Describing Scheduling Agreement Collaboration

For an overview of Scheduling Agreement, watch this video.

There are two types of scheduling agreements:

• With releases - LPA

  Each release is delivered to the Supplier according to the delivery schedule.

• Without releases - LP

  The entire agreement is delivered to the Supplier when the agreement is created.

The customers can benefit in a number of ways:

• One delivery schedule can replace many discrete Purchase Orders or contract release orders. This removes the need to approve each Purchase Order.
• Inventories can be reduced to a minimum. This allows companies to carry out manufacturing operations based on the Just-in-Time (JIT) principle.
• Reduced lead times facilitate smaller deliveries. This also allows the Supplier to plan and allocate resources and plan material purchases.

• Suppliers submit Order Confirmations and Advance Ship Notices for quantities in this zone (regardless of Scheduling Agreement type).
• Cancellation ramifications:

  Depending on the Scheduling Agreement Structure, the supplier is entitled to reimbursement for both material and production costs.

• Cancellation ramifications:

  Depending on the Scheduling Agreement Structure, the supplier is entitled to reimbursement for material costs only.

• Suppliers may aggregate demand from all Buyers and plan future purchases..
• Cancellation ramifications:

  None

• Scheduling Agreements do not have to include all three commitment zones.
• It is standard practice to send Scheduling Agreements on a weekly basis to revise the quantities in each commitment zone.
• As time passes, the quantities automatically move from one zone to the next, from the Forecast/Planning zone to the Trade-off Zone, and from the Trade-off Zone to the Firm Zone.