Describing Scheduling Agreement Collaboration
After completing this lesson, you will be able to:
- Define Scheduling Agreement Collaboration
- Explain the business case for Scheduling Agreement Collaboration
- Define a typical process flow for Scheduling Agreement Collaboration (including commitment zones)
- Compare Scheduling Agreements with releases and without releases
Scheduling Agreement Overview
What is a Scheduling Agreement?
For an overview of Scheduling Agreement, watch this video.
Types of Scheduling Agreements
There are two types of scheduling agreements:
Scheduling Agreement Business Case
- Scheduling Agreements assist Suppliers with planning
- Pricing and terms agreed for the time period (horizon)
- Quantity covers the needs for the horizon:
- Short-term or immediate needs are ordered on an ASAP basis in the firm zone
- Mid- to long-term needs are ordered in the trade-off or forecast zone
Scheduling Agreement Benefits for Customers
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.
Scheduling Agreement Time Periods
For an overview of Scheduling Agreement time periods, watch this video.
Scheduling Agreement Commitment Zones
There are three commitment zones for the Scheduling Agreement:
Firm ZoneSignal to Start Production
Trade-off ZoneSignal to Buy Components
Forecast/Planning ZoneStrictly for Planning
- Suppliers may aggregate demand from all Buyers and plan future purchases..
- Cancellation ramifications:
Additional Information about the Commitment Zones
- 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.
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