequently purchased from suppliers with whom a long-term relationship is anticipated. A contract may be defined for a best price or discount on the purchased products. It allows companies to reduce their operational costs and gain a greater control over spending and supplier performance by managing their contract renewals.

A released purchasing contract can be used as a source of supply for the procurement of products through a purchase order, or a supplier invoice, or in case of a purchase order with limit items, a contract is used in a goods and service receipt. The releases made against the contract by these documents are updated in the contract release history. For example, if a supplier invoice is created with reference to the contract, when the invoice is posted, the system updates the relevant contract release history with the supplier invoice details.

In this blog post we are going to focus on creating a purchase contract as a source of supply for the procurement of products through a purchase order.

In order to create a Purchasing Contract, ensure that Sourcing and Contracting are scoped into your project.

Creating a Purchasing Contract

  1. Go to Sourcing and Contracting, Common Tasks, New Contract.
  2. Enter Supplier, Contract Description, Currency, Validity dates, Purchasing Unit, Buyer Responsible, Company, Target Value, Incoterms, Incoterms Location, and Payment Terms.
  3. Click on items tab, click add row. Enter Product ID, target qty, target value (qty*cost/unit), and cost per unit.
  4. Click ‘check’ to see if there are any errors.  Click Save, and note Contract # created (86 in this case).
  5. When you’re ready to release it, click Release. Contract is now released, will automatically activate the item for sourcing (see line item status).

Making Contract Fixed Source of Supply

  1. To make this contract the fixed source of supply for this item (so that MRP generates supply requirement off of this contract), go to Sourcing and Contracting, Fixed Source of Supply.
  2. Click New, Fixed Source of Supply.
  3. Enter the Product ID and then click ‘Get Sources of Supply’. You can choose which source should be the fixed source of supply here. Select the contract, then click save.
  4. Note that if you don’t assign an item a fixed source of supply, the system default is to a contract then a list price, if there is one.  If there are multiple contracts released, the system may select one at random.
  5. Now that the source of supply is fixed, let’s run MRP to show the purchase contract as the source of supply against a purchase order. Go to Supply Planning, Products.
  6. Click All Products from the drop down and search for the product of choice or enter the product ID in the search field. Once the product is found, highlight the line and click Open.
  7. Click Run Planning then select Single BOM Level. Then click OK when prompted.
  8. Click Save to save the proposal so that when you click the proposal hyperlink you can view the proposal’s information. If you don’t click save and open the proposal, the proposal will be blank.
  9. Click on the Purchase Proposal ID hyperlink to view the proposal.


How to Turn Proposal into a PO

  1. To turn the proposal into a PO manually, go back to the supply planning screen, find the proposal, highlight it and click Release.
  2. Go to Purchase Requests and Orders work center, Purchase Requests.
  3. View ‘Open Tasks, find the request and click on Bundle and Order, by Supplier.
  4. Review the information and Click Order, or if there’s additional information needed in the PO, click Edit. Make necessary changes/modifications, then click Back to Bundle and Order. Next, click Order
  5. Order 969 has been created and sent to the supplier (if this functionality is enabled).
  6. Go back to the contract and view how the PO has impacted it. Go to Sourcing and Contracting, Contracts.
  7. Find the contract that you created. Highlight the contract line and click Edit. Go the items tab and view the released qty and value.
  8. The contract will remain open until the validity end date hits, or the qty/value has been met.
  9. For more helpful articles for SAP Business ByDesign, visit our Resources page.

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