Describing Conditions in Outline Agreements

Objective

After completing this lesson, you will be able to review the usage of conditions in general and in contracts.

Overview 

Conditions are agreements made with suppliers about prices, discounts and surcharges, freight costs, and so on. Such conditions can be stored in quotations, info records, outline agreements, and purchase orders (POs). ​

​You can also maintain general conditions at supplier level. The system then also applies these conditions to determine the price in purchasing documents. You can manually enter further conditions in the purchasing document itself. ​

An outline purchase agreement is a long-term agreement with a supplier covering the supply of materials or the provision of services, subject to predetermined conditions. These apply for a predefined period and a predefined total purchase quantity or certain total purchase value. ​

​For long-term outline agreements, you can also store several condition records for each item if, for example, the outline agreement is to last five years and prices within this validity period are to decrease annually by 3%.

A flowchart titled ‘Gross Price, Surcharges/Discounts, and Freight Cost’ showing time-independent and time-dependent pricing components, including purchase orders, quotations, scheduling agreements, and contracts.

Time Dependency on Conditions

Note the following:

Conditions in purchase contract are always time dependent. ​

​For scheduling agreements, the document type determines whether time-dependent or time-independent conditions can be created. To enable time-dependent conditions in scheduling agreements and quotations, you set the corresponding indicator in Customizing for Materials Management.​

​For time-dependent conditions, you can define validity periods and scales. You can also specify a price range (upper or lower limit). If the system adopts these conditions in a PO and the condition is then changed in the PO, causing the price range to be exceeded or lowered, the system issues an error message.

A pricing scale graphic showing time-dependent prices labeled Price A, Price B, and Price C, with a legend indicating bulk pricing options based on quantity purchased​

Calculation Schema 

The calculation schema comprises a set of rules for determining the purchase price. ​

In the standard calculation schema, the elements of the purchase price, such as gross price, net price, and effective price, are defined as follows: ​

  • Gross price: is the total cost, before any conditions, such as discounts, surcharges, or delivery costs are applied. It is sometimes referred to as the supplier’s net price.. ​

  • Net price: is the price after conditions, such as discounts and surcharges are appled. It excludes delivery costs. ​

  • Effective price: is the net price, less any cash discount, miscellaneous provisions, delivery costs, and nondeductible tax. ​

​The calculation schema groups together all condition types that determine the price. It also determines the sequence in which the condition types are included in price determination. ​

​Condition types are keys defined in Customizing to control how the conditions are used. For example, in the standard system, the PB00 condition type represents a quantity-dependent gross price.

The calculation schema also defines the following: ​ ​

  • The subtotals that are formed with each condition type
  • ​The condition types that are allowed in a document or info record ​
  • The sequence in which the condition types are applied in calculating the net price ​
  • The condition types that are displayed in the message to the supplier
A table showing steps in a pricing procedure with columns for step, counter, condition type, description, and from. It includes conditions such as gross price, absolute discount, surcharge percentage, freight percentage, and cash discount.

How to Display the Calculation Schema in a Contract Item

In this demo, you see how to calculate schema in contracts.

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